Are We There Yet? How Will You Know When You’re Rich?
Published on - April 21st, 2010 (Modified on - April 23rd, 2010) (by J.D. Roth) This is a guest post by Ami Kim, who blogs about searching for a calling at 40 Days to Change. Ami is a long-time GRS reader.
Here at Get Rich Slowly, we imbibe many flavors of frugality, smart investing, and money management. Between J.D.’s (and others’) posts and the treasure trove of comments, you could build a path to wealth tailored to your individual income, assets, and circumstances.
But how will you know when you’re done? Are you there yet? Are you rich? And what will you do once you get there?
When I worked as a lawyer at a Big Bank I conducted an informal poll of my co-workers, asking what their magic number was: What dollar figure would make them feel comfortable retiring? (Or at least leaving their comfortable jobs to pursue their passions?) I guessed that at least some would say $1 million would be enough to let them leave in comfort. After all, we weren’t living in a big city, and the cost of living in our town was pretty reasonable.
I was wrong: $1 million wasn’t even close to the magic number.
This didn’t completely surprise me. Some people have a lifestyle they want to maintain, and they’ll have to save a lot of money if they want to maintain that lifestyle. But even those colleagues who lived frugally threw out numbers like “$5-7 Million, minimum,” citing the impact of taxes, inflation, medical care, the desire to travel, etc.
$5-7 Million? Minimum?
I have a friend whose husband makes a six-figure income at his job, plus significant income as a consultant. They have a million-dollar home and a cottage on a lake and one million in a retirement account. One day, I made an off-hand comment about how wealthy they were, and my friend vehemently objected to the description. “We are not wealthy,” she said. “I’m not saying we’re poor. We’re comfortable, but we’re not wealthy.”
On the other end of the spectrum, most of the world would view the readers of this blog as incredibly wealthy. (Check out this “Wealth-o-meter” to see how you compare to the rest of the world.) On a personal note, my job was eliminated by the Big Bank at the beginning of this Great Recession. I got a severance package, which has since run out. Despite the absence of a steady income, I’m not alarmed, hysterical, or panicked. Most days, I feel blessed, perhaps even — dare I say it? — wealthy. Why?
On one level, my husband and I are the poster children for Why You Should Establish an Emergency Fund. We did the things that readers of this blog do, including:
- using the debt snowball to pay off our debts
- establishing an emergency fund
- establishing a habit of contributing to retirement accounts
- spending less than we earned
This meant that when I lost my job, we knew we had resources to fall back on. In addition, by viewing our financial situation as just another challenge, we adopted many of the cost-cutting strategies on this and other blogs, which allowed us to substantially reduce our expenses.
For me, the bottom line is this:
- Wealth is not a magic number. The problem with a magic number is that it’s never better than an estimate. It would be a miracle to leave this earth having spent exactly the number you forecast. You’re more likely to have some left — or not quite enough. Also, the bigger your magic number, the longer you may stay in an uninspiring job and the longer you may wait to follow your passions.
- So, wealth relates to a state of mind. For me, being wealthy means having the resources to be confident that I can manage the financial ups and downs. But more importantly, being wealthy means I can do what I love — and live comfortably. If you’re willing to experiment and take risks, this type of wealth can come a lot sooner than “magic number”-based wealth.
- Wealth does not mean never having to make choices. Some people think that being wealthy means being able to buy whatever they want, whenever they want it. Maybe that’s why those magic numbers are so big. If we wait until we’re “wealthy” to do what we love, we’ll wait too long. For me, being wealthy means being able to make choices that align with my values and my passions, and being happy with those choices.
- Wealth means being able to say, “I have enough.”
What about you? Do you think of yourself as wealthy? Do you have a magic number? Are you waiting until you’re wealthy to do what you love? How will you know when you’re rich enough?
You can also see what others think they’ll need for for a comfortable retirement in our recent reader poll and post on How Much Retirement Savings Will You Need?
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This is a question we entertain on a pretty regular basis.
