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Am I rich? Do you think you’re rich?
J. Money at Budgets are Sexy wonders what salary it would take before he thought he was rich. For him, $150,000 per year would make him feel like Mr. J Moneybags, but I have a different perspective.
When I was young (like 20 years ago), six figures sounded like a fortune. I think I knew one person who made that much (a friend’s dad), and he was the CEO of a bank (although he in no way flaunted his wealth so I’m only guessing). Even when I graduated college earlier this decade, I still thought it would take me forever to make six figures, but I had the wrong perpective.
Perception of Wealth is Relative
I was looking at a $100,000 from the perspective of 1) a “lower middle class” child and 2) a debt-poor college graduate. And both perspectives were from mid-size Pennsylvania towns.
When I graduated, I moved to the Washington D.C. area, but my perspective still stayed in central Pennsylvania at first. Then, as I began to see my earning potential in a metropolitan area, I no longer saw $100,000 as “rich”. I had many more people around me that I knew made very close to, or over, six figures a year, but here’s the kicker…
They weren’t living the lives of rich people, and least the rich people I saw on TV. It didn’t make sense to me that these people were rich to my young eyes, but now I see they’re just like me. Why was that?
Cost of living! These coworkers and friends weren’t paying the $500-$1000 mortgages from my hometown. Instead, they were paying $2,000-$4,000 per month for the same size house. And while most in my hometown were content with owning one or two used cars per household, people in D.C. seemed to need 2-3 new cars per home. It was a richer lifestyle, but I still wouldn’t call it rich.
So a six figure salary no longer appeared like very much money to me in my new big city. It wasn’t the average salary for a single worker, but six figures in combined salary for a couple in our area is pretty common.
Combined Income is Screwing with My Perception
When I was young, I never thought I would be married to a working woman. Heck, when I was 10 I thought girls were evil and would eat my ears off. Puberty corrected those thoughts about girls, but I still never factored in a wife’s salary because I never seriously thought about it. I was too focused on getting a job to think of someone else’s career.
But now that I’m married and have been in the workforce for nearly a decade, I’ve become a pretty decent wage earner, and I also have Stacie’s income to add to the total. With that said, I will state that we are in the six figure range with our combined income. But knowing what our money does for us, I wouldn’t consider ourselves rich. We can pay our mortgage easily, and we have 2 cars (2-3 years old), but we’re not living anywhere near the lifestyle I thought rich people would live. Heck, we don’t even have a flat-screen TV! Boooo!
For J. Money, $150k-$200k is rich. I guess if I alone made $200k per year, I’d consider myself rich, or close to it, because it seems such a considerable distance from where I am in my career. I figure that wealth is when you’re earning what you couldn’t even imagine right now. I can’t picture myself earning $200,000 per year all by myself, but perhaps I’ve opened a path to riches with my side income (this site and a few others). Maybe I’ll make it to $200,000 per year in less time than I would have thought, but I think I need to own my own consulting business to get there.
So what’s your definition of “rich”? We know John McCain thinks you need to make more than $3,000,000 to be considered rich, but is that a bit high? Let me know what you think.
Photo by Refracted Moments
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Clever Dude and his bride started with $113,000 in consumer debt and in just 3 short years, it's gone!
This all started because I asked is $250k rich. And CleverDude, I still think anyone over $100k combined income is rich. Yep, even living in a HCOLA, making 6 figures as well, I DO!
How can you not when it’s the top 5% of earners in this country? It’d be crazy when so many people make a lot less.
I am happy to be in the top earners but never would I say I’m poor. Broke yes, but poor? No.
I have been like you in the bottom 25% of earners probably and lived that way. But now I’m definitely in the rich category. Yes we don’t feel it, but we are.
I struggle with this rich/poor dichotomy too – when I was working in marketing, I would compare my salary to my then-boyfriend’s and feel poor. However, as a grad student now on significantly less income, I now realise the potential freedom I had with that income (whether I took advantage of that freedom is beside the point LOL). Feeling rich again will be returning to full time income! I’m already making plans for the money!
