What does it mean to be rich?
I had lunch with my accountant the other day. Sabino is more than a financial advisor to me — foremost, he’s a close friend. I told him about my current circumstances, about how I’m now making more as a writer than I did when I worked at the box factory, about how I’ve been saving money, about how Kris and I are beginning to contemplate paying more on our mortgage.
“How does it feel to be rich?” he asked me. “Has it changed you?”
“What do you mean?” I said. “I’m not rich.”
But then I paused and thought about it. “Oh,” I said. “Maybe I am.”
I’ve repaid my consumer debt. I’ve saved $10,000 for emergencies. I’m setting aside money for retirement. I live in an 1800 square foot home on half an acre of land. My wife and I are paying more than the required amount on our mortgage. Though my income is variable (and has dropped significantly in the past month), I make enough to support myself while doing something I love. Kris has a stable job that she loves. We own a lot of Stuff — so much Stuff, in fact, that I sometimes feel oppressed by it. By any objective measure, I am rich.
“Well,” I said. “I guess being rich doesn’t feel much different than being poor. I still worry about having enough to pay my bills. Despite the fact that I have a huge cushion in savings, Kris and I strive to be frugal. We’re always looking for new ways to save money.”
I thought for a moment. “What about you?” I asked. “Do you feel rich?”
Sabino smiled. “You know how I’m always joking about being a ‘poor migrant worker’? There’s some truth to that. When I imagine myself, I’m still the boy who came here from Mexico, still the boy who worked in the fields. I’m not the man who owns an accounting firm. When I think of myself, I think of how poor I was, even though I’m not poor any more.”
I was fascinated. When I considered it, I realized I agreed with him. I, too, was raised in poverty, and now that my economic class has risen, I still have that mindset. On some level, I know I’m wealthy, yet I still think of myself as poor all of the time.
The truth is, I live in a nicer home than my parents ever owned. I’ve saved more money than they ever saved. I earn more money than most people earn. I have more Stuff than I’ll ever need. I am rich.
Later, I told Kris about my conversation with Sabino. “Do you really feel poor all of the time?” she asked.
“I do,” I said. “I know it’s irrational. I know I have more than 99% of the world’s population, but I still feel poor. It makes me wonder: What does it mean to be rich?”
“Exactly,” Kris said, and she told me about a conversation she had with her friend Rhonda today. Kris had mentioned in an offhand way that she and Rhonda were rich.
“I’m not rich,” Rhonda said. “I still have to come to work every day.”
When pressed, Rhonda elaborated, “I have this concept of what it means to be rich. Rich people keep buying Stuff. They don’t think about what it means to consume in the way they’re consuming. When I think of rich people, there’s a negative connotation. That’s part of why I don’t want to be called rich. Rich people are selfish. The rich don’t care about other people.”
Kris and Rhonda tried to decide: Does being rich mean having a large income? Does it mean having a certain net worth? Are the rich selfish? Is being rich only a state of mind? Or is it something else entirely?
Are two people with equal $100,000/year incomes rich? What if one has $100,000 in credit card debt? Is he still rich? What if one has higher expenses because she has four children? Is she still rich?
I think most of us would agree that a person with a $20,000 income and three kids is poor. But what if somebody earns $20,000 a year, lives a frugal lifestyle, and is able to save $5,000 each year in a Roth IRA? If you have a small income but you’re a good saver, does that make you rich? Is this a bad thing?
“All this makes me think that money isn’t the answer,” I said after Kris told me her story. “It makes me think that being ‘rich’ doesn’t have anything to do with how much money you have. But what then does it mean to be rich?“
Ostensibly, the aim of this blog is to get rich slowly. My goal is to build wealth. But what is wealth? What does it mean to be rich? If becoming rich is a goal, what does that mean to me, and to the people around me? Is it all about money? Or is there something more to the equation, some sort of social capital?
Although I don’t write about them often, I ask myself questions like these all the time.
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There are 151 comments to "What does it mean to be rich?".
What does it mean to be rich? To me it means to have completed all the baby steps… paying off debt, have a fully-funded emergency fund, having invested in a retirement savings vehicle of some sort to have enough money to last me a few years of retirement… and having a home of some sort to call my own… rather that is a rented place or a piece of real estate that I own. But the reason this means being rich to me is because this is when, at least at this point in my life, I feel like I might feel secure. I guess I equate being rich with being financially secure… but then I realize that there is a lot more to that than meets the eye. Feeling secure (even financially) is more of a psychological thing for the most part. I have a feeling that there are a lot of financially wealthy people out there that may not feel the same sense of security that I equate with being rich. They may not even view themselves as rich… One thing I hope is for sure though… when I reach that point for myself I hope I will be able to take a big sigh of relief and relax a little more comfortably… knowing that I’ve done well to take care of myself.