My husband describes us as the richest poor people we know. Why? Together we make a good salary, we have quite a bit in assets (we hit the million mark for a few weeks last year) but we keep such a small amount of available funds in our accounts that we do have to think about just about every purchase or transaction. We move a big chunk of money each month into retirement savings, other investments, other savings that after we pay bills our day to day spending is limited.
We feel comfortable in that we have a good roof over our heads, money for food, and health insurance. Plus we have an emergency fund and money in savings. We don’t have any debt except for our mortgage (and the mortgages on our investment properties). Finally we are comfortable enough that we can give to our favorite charities and recognize that we have much more than most and therefore need to (and want to) help others.
Our present goal is to have 1 million in non real estate investments which would be a big step towards feeling wealthy. But I’m sure that when we reach that goal we’ll just set another one.
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I guess it is about setting a target not a money target but a purpse for that money. In our case it is time with family and friends and right now time with our small kids. They will not be small forever and one day we will be to old to do stuff. In generall we are saving 30-40% of our income, but next year will be a change, then we will both spend 6 months without workning just spending time with our kids and family as well as friends doing the things we love. That is true wealth to me, worth more than all the money in the world (it will only cost us $20-30k which i think is ‘cheap’…..
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Great post! Thanks very much. It helps validate the choices my wife and I have made. I’m with Oskar (above) with regard to what’s important and how to look at wealth. We have just purchased a second home in preparation for early “retirement”. My wife will retire win a matter of months, and I will follow within a very few years. Our retirement won’t be sitting on the porch in a rocking chair, or swinging clubs on some golf course. Instead, we want to pursue passions and do things we really love. We’ll augment our meager retirement income with these and live simply. What a joy it is to consider being able to do this!
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Wealth is not prudently defined by monetary means….
“Contentment is natural wealth, luxury is artificial poverty.” ~ Socrates
“If thou wilt make a man happy, add not unto his riches but take away from his desires.” ~ Epicurus
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It is always about what is important in life. If the main goal is to be rich, there will never be enough of it. After the basic needs are met, we have to choose what it is we are going to spend our time, thoughts, and energies on. Money is important, sure, but life is so much more. Often living more simply, even if there is plenty of money, can lead to a more satisfying life. Here’s to a life more full.
Kay
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In four years we have seen two brothers and one sister die, another two go through cancer and a two others go broke chasing the big buck. One was a wealthy lawyer with a major office- who died of an infection from a simple procedure. We decided we would save all we could until my husband turned 60-that would be in June. We would just go forward from there.
Having a big bank account is like being a part of the “beating the Jones” set. To us, we are retiring with “less” than our sibs- but we will be doing what we want to do in our 60′s and 70′s before we have to slow in our 80′s and 90′s.
My sister’s number is $3,000,000. (small business owner who happily plans to work well into her 70′s). Our number is one tenth of hers- and no debt. Of course- we don’t plan on spending any of our number until we are in the slow stage. I ‘ll tell you how it works out in 40 years!
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Great topic.
I think that for me, the magical number is a moving target – one that changes as my dreams and aspirations change, and as my life unfolds.
In university, I just wanted a decent-paying jobs, enough money to pay off my student debts, drink a few beers every once in awhile
and live comfortably.
Then I met my husband and my dreams changed – fancy dinners, weekends away, and travelling the world became much more important – and therefore so did money.
Now I have a daughter, and time is the most important thing now. That too has a monetary cost.
Once she leaves the nest, who knows what will happen. I accept that my values and needs and desires will change – I will just keep trying to do my best as I stumble about making my way in the world.
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I think about this a lot too. For any goal, I have a hard time knowing when I’m there, I always want to do a little more.
I think “wealth” is tricky, because if you’ve spent it it’s not really wealth. If your friend had a smaller house and more in her bank account maybe she would feel wealthy.
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Good Post. There is a lot to take from this. I think the idea is to strive for financial independence versus trying to hit a magic number of say $3-5 million.