There is also a huge difference between single income and double income! I have multiple friends working less than what I do that have the benefit of a financially supportive partner. While theoretically poorer than I, they don’t have the same financial struggles. In saying that, my life is ‘richer’ since deciding to follow my dreams
I’ve always considered myself “rich”. However I grew up with a different perspective. I was born & raised in South America (by American parents). We saw many people that lived in cardboard boxes and dug through garbage for dinner, it sure made an impression on me. In reality, even the bottom of the food-chain in our country is considered rich by most of the rest of the world.
That being said, some of the richest people I know have the smallest or no incomes. “Rich” is being in a state of contentment and has nothing to do with income.
I used to think that six figures was rich and would allow a lavish lifestyle. Then we started making six figures, and found it wasn’t so lavish. In fact, it was just “normal”. So I adjusted my number upward to making $200,000+, but then I realized that most of the partners I was working for were making at least this much, and they didn’t strike me as rich or lavish. Sure, they had bigger houses and nicer cars than I, but nothing exceptional.
I’m not sure if my increasing perceptions of wealth are the result of an greater understanding of how quickly even high salaries can get eaten up, or inflation, or if it’s a matter of being desensitized to what a much younger version of me would have considered the trappings of wealth. I suspect it’s the latter- I have become accustomed to seeing newer cars and nicer things, to wine that doesn’t come from a box and to restaurants with cloth napkins. When I was 15, these were things from another realm- now, they’re just normal.
My wife and I gross about $90K and I certainly don’t feel rich. With all due respect, I have to disagree with LAL that rich = being in the top 5%. I don’t think the definition of rich is just the relation of how much money we have to how much money others have. We can believe we’re not rich and not believe we’re poor. We’re just not rich….yet!
I would suggest that rich is more about financial security. Maybe we keep raising the amount that it would take for us to be rich because we think it takes more to be secure. For example, financial security for me = being out of consumer debt, having a completely funded emergency fund, having a couple million saved by the time I retire, and enough money to put my kids through college.
I don’t ever want to be rich.
I have a distinction between being rich and being wealthy.
Being rich indicates that you want other people to see what you can buy. You’re basically flaunting what you have to others. Being rich means you care about what other people think about your possessions. You’re basically spending all of your money to live up to someone else’s ideal.
Being wealthy, to me, means having enough to live a lifestyle you find comfortable while ensuring that you’re saving for the future, donating to charity, etc.
I would feel “rich” if I was taking home over $100k annually from passive investments or grossing over $1,000,000 annually of earned income.
Making a couple hundred thousand a year is being comfortable. Far from rich!
I have started telling my kids our revised definition of rich.
Rich is when you do not have to work to earn a living.
You would work only if you choose to work.
You have enough to live on your investments.
To me now $500K a year income (passive or earned) would be rich. In High School I thought any household that made $50K a year was rich.
If Wikipedia is to be believed then anything over $350K is the top 1% of America, and my husband and I are just a few years/raises away from being in the top 5%. (American Middle Class article)
I AM Very interested in what 2008′s candidates consider “Rich” enough to tax…
I earn about 300k a year and I definitely do not feel rich. About half of my income goes to federal, state, property, SS, tax. This leaves ~150k of net, which for most people is a lot… but when you have three kids about to enter college and are helping elderly relatives that did not prepare for retirement… it is not as much as you might think. I consider myself well off, fortunate, and in a better position than many……. but definitely not rich….. I think that about 500k per year in net income would be enough for me to feel rich… but I guess it is all relative…..