I think being rich is relative, if you live in a rich neighbourhood and don’t have as much money as everyone else then you will feel poor. If you make more money than everyone else then you will feel rich as you will have more possessions. I think that certain people are bought up to believe that they should save and live a sustainable lifestyle.
Well, one definition is, if you make more money than you spend, you’re rich, if you spend more money than you make, you’re poor.
I’m a bit financially disoriented at the moment. I consider myself middle class, but I’m single and having two incomes is now the norm, so I live in a working-class neighborhood and have neighbors who are doubling up in tiny rental places, not to mention the people who come to my door looking for work, so by that perspective I’m rich, but then I also know a lot of rich people and am embarrassed to have them over to my house, so then I feel poor.
I think being “rich” and being “wealthy” are two separate things.
You can be “rich” if you have income of $250,000 but have credit card debt of $100k and growing… Think rock stars, athletes…
But the truly “wealthy” are those with savings, retirement investments, etc.
That’s always been my opinion…
Escape: I know how that feels. In my late 40s know, taking my life on average, it’s highly unlikely I will achieve my middle class parents standard of living. Ever.
I don’t own a home, but on the other hand I have no debt and years and years of savings.
Being rich means only one thing: not to have to worry about money.
Can you enter any shop anywhere, buy whatever you fancy in the knowledge that you have enough money to pay? Then you are rich.
If you have to care about savings, pension and a regular income (no matter how high) then you are not rich, you may be well off, wealthy or whatever, but you are not rich.
I fail to see why to agonize so much about this when we all know what it really means to be rich.
I think that to me, “rich” is still the mansion and the fancy cars and the jetset lifestyle. Not sure why I think of it that way…maybe I used to watch too much TV.
But none of that is my goal. I’m turned off by too much excess. My goals are to finish funing our emergency fund, get the IRAs maxed out, and to save for the home we’re building. I think when these things are accomplished, and if I can still sock away a bit more for a great vacation every other year to a far-away land, I’ll be perfectly content with my finances. I love being totally out of my element in some foreign country, or in an underwater cavern, or in the middle of the desert…
What does it mean to be rich?
Partly, it’s about your relative position in society. I think that many people (myself included) don’t really think of themselves as rich because they know other people that are doing better than they are. It could be that they have a higher income, more stuff, or what have you. Moreover, I remember an article that states that even those people who are making six figures (which is like the top 5-6% of American income) still consider themselves to be “middle class”.
So I think a lot of it is relative. That being said, you can use that to your advantage to determine what rich means to you.
When I think about what it would take for me to feel “rich”, winning the lottery comes to mind – having more money than I know what to do with. At this point, I still have plenty of ideas for any extra income that comes my way.
I think this is a really interesting conversation. The heart of the matter isn’t really where is the line between rich and poor. That’s most certainly a grey area. The real conversation is how does your history and perceptions about money shape your perceptions of your current financial state?
I didn’t grow up poor, but rather solidly in the middle class. My mother didn’t work for the majority of my life. My parents were always (to my memory) able to own a house, keep plenty of food on the table, pay for the occasional vacation to visit family or even Disney World. When it came time to go to college, my brother and I both received academic scholarships to our public institutions of choice where we each earned great degrees that took us in fantastic directions.
How does that history shape my perceptions of my own financial situation? I feel like I’m doing quite well for myself, even though I’m the financial laggard of my immediate family. My personal finances were in a state of disarray as recently as four years ago but now I’m in much better shape. I’m married to a wonder woman, we have a 5 month old son. We also own a house larger than any I’ve ever lived in with my parents. I’ve got a nice flat screen TV. Both of our family cars are paid off, and they’re each less than 6 years old. I know that with the application of additional effort I could earn a lot more money but I value the small amount of free time I have. My job is challenging and rewarding.
Sounds like I’m rich.