If you can learn how to consistently generate income doing something you love, and have a very healthy emergency fund (that makes you feel secure), you could consider yourself “Wealthy.” I do believe however, that it requires having goals with numbers. In other words, I need to break down these goals into attainable short term targets.
For example: “By a certain date, I will have replaced my income doing (whatever it is you love) and I will have an emergency fund that is equal to (what ever number makes you feel financial stable) I think if you do just that you will find wealth within reach.
Mike
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Being rich or wealthy in my eyes is when working for an income is optional and no longer a necessity. You could still be working, but it would be a hobby to keep you out of trouble and occupied, not something that you critically depend on to makes end meet.
Now combine that with different expectations for standard of living and you arrive at a broad range of #s.
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I will consider myself wealthy when I am able to support myself without having to sell my physical/mental labor.
If events keep going as planned (ha ha!) that will occur in ~4 1/2 years (out of a total of 18 years of work).
Then everyday is Saturday. 8^)
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Part of being rich, as I see it, is age too. I’m 31 and my net worth is a lot higher than most people my age.
I read this article in MoneySense magazine, which talks about the net worth of Canadians. If you’re unattached, the richest 20% of Canadians have a net worth of $270,001 and up. Whereas families of two or more need to have $697,000 and up to be in that top 20%.
http://www.canadianbusiness.com/images/article/content/ms/2009/wealth-package/are-you-rich-yet.png
Rich is a state of mind, but it is nice to know what the Jonses are up too, and know that if you want to be “rich” you gotta stay single!
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Great post AMI. I totally agree with the concept of emergency fund though most of do not contribute to that. Also concept of being wealthy is also to some extent related to how what kind of lifestyle is going to satisfy you. Most of the time if we are willing to sacrifice some portion of our spendings we can work in a more convenient jobs and be more peaceful
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If you live in America, you have your health, a roof over your head (any roof) and food in your belly, then I think you are rich.
Being wealthy is a state of mind. I am wealthy. I am healthy, I have an awesome family, I have friends, I have a job, I know where my next meal will be. If you look at my financial stats, maybe I’m not “wealthy” by anyone elses standards. I make less than $40k a year. I drive a 5 year old base model civic. Live in a working class neighborhood and I wear old clothes. But I am grateful sooo grateful for everything I do have. To me, wealth is in my own mind not in what I don’t already have.
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We’re wealthy and know it. Not in monetary terms exactly, since we have a mortgage and student loans still to pay, but in time and community.
We’ve chosen not to have kids, so our evenings are filled with community meetings, volunteer events, cooking, dancing, singing, building, making, eating, loving. Living, and living well. And sleeping as much as our bodies need.
Sure, we have to keep our jobs and keep commuting, but it’s well worth it.
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My husband and I have been having this conversation a lot lately. How much do we need for retirement? And when we get there will we be able to walk away and trust that it’s enough?
We are in our early 50′s and will definitely be retired by 60.
I say 5 million put away would make me comfortable. Is that enough? Or too much? We are over halfway there and at the rate we save money we will be there within five years if not sooner.
Retiring means being able to move back “home” and being much closer to our family and friends.
Being rich doesn’t mean keeping up with anyone. We live very simple lives and our neighbors would be shocked at our net worth. Being rich to me means never having to worry about money.
As I said this a frequent topic of conversation in our house at the moment. It will be interesting to read what other people’s ideas of being rich is. And when is it enough?
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I agree with the earlier posters in the definition of wealth as the moment where your passive income equals your required expenses. This can be expressed in a single figure, but you have to have your assumptions clear.
The main assumptions I make for the end target: 1) The amount of income required (I based mine on my current actual expenses minus categories I won’t have in the future, being mortgage and saving), and 2) the estimate of the future return on your nest egg, I take 4% as my personal conservative value. The overall figure then is income/4% as required amount for perpetual sufficient income.
Second step, getting to that end target also depends on 2 factors: 3) amount of money saved per year and 4) estimated return on saved income.