I think it is honestly all relative to the amount of debt and other obligations you have. If you earn $100K a year and only have a modest house payment and no other debt, then yes that is a significant amount of money. I think the deeper you are in debt the more your perception changes. It will take you more money to keep up the same lifestyle that you could have with less debt and less money. Also, McCain jokingly stated, “$5,000,000″ was wealthy. I don’t think that Barack is able to sense sarcasm.
i don’t think feeling rich or wealthy can be defined by how much you make. It is the other way around. feeling rich and wealthy depends on the lifestyle you “want” to live and how much it costs to sustain that lifestyle.
jiggy…
i don’t think he was talking in jest…he also was not sure how many houses he owned.
If I earned the equivalent of $100k I wouldn’t describe that as rich. If I earned £100k a year, that probably would be. I know quite a few people who earn around £55k ($100k these days), but not many who earn 6 figures in sterling.
I would not consider the entire top 5% of the population rich. 5% is 1/20th, which isn’t “exclusive” enough to fit my definition. 1 in 1000 people make a million per year, though 1 in 1000 is a little too exclusive for my definition. I heard the other day that the median income of Maserati buyers is $750,000. Let’s go with that.
I earn about 107K(base) plus bonus and awards, so it comes up to 110-115K a year alone (single) which I’d imagine is more than a family earning 150K, and I don’t consider myself rich. I certainly don’t think 150K per family as rich. I know families earning 250K, and one family earning 300K who don’t consider themselves rich.
While I live in a very expensive area – medium house price right now is 650K; townhouse condos range in 350K-600K and one bedroom condos – 280-400K. But this isn’t really my problem: I bought my townhouse condo in the 90s when the market here in lower NY state was very depressed, made money on renting out/reselling the condo I owned previously and used the resulting windfall to pay off my mortgage. So my living expenses are fairly low now. I can easily live on less than half of my salary without sacrificing anything, on much less if I get into real stingy mood.
There are three main reasons I don’t consider myself rich: a) while I have savings I don’t yet feel I have enough to retire now (I am 49), so my income is very dependent on my job. b) a really serious illness or something similar can wipe out my non-retirement savings. c) about 60% of my money is currently in the stock market and this can easily go down. Have been going down for the past few months. I think I’d consider myself rich if I had enough in savings that I could stash it all in some fixed income account or municipal bonds and have enough to retire on AND if I had an extra million just for “emergencies”. Oh, and also if I could get myself a place on Central Park West and if I could buy anything my heart desires on 6th avenue (and had a place to wear it too) and whatever else rich and famous in NYC can buy. Just kidding.
“I AM Very interested in what 2008’s candidates consider “Rich” enough to tax…”
Me too, me too… Especially for singles.
It seems that most people here define “rich” as “having a little more than I have.”
I’ll propose an alternative definition: If you feel the need to make the argument that you’re not rich, then you’re rich.
Johanna, I get what you’re saying, but Donald Trump knows he’s rich. If people who need to make the argument that they aren’t rich ARE rich, the percentage of “rich” people will be way higher than it would be if it was defined in a more typical fashion. Rich can’t be 1/2 or 1/3 of the population.
“Rich can’t be 1/2 or 1/3 of the population.”
Why not? This is one of the richest societies the world has ever seen. If you look at all the people who have ever been alive, or even all the people who are alive today, then absolutely, 1/2 or 1/3 of the population of the US would qualify as rich.
Yes, when you look at all the people who have ever been alive, everyone is rather well off. You definitely have a point. However, that’s also related to world development as a whole.
I tend to focus more on comparisons within the US. 1/3 of Americans don’t really have sharply improved lifestyles compared to the other 2/3. You have to narrow it down to less than 5% to get certain comparisons like mansion vs. house, 3+ cars per person vs. 1 car per person, etc. I guess it’s all in how you look at it; there may not be a right or wrong answer.
I have to say that you folks who are earning 100K plus and don’t consider yourself rich….well, I would have to guess you aren’t managing your money very well. I’ve addressed this on other blogs with similar queries, and it still astounds me that people earning that much money don’t think they are earning “that much money”. I earn around $40,000 as a single mom with 2 kids, so a family of 3. I save about $7500-10000 per year. I’m in the northeast, which while not the most expensive place to live, is still pretty pricey. I have private health insurance & I’ve never used or needed public welfare of any kind (even though I’ve qualified for it many times).