On the other hand, I don’t make anywhere near the $250,000 income which both political candidates seem to think is the dividing line. We don’t drive fancy cars. All but two of vacations I’ve taken in the past 4 years (my honeymoon and a 2 day beach trip with friends) have been to see family members around the country. My wife and I are carefully budgeting b/c our 30+ year old house just had the entire HVAC system replaced in May and now needs a new roof. We’re trying to plan a vacation which will take us to an exotic foreign land. Current projections have us there no sooner than 3 years, maybe more. My wife is stressed about the decision between leaving our son to go back to work (and the child care costs that entails) or staying at home (which means our lifestyle must be adjusted).
Sounds like I’m not rich.
What’s my personal feeling about my personal situation? I feel like I’m doing well. I don’t feel like I’m free from worry, but I don’t worry too frequently.
You write so often about Kris. What does she do for a living?
Turn this around a little and use the term “wealthy”. I think of being “wealthy” as being financially well, the way being healthy is being physically well.
I’m a tax accountant and I’ve been trying to tease out what makes people financially well. I’ve found five factors:
1. They need to have some savings. Life is too bumpy if a speeding ticket constitutes a tragedy.
2. They have to have debt under control. Not necessarily OUT of debt, just have a plan, be working on it, be able to sleep at night knowing the debt is going to work out okay.
3. They have to be saving for retirement. Not HAVE some savings from a job they had ten years ago that they haven’t touched, but be actively putting something away for distant goals. It doesn’t have to be in an IRA or 401(k), it can be by building their retirement house or building their business or farm. It’s about building long-term assets, not being a grasshopper, using this year’s labor to fund those rainy days that will come.
4.) They can’t be a slave to their job. No one is wealthy who must labor against their will. I’m not saying you have to love your job or be willing to do it for free, just that you can’t HATE it with no recourse.
5.) The last thing is a bit surprising. I can’t explain this one mathematically. But to be wealthy you need to give to charity. You have to say, out loud, and mean it, “I have enough so that I can share.” The opposite of this statement is “I don’t have enough so I can’t share.” Either way, it becomes true in the doing of it. I encourage my clients to pick a charity that has meaning to them and make the world a better place because they existed by funding their own values. It really is enriching.
For me rich is a premium on security. When I own some land and the house on it, and there are veggies and fruit growing, and solar panels and a well, then I’ll feel rich – and no one will ever be able to make me move.
Personally, I don’t think “rich” or “wealthy” should depend on comparing what you have or earn with what other people have or earn. Why does it matter what anyone else makes? Personal finances are personal – it’s about what works for you.
If you set the “rich” standard based on your personal situation, then when you have or earn more than you need you’re actually “wealthy”.
When it comes to feeling rich or wealthy, I think that depends on your contentment level. If you’re not content or can’t realize that you actually are wealthy, then you’re not going to feel that way no matter how much money you have in the bank.
So I look at it as having two components:
1. The numbers – Do you have or earn more than you need to live on?
2. The psychology – Are you content with your situation?
In my view, being content is the quickest way to get rich (slowly or otherwise).
This is a great post, J.D. I think it hits on something that I struggle with, and that’s “the grass is always greener” syndrome. I find myself always desiring something that I do not have, but then when I achieve it, it’s not usually what I imagined. Then, I find myself wanting something different. So when I read your description of your financial and life situation, then your statement that you still feel poor, it really scared me. From where I am now, I would love to be in your situation. I think that I would feel much more secure financially in that situation than my current one. But when I get there, will I still worry about money? Will I still feel like I need more to feel secure? Will I still feel poor? So, I struggle with trying to just be content with my current situation. Not content in the sense that I don’t desire to better my life, but content in the sense of being happy regardless of life’s circumstances. I think you can still be ambitious while being content and happy in your current circumstance. I have another question for you. In your other endeavor to Get Fit Slowly, do you have the same issues there? I mean, do you still feel fat and unhealthy when you are getting very healthy and thin?
Here’s one of your quotes:
“Rich people are selfish. The rich don’t care about other people.”
Hmmmmm? Who do you think donates time and MONEY to cancer research, the aids epidemic, breast cancer awareness and on and on and on. Poor people?
As a side note, do YOU donate any money, Mr. Newly Rich guy to anything?
People seem to forget all the wonderful things rich people do in this world. Bill Gates has brought free technology and medical care to millions of South Africans. Angelina Jolie and Oprah Winfrey have helped thousands of poor children. Warren Buffet donates millions and millions of dollars to worthy causes and to the forgotten. What about Paul Newman and all the profits from his business that he has donated to much needed causes worldwide? Or Imus who built a western dude ranch for disabled children to go to?????