My main reason for detailing these assumptions is the impact of each of these factors on the time required for creating the point of no return (i.e. being wealthy :0). As already mentioned on this blog many time, due to compounding, the effect of increasing your return on savings is much larger than raising the amount saved each year. However, reducing the amount of income required at “retirement” has a larger impact on the timelines than increasing the % of return on assets after retirement.
In other words: start early, focus on return on savings (3 vs 4 % can make a large difference) and don’t inflate lifestyle (which basically is good practice for living on your end income).
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We just reached the milestone of paying off our mortgage. It’s hard for us to say what is enough to retire. Social Security at 62 is not a given with all this government spending of late. We have an A plan and a B plan. The A plan being living in retirement with some fun and the B plan living with no frills. It is comforting to know that as of right now we can support the B plan. So I guess for me the fact that we know we can get by without working makes working much less stressful.
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I used to think that I would be rich when my husband and I reached an income of $50,000 per year. I used to get so frustrated when I would read financial advice articles that would say “any family making $50,000 per year should be able to accomplish these things” and we were only making half that. Now, though, we’ve passed that mark and funny…I still don’t feel rich! However, I do feel wealthy, because we have enough money to eat, own a home, pay the bills, and set some aside for savings. I will feel much more comfortable when we get our debt paid off, but life is good.
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Being wealthy is when we no longer NEED to work. Work then becomes optional. So, I’ll consider us wealthy when we have enough saved up for the kids’ college tuition, retirement account, and have other money to live comfortably between retiring from work and retirement age of 59.5.
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Wow… there are some Fortunate people on this board. I never expected to see posters talking of having $1M to be veiwing a site like this. We’re nowhere near there, and it just seems such a long way off.
My wife and I have been working thru alot of goals these last few years. We just started talking about our new goals. One of which is the Retirement “number”. I believe a person should a $ value in mind. I don’t think most people can focus toward a contentment value. That will come from reflecting on what your $ is doing for you and then allow you to set that $ number. We are trying to balance realistic Retirement #’s with today’s requirements and realities. It’s a tough road.
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We live a comfortable, but pretty simple life. We have about 6 months expenses saved, plus other savings for home improvements, retirement, etc. We specifically chose this lifestyle and planned ahead so my wife can stay home and raise our kids.
While we don’t have “a number” in mind, our major goal is to pay off our home, which accounts for about 1/2 our monthly cash requirements. After that is gone, we could probably live on about $25k. At that point, I might partially retire, start my own business, wife might go back to work, who knows? I like that we’ve set ourselves up for many options in the future.
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@anyone with 1 million in the bank: by all means, you’re not poor.or rich poor.You are RICH!And you don’t seem to enjoy it…
I earn 12.000 euros a year and so is my husband.Half of our salaries go to a huge house loan. But I consider ourselves rich because:
we are young and healthy to enjoy our son and comfortable home.
we save with a means to travel.and we actually do it.now, that we are young, we enjoy our trips around Europe more than anything.
we save to educate our son.
we save for retirement;not much but enough to live a simple life.
we have more food than we can eat, a car to move us around, clean water on our taps and clothes to warm us.We read our books and magazines and sometimes we go to the cinema.
we live in Greece, next to the beach.
I’m happy.
How many people in our age don’t even know if they will be able to feed their children tomorrow? They are that poor and this is so cruel.
How many ppl consider themselves poor with 1 million in the bank?? They are not poor just silly
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One idea I’d throw out there – some commenters are pointing to that wealthy state as a sort of dividing line between work and retirement, with retirement being the time when fun starts. Why not start the fun now? Find an inexpensive way to pursue the thing you love now. For me, that’s a big part of being wealthy.
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Respectfully disagree with the couple who said they are not wealthy. They take vacations, they will be able to put their kids through college, they’ll retire in their 60s.
I think a lot of solidly upper-middle class and upper class families suffer from a guilt paradox – not wanting to appear “too rich” to people that don’t have as much money as they do, but also wanting to maintain an outward appearance of comfort.