I think the issue is that most people feel they have to spend more and (perceive they are) improve their standard of living as they earn more – rather than maintaining a standard of living which has been (and still is) perfectly acceptable and putting that extra income into savings or retirement or a college fund. Heck, at $100,000 per year – for the next, say, 3 years – and I’d have BOTH kid’s (state) college educations fully paid for!
Susie,
My wife and I gross over $110k. We carpool in our one car, which we bought as a $4k cheap reliable used car. We only buy things on sale. Our housing and debts are within the budget guidelines (less than 25/30% of take home). After maxing out our Roth’s and 401k’s we don’t have much left over. We are far from rich. It’s honestly laughable to say a couple making $100k is rich. I wouldn’t even say they’re well-off.
Aaron,
You are maxing out 2 401k’s, 2 Roth IRAs, and spend on housing alone pretty much what I spend on all living expenses for 3 people (mortgage, insurances, food, education, vacations, gasoline, heating, car repair, etc etc etc) in one year, and you think it’s laughable that that would be considered rich? Really? Because that just….blows my mind. It really does. I don’t know what to say because I realize the bridge between our perceptions is so vast, there’s no way either of us would see it from the other side.
@Susie, and others: So you think we people making over $100,000 are rich. Does that make you poor then? And then if you think you’re poor, what would people in Mexico think of you? It’s another country, but it’s only a few miles away from some of us Americans. At least most people in America have running water and proper sewage. Are you still poor if you have what a majority of the world would consider luxury amenities like an actual flushing toilet IN the house and clean, drinkable tap water?
And Susie, you yourself said you’re able to save thousands per year. How many Americans can even do that?
Since my own thoughts on the word “rich” echo those on here who say it’s about how you’re living, I would say YOU’RE rich because you have money to fall back on during hard times. Heck, you might even have a higher net worth than we do for all I know.
So just because we make six figures doesn’t mean we’re “rich”. We’re “well off”, but not rich, unless you’re at the bottom of the financial food chain somewhere in the Sahara I guess.
@CD et al.
Apparently it really DOES depend upon how you define rich. For me, it’s defined by having far more than enough money to cover my minimal basic living costs. Note I said minimal. Do I think I’m rich? I certainly am, comparatively world-view speaking. I have not only shelter, but very sturdy, comfortable, attractive shelter. I have clothes that I chose based on how they look, not just that they were available; I have shoes; I have daily, fresh, potable water; I have reliable transportation; I have good health and access to excellent healthcare. As I believe Johanna pointed out, Western nations are abundantly rich – even our poorest citizens are comparitively rich.
In our particular nation, however, I might be considered poor, or close to it. No, my net savings are not greater than yours – I’ve only been earning this much money for 3.5 years. However, I have not increased my spending on my standard of living, so all of that extra money has gone into savings. I would like to think that if my income doubled or tripled so that I did earn 100k plus, I would continue the same way and put all excess money into savings. In which case, with compound interest, I’d be a millionaire in less than 10 years.
I’m really amazed at the defensiveness of folks who are in the 100k+++ bracket at being called rich, likes its shameful or undesirable. Why is that? Why do you not want to be considered rich based on your income (rather than your jewelry or car or mansion)? And why are you assuming it’s a negative judgement upon you?
Suzie -just because we said we don’t consider ourselves rich, doesn’t mean we don’t save over half of our salaries or live the life of luxury. Nor does it mean that we need to feel defensive. It just means that we have other criteria or fears – dependency on continued employment, ability to handle real emergency – where emergency is on the scale of “got really ill and need expensive treatment” not “oh, I need to fix my car”. Sure, occasionally I think how great it’d be to be able to afford all of these fancy things I see when I visit Manhattan, but this is really not the most important thing.