That’s what rich means to me. Not what money can bring to ME but what I can do to help others.
Without the rich, the world would be a horrible, horrible place. Take a good look at them, for they will slowly vanish from the US. The new government wants to take from the rich and give to those who don’t even work. Despite the fancy wording, it’s welfare NOT wealth redistribution. Think the rich are going to sit around and let others take their money?
Think again.
Why anyone would want to work hard and become rich only to have a government take it away is beyond me.
Just my opinion.
Interesting post today JD. As someone who moved to North America from another country, I have always been surprised by the extent to which middle-class people here will emphasize and play up their roots in poverty. I’ve even seen people claim to be real red-blooded up-by-the-bootstraps americans because their grandparents, long dead, were poor immigrant kids! There’s nothing wrong with this, of course, but it was unusual to me at first, as it doesn’t happen so much at home.
I’ve never been in debt, so rich to me is never having to go into work again if I don’t feel like it. So, able to live off my investments whether that be $100,000 or $10,000,000. I’m sure not there yet!
To paraphrase a great philosopher: When you know you have enough, you are rich.
It’s simple. The main difference between the rich and normal people is that normal people live from their income whereas rich people live from their money.
If your main income-source is work you are doing, you’re not rich.
If your principal source of income isn’t work, but rather gains from stuff you OWN, then you’re rich.
In practice there’s all degrees between offcourse, someone like you make most of your money from writing, but some from interest earned, stock-dividends, value-growth in index-funds whatever.
Being rich or wealthy is not about *how much more you have.* It’s about *how little more you need.*
A good question. Compared to most people, even in America, never mind the rest of the world, we are doing pretty well- $75k household income, $2000 and growing emergency fund, $17,000 going into 401k/IRAs each year, and still investing about $5000 more in a brokerage account, and we took a $4500 vacation this summer (which we diligently saved for over 9 months using ING accounts). We own our condo. Our net worth is 5 figures, but we are young and have good prospects.
I feel blessed for what I have, but I don’t feel rich or wealthy. Why? Mostly because in the USA, even with employer-provided healthcare, this could all be wiped out in a very short period of time. Let me illustrate what I mean.
My father died in 2006, in his late 50s. He lived a nearly completely normal life medically until he had a massive, no warning heart attack that year. He held on for two months, but the damage was too great. As our family sifted through the financial impacts of his loss, my mother noted that his medical bills in the 2 month struggle totaled over $970,000.
Having been a union worker with a good pension and coverage program, my parents paid $150 total for his care. One hundred and fifty bucks! My mother, while heartbroken, has not had to face the additional challenge of financial destitution.
My employer’s health policy indicates I never have to pay more than $4,000 in deductibles for care in any given year. But it also has a $1,000,000 lifetime MAXIMUM payout benefit.
As I think about this, and imagine if my father had lived a few weeks longer and had my health plan, my mother might be wiped out, or at least would be facing $300-400,000 in bills on top of losing her husband.
Until I have enough assets to mitigate this type of risk, I don’t think I will be able to consider myself truly wealthy, because I associate that term with a level of psychological peace of mind that allows me to wholly remove certain types of risk from my life. Will I consider myself blessed, well-off, and look to give to others and worthy causes along the way? Yes! I do so now.
Rich, to me, is having the option NOT to work, and maintain an acceptable lifestyle. Obviously, this is different for everyone, and unfortunately, I’m not there…yet.
“In your other endeavor to Get Fit Slowly, do you have the same issues there? I mean, do you still feel fat and unhealthy when you are getting very healthy and thin?”
Can’t speak for JD, but I know this is true of me. A couple of years ago, I lost about 20 pounds. Now I’m a size four, but I still feel heavier. I take clothes into the dressing room that are two sizes too big, only to realize that I’m smaller than I think. When people say I’m thin, it seems like they’re talking about someone else. I told my husband I wanted abs like the girl on the cover of Women’s Health, and he just looked at me funny and said I DID have abs like that. It’s not that I’m horribly unhappy with myself, but I definitely don’t always see what others see.
As far as finances, growing up, we always had a house, one and then two cars, clothes, food, and I got a lot of extras not all kids had, but my mom would always say she was “tired of being poor.” I grew up thinking we were poor, and while we weren’t fantastically rich, we were by no means poor. As I grew older and learned how wealthy most Americans are in comparision to the rest of the world, I had a big mindshift that has made me very content with what I have, and actually more motivated to let go of consumerism and Stuff.