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The only predetermined number we have is the date itself that we can take early retirement. We don’t have any other kind of magic number per se because we’re going to retire from the rat race early regardless and make it work with the assets we have. There are too many variables in life and life itself flashes by so darn quickly. We are no longer materialists either so that helps. We don’t plan to remain in jobs a minute longer than we need to regardless of how much money is in the bank.
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$6,650,000
All completely made up & estimates, but here how I figure…At 25 years old, my DH and I live quite comfortably on $50,000/year combined. Less than that and we start to stress over bills, more & we either save or waste the excess. At age 60 say that doubles to $100,000 for healthcare, inflation, whatever else. And assume we live/need that amount til 100. Plus $300,000 for a house. Plus $600,000 college for 3 kids: assume $50,000 per year for 4 years each.
It’s all just very rough estimates, but I can see how people get to such high numbers for being “wealthy”.
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I live in a developing nation. If you have ever thrown food away, you are wealthy. Its not about comparing up. Compare down and you will see just how wealthy you are.
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I think these comments are interesting. I think wealth is a moving target and if 10 years ago you told me that I would have 1 million in assets, along with my husband, (that is NOT 1 million in the bank) I would be amazed and would certainly classify that milestone as wealthy.
I guess we don’t feel particularly wealthy (except when I update our NetWorthIQ each month) because we have all these systems in place that keep us from spending money each day. I don’t feel any guilt about how much we have saved because it has taken hard work and real effort to do so.
We also make lots of time for fun we just find our fun with less expensive pursuits.
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I agree being wealthy is an arbitrary figure for everyone. Wealth for some is vast amounts of money in the bank, for some it is simply being able to cover all the expenses, then have all the time they want with family. From a financial point of view, I believe at least a couple million is the minimum if that is what you will be living off of.
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I’m sure this says a lot about where we’re at, but I’d be happy if we just had paid off all debts including mortgage, had a healthy emergency fund, and could contribute to college for the kids.
Of course we need money in retirement, and I like the idea of having enough money to pursue something we love, but at this point we both have good jobs with good companies that are flexible enough to let us go to t-ball games and soccer practice.
I’ll surely have a number or a goal that I’m aiming for eventually, but right now I am so thankful for what I have.
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@Amy (#27) I think you are being a bit too conservative, since you don’t take into account the time factor. If you need $600,000 for the college for 3 kids, you might need that in 18 years. The amount you need right now for that would be significantly lower.
Similarly, the amount of costs for living as an elder person might be higher on a healthcare level, but cost of living is lower in general. By that time you will most probably have a house you can call your own, so don’t add the into the $100,000 per year. Then, if you have a wealth of $3,000,000, you already have enough for such an income, since 4% interest on 3 million equals $120,000 per year for eternity. In other words: you need less than half the amount you think you need to live with $100,000 (which is a lot in the first place I think
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I’ll be ‘wealthy enough’ when I can stop working if I want, and live the rest of my life on what I’ve got.
I also think a turning point is where you stop worrying about money, which for me was not long after I eliminated all of my debt. It’s cool to have net wealth milestones (being a millionaire is cool, but it isn’t enough to stop working), with an idea of where you need to be by a certain date.
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We’re sort of like the people described above, except we realize how lucky we are — we have a little over a million in assets and are still in our 30s. We are accumulating about 200K per year in savings. Yes, we’re rich. But we won’t feel like we’ve hit our number until we are at 4 or 5 million. That’s why I read this blog, and follow a lot of the advice given here. We live a good, but not exorbitant, lifestyle — we’re driving mid-aged Hondas, not luxury cars, I shop at Banana Republic, not Neiman Marcus, etc. Why do we think we need so much? In part, our expectations for how “safe” we have to be have adjusted to what we can pull off. We want enough money to cover lots of worst case scenarios, not only for ourselves, but for our parents and siblings (none of whom have nearly as much money as we do) and for our kids. We’d feel like total jerks if we retired in our 40s and then didn’t have enough money to help those people out if they got in trouble.