I drive a Honda Civic (OK, it was bought new, but I paid cash for it), I live in a townhouse style condo. I take my own lunch to work and rarely eat out. Yes, I have some jewelry, but nothing particularly expensive. I do allow myself to spend money here and there – vacation, theater tickets, etc., but always well within what I can easily afford.
But I know how much a serious health problem may cost. My mother has just been diagnosed with lung cancer (no, she has never smoked and neither has anybody in her or my family). The drug she is taking cost $4000 a month. She is OK because it is covered by medicare plan D, but what if someone encountered this type of an expense and it hadn’t been covered? I do not clear enough after taxes to cover this type of an expense and still pay my bills – after taxes, 401K contribution and other deductions (e.g. health) I am left with about $4500 net. A friend of mine had hundreds of thousands in medical bill after her husband was diagnosed with sarcoma and insurance company refused to pay for a particular type of chemo after the fact. Yes, after a lot of calls and appeals, they did pay for it, but where would she be if they hadn’t?
Of course, it is all relative. I am rich compared to someone living on smaller income while having a family of 4 – I can cash flow the expense many people need to spend months saving for. I am rich compared to my relatives in Russia, and I do bring them cash and behave as a “rich American” when I visit. I am rich compared to myself growing up as a child in the Soviet Union to the first years in the US, etc.. But to me being really rich is about being secure in being able to cover a real emergency.
I like Cindy B.’s defininition (above) or rich..
“Rich is when you do not have to work to earn a living.
You would work only if you choose to work.
You have enough to live on your investments.”
If that’s it, then I’m there – but no one else would probably think so.
My basic expenses are about $375/month. When I do retire, I will have more than $1000/month coming in in investment income, so then I will REALLY feel rich 
I make about $20,000/yr… but am debt free including my house. I chose to work to keep the health insurance paid, but with my retirement savings, I could quit work at any time I wanted and live on my investments,etc…. I take home about $1000/month now and am very comfortable… but I doubt others would think that as rich, while I most certainly do
Yes for me, knowing I can quit work any time and continue my present lifestyle makes me feel rich. Rich enough, in any case!
Rich is always “more than I make”.
My wife and I do pretty well. In our early 30s, we’re making ~$400K combined. Yet while most people would call us “rich”, I’d consider us middle-class.
and at $20,000/yr, but debt free, I consider myself middle class
Big range there ! LOL!
Are accredited investors rich? Maybe that’s a better yardstick to use. If they’re not, shouldn’t they be clamped down upon just like the people who don’t qualify to be accredited investors? Just thinking out loud.
Jon, this seems like a good yardstick. The only problem I see with it – I just looked up the definition is this line from the definition: “a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;”
I wonder if net worth is inclusive of primary residence or not. I’d say if it is not, than yes, it’s a good definition. By if it does, I am not sure… Here in Westchester, an average house is over 600K. Same houses people bought in the 90s for 200K. So somebody with a house and only 400K in non-retirement and retirement (not yet taxed) investments will have a net worth of $1 million. But I don’t think this person is rich. Of course, this is just a matter of definition…
My math is a bit off, I didn’t adjust for mortgage. Let’s say the person has already paid off mortgage…
Kitty, as far as I know, the definition does not include personal residences.
Another interesting question is: “What does it mean to be middle class?” My husband and I make a combined six figures, but we live in NYC. I don’t think we’re particularly extravagant spenders. We’re able to put a significant amount into our 401ks and max out our IRAs. We were able to take a nice trip to Europe this year. (Won’t do that again next year.) But if we had kids … that would be it. I think we could still max out our IRAs but we wouldn’t be able to save for anything else significant, and we wouldn’t be able to put much money away for our kids’ college education. We wouldn’t be able to pay much more in rent — and we currently have a VERY good deal. Yet, we’re in probably the 90th percentile of American households.