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@ami (#24) Thanks for the interesting article in the first place. Regarding waiting for the point of potential retirement or enjoying wealth right now, I do not see the two as options that exclude each other. I have a personal number for “potential retirement” as ultimate wealth target, but that does not mean everything else have to wait until then. I’d say that the time required getting to that moment is determined by the amount of fun you want to have in between.
I’ll never sacrifice family, seeing my son grow up or sports for “retiring” a year early. I actually intend not to retire at that time at all, since colleagues and working provide essential parts to my life as well, but I do really dig the idea that you can stop at any moment that work no longer brings you that which you value.
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Another thing to take into account is your age. I am 27. If I live to a statistical average for people who die today I have a long way to go. If the statistical life span continues to move out then I need to support myself for longer.
There are also wild fluctuations when one looks at inflation and rate of return. If inflation is 2% and my return 8% that’s one thing. If inflation is 4% and my return 6%, that’s another entirely. How conservative do you want to be?
Amy @ 27
If you are 25 now you are likely to need more than double that $50k in 35 years. A rule of thumb is to divide 72 by your estimated inflation. That is how long your money will take to double is size (or halve in value). So if inflation remains at ~2%, you’re fine. If it is twice that…not so fine.
I don’t set a specific number so much as goals. I want my house paid off. I would like investment properties paid off with an income that can cover basic living expenses (plus their own upkeep). Right now that’s about two medium size single family homes (or one ~8 plex) Then I want $X to draw on for extra expenses such as travel, new car, etc.
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We’re solidly in the “Your Money or Your Life” camp — when we can passively make enough money to support ourselves on an ongoing basis, then we will be “rich”. We will be able to choose how we want to live and work without worrying about getting by. That isn’t about retirement, per se — after all, Joe Dominguez gave YMOYL seminars for decades after retiring from a Wall Street job, before dying of cancer at 58.
We have scaled back our lifestyles a lot from trying to keep up with anyone else or live by anyone else’s expectations. That means we’re closer to “rich” than we would be otherwise.
Are we “wealthy”? I’d say yes, but not “rich”, yet, unless we want to move the family to a developing country and live like the typical family there.
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I’ll know when I’m rich when I can take time off whenever and not stress it, and I can buy something without ever asking or carign the price..lol
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I do not consider myself wealthy. Even though we have substantial assets, I feel like they may not be enough when we retire. My husband has $2 million in retirement funds, and another $2 million in outside investments. I do not consider that wealthy. I consider that comfortable. I believe I’d need at least $10 million before I even thought of myself as wealthy.
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I definitely consider us wealthy now. But we still have a goal. Like many other comments, it’s not a fixed number, but the number that would let us take a dream opportunity.
We’re only 30, but already we have plans for a second (or retirement) career. We want to walk away from 9-5 to open our own business. We’ll still need to make money from that business, but not so much that we can’t close the doors for a few extra weeks a year if we feel like it.
When we have the startup money to open the business and the savings to make put the risk well into our comfort zone, we’ll have made it.
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I’m in my 20s and just starting out in my career. I’m almost out of debt. I make a good income, but I’m on a contract and definitely get concerned that I will not be renewed. I won’t feel truly comfortable (let alone wealthy) until I am out of debt, have some savings, and have a permanent job. I always think of wealthy as having substantial savings and a high-paying job (so like a lawyer or doctor or director etc.). I think of rich as having enough money to not have to work.
I don’t really have a magic number. I guess I always think of an annual salary of $100,000+ as being wealthy, as long as it’s not frittered away. Having a million+ in the bank when you haven’t been saving for your entire life (so say in your 30s or early 40s) I would say is the start of being rich. It’s all semantics really – rich people are wealthy obviously. I guess in my own mind though it’s more attainable to be wealthy than stinkin’ rich.
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If you ask people what it means to be wealthy, most of them aren’t going to tell you that it means having enough to retire. People watch shows like MTV Cribs (or Lifestyles of the Rich and Famous), and associate wealth with the ability to buy a mansion in Beverly Hills and park a Bentley for each day of the week out front. Equating “wealthy” and “comfortable with retiring” gives definitions to these words that aren’t what others mean when they use them.
As far as I can tell, everyone’s view of “wealthy” is always pretty much “twice as much as I have”. If you make $50k/year, you think you’re “normal” but you look at the engineer down the street who makes $100k and think he’s wealthy. Meanwhile, he feels normal too, and looks at the doctor who makes $200k/year as wealthy. It’s all relative. Ever travel in the third world? Traveling students who we consider nearly flat broke here in the US are all thought of as wealthy when they’re staying in hostels in third world countries — they have expensive shoes and fancy cameras and white skin and US/EU passports.
It’s a losing game, trying to make yourself feel wealthy. I’m not playing. I’m going to do the things I want to do now, with the money I have now. Others like to publish their net worth on their blogs — I’d rather publish photos of my life. Besides, all that really matters is your health and your family. If those are taken care of, the rest is al just “Stuff”.
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Thanks for your input, Andrea #28. That really puts things in perspective for us rich folk in the United States.
From what I’ve noticed, when we tie “rich” directly to money alone, the danger can be that we may never feel like we’ve made it.
You know how it goes. “If only I had a paper route, I could buy that bike I want”. Then I get a paper route.
“If only I could get that job at the grocery store, I could get my first car”. Then I get the job at the grocery store.
“I can’t wait until I graduate from college, then I can finally start my career and buy a house.”
After I graduate and get that job, “Wow, look at those people further up the ladder. If I could become a director, I’d really have it made” ….
When money is the goal, I’d dare say that we will never achieve it. There will never be an end as there will always be, yet, a higher monetary goal to reach.
So, like Ami says, don’t wait until you reach a goal to start living; begin today.
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One thing nobody seems to consider when figuring their “magical number” is requests from others for help. My family doesn’t know exactly how much I make, but they know it is more than they do. We have literally been asked by every immediate family member on both sides for financial help in the last 18 months. It’s easy to say no to ridiculous requests (like my brother wanting funds to start a porn website). But it is hard when someone just needs a bit more to make their down payment on their first home, or when my dad needed a co-signer or else end up on the street, or when my mom needed the down payment for the rehab treatment she definitely needed. I am happy that we are in a position to help those we love, but these items weren’t budgeted because no one ever talks about that kind of expense.
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I’m in my mid-twenties. My partner and I take home a combined income of around $35,000, and we consider ourselves wealthy. We also have over $25,000 debt in student loans.
He’s a nurse and I work in a homeless shelter, and we both love our jobs. We share a car that’s completely paid off, buy almost anything we like (used), have no consumer debt, and plan to take 2 months this summer to camp and travel across Canada. We’ve started an emergency fund ($1000) and have begun saving for retirement (although it’s only $100/month). We budget money every month to give away to charity.
I’m surprised that so many people here don’t consider themselves wealthy. Maybe we’re able to feel wealthy because I work with people who are financially destitute and without housing, and my husband works with people who have poor health. I think cultivating a spirit of gratitude and being able to appreciate what you have plays a role in feeling wealthy.
I think it also helps that we live a very simple life – the more you own, you more you have to clean, maintain and repair. This eats up your time, and feeling like I have time to bake, craft, dance, visit with friends, and attend community events makes me love life.
Would I like to continue paying off our debt, increasing our savings, and travelling? Yes! But these are things I’m already doing now, and so I don’t feel as though I need to wait for a ‘magic number’ to begin to feel wealthy.
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It literally isn’t healthy to define your well-being based on how well you are doing compared to others, at least if you’re comparing against people who are doing better, which is what most of us think of when we think “wealthy.”
I’m pretty happy where we are now, on the path we’re on now. If I had 10 million dollars we would be on a different path, but that path wouldn’t make us happier enough to make the trade-offs needed to save up 10 million dollars. Somewhere between what we have now and 10 million dollars I might be willing to make the major career change it would take to live in the area of the country I want to live in. But we’ll see what opportunities are like when that time comes.
In the mean time I will enjoy compensating differentials.
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Des – you are totally right. For me if I had a million I would feel rich, it’s that big number that makes me see zeros and I believe I could live off the interest and not touch the principle – but my husband corrects me, says that’s not realistic because everyone (friends, people on my side of the family) would be asking for money, and I would not be able to say no. So I’d have to double whatever I truly could retire on, to actually do it. Or move with no forwarding address to some island, but that wouldn’t make me feel happy.
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I feel pretty wealthy despite the facts that we don’t own a home, our cars are 10 and 15 years old, and we both expect to continue working for another 15/25 years (DH/me).
We’re healthy, we’re happy, we have leisure time, we like where we live, we can afford our hobbies, we’re paying off debt, we’re saving … . We’ll probably never be millionaires and I won’t feel “rich” until we do own a home, but we have a great life!
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I have been thinking about this topic a lot over the past few months. I’m a late 30′s mom of two young kids. My husband and I currently have well paying jobs (household income ~$270K). We’re within a year of paying off our mortgage and have a reasonable amount saved in retirement savings plans and for kids education, so our net worth is approaching $1 Million.
While we don’t live or spend like the “rich”, we do feel wealthy. We made conscious choice to live in a nice neighbourhood in a good school district, but we realize that our income and savings are much greater than most of our neighbours. We are cost-conscious, have only one car (hubby bikes to work), don’t spend a lot on expensive recreational activities or lavish vacations. We do spend a little extra on buying organic food, but very little on eating out.
I have thought for several years that once we have $2 Million in savings, that I would quit my job and become a full-time mom. Now that my kids are getting a little older (5 and 7), I’m realizing how independent and responsible they are becoming, and if I quit my job, I was lose a big part of my identify and who they see as being their mom. Also, I’m realizing that my job is pretty great, with sufficient challenges and reasonable flexibility that it would be really stupid for me to quit.
I think feeling wealthy comes from feeling that you have choice. I can quit if I start to really hate my job. In fact, my husband did quit his steady 6-figure income job about a year ago, to pursue a high-risk startup opportunity in the tech sector. That risk ran out of funding, so he just recently got back into working fulltime at another company, but is still involved in the startup as a side project. He could not have taken such a risk to quit his job initially if we had made choices in the past to own a bigger house in a more prestigious neighbourhood and have expensive golf club members, car payments, etc.
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I consider myself wealthy because I am doing just what I want to do, right now.
I don’t plan to retire, so I couldn’t care less about saving a million dollars, or whatever ungodly sum people think they need in order to spend their last two decades loafing. If we have a currency crisis it won’t matter anyway. What a huge load THAT was off my shoulders! No more worrying, fretting, or stewing about whether I’m saving “enough for retirement.” I’m not living my life that way anymore.
Instead, I have paid off all debts (including the mortgage), have two years’ worth of living expenses in cash, and am making my living as a temp. Another huge load off my shoulders! I hate taking a full-time, permanent position, knowing I’m only going to get two weeks off a year, and it’s nowhere close to the amount of time I want. Now I take a couple of months off each year, using the money I’ve saved during the other ten months. (Instead of saving it for that mythical “retirement.”) I will never go back to two weeks of vacation again.
Besides, there are a lot of really sucky companies out there, and a lot of awful managers. There is nothing worse than realizing within 3-6 months that your manager, who seemed nice in the interview, is actually a complete psycho, and that you are going to hate every day of your life until you can leave this job. Then, you are afraid of looking like a job-hopper and try to stick it out as long as you can, only to find that your tolerance for hating your life only lasts about a year and a half, and you just end up looking like a job-hopper anyway. NO MORE! If I go to a temp assignment and the boss is a jerk, who cares? I won’t be there for long. And if it gets really bad, I ask my handler to send me somewhere else.
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