According to my old college professor, “Rich is being able to fly to Paris for lunch on a whim.” I’m not there yet…
I’m sure compared to the world, I’m rich. We live in a single-family house on almost 3 acres, we have all the food and ingredients we need, we have clothes and two cars, we have a 401K and our Roths and bank accounts. The house is the only thing not paid off.
On the other hand, I don’t feel rich per se because of my mindset. I don’t feel financially secure. In truth, I’m not better off than my parents, but also in truth, that’s because both my parents worked pretty high powered jobs and I quit to stay home with my children.
There’s probably not much rational explanation, I just don’t feel secure…but I am working to get there.
Great discussion so far, everyone.
I want to point out that I do not condemn the rich. But many people do have negative feelings about them. (Conversely, many people have negative feels about the poor, too.)
I agree with what many have said: wealth and being ‘rich’ are relative. The same is true with poverty. There’s no question that my family was poor when I was a boy, but were we as poor as Sabino’s family? Does such a distinction matter?
I know people from all across the economic spectrum. Some are clearly wealthy/rich, but I don’t think even they would self-identify as such. I wonder if “being rich” is always something that somebody else is, and not us. I wonder if it’s a moving target.
An excerpt from a post at http://www.ViolentAcres.com says it all for me:
“How would I define rich? Let’s look at two examples:
A friend of mine spent 8 years investing his money. His portfolio yields him around 42 grand a year. In some areas that’s chump change; but in his area that’s comfortable. He works maybe 3 or 4 hours a week balancing his numbers, making bank deposits, phone calls, (that’s sort of thing) poolside with a corona in his hand. If he wants to go skiing in Colorado for a few months, he goes. If he wants a newer car, he pays cash. If he wants to spend his morning loafing around his house in a pair of slippers, he does. He lives his life with minimal time constraints, almost zero stress, and he works as often or as little as he wants. He’s happy, calm, and comfortable. He’s rich.
Another friend of mine has a combined household income with her husband of over 450 thousand a year. They are in debt up to their eyeballs after blowing all their money on obnoxious status symbols. Between their mortgage, private school tuition for the kids, country club memberships, and other living expenses, they are just barely keeping their heads above water. It is not uncommon for them to be dead broke by the end of the month and they’ve even had to borrow money from their parents a couple of times when things got really bad. My friend has to work 60 hours and week and barely ever sees her children. She is being treated for depression and sometimes complains that the stress is so bad that she often has panic attacks. She’s poor.
Do you see where I’m going with this? It’s not the dollar amount that makes you wealthy. It’s the time you have to put forth to make yourself personally comfortable. Personal comfort varies for everyone, but I would say that a person who spends 1 hour a week to be comfortable is richer than the person who spends 70. Whether takes you 25K a year to be comfortable or 200K is moot. Time is the only tangible luxury.”
The full post is here: http://www.violentacres.com/archives/48/four-rookie-mistakes-people-make-that-keep-them-poor
Rich means having options. Make 100k are year, but you have 120k in dept. You make a lot of money, but have few options. If you make 50k a year but have no debt. You have a lot of options. You can take 5k and go on a vacation and not worry about it for example.
That is freedom – the option to do whatever you want, even if you choose not to do it. That is being rich to me.
Thanks for this timely post. I think it’s easy to forget, given the bad news on the economy day after day, that being “rich” is to some extent a state of mind. That’s not to diminish the very real suffering of a family who has just lost their home.
But a friend of mine who just came back from a visit to Rwanda recently reminded me how relative wealth is. She took gifts to the family that was hosting her there. The gifts? Hair scrunchies and a vegetable peeler, both of which they considered luxuries.
Wow, interesting and scary comment, Visitor.
Tzctlpc, I’m going to have to disagree. What you’ve defined in your comment is wealthy: having so much money that it doesn’t matter how one spends it, because it’d be almost impossible to run out. Rich, on the other hand, is different and much more intangible, but I think Dally is on the right track.
Her post gets at something fairly intrinsic about being rich: it’s more about a state of mind than the number of digits on a statement (though yes, excess money is required to be rich). Rich people have the will power to save up cash for short-term emergencies and long-term goals. They have the will power to get out and stay out of debt, rather than let it run their lives. Rich people have the discipline to save up so that they can change jobs if they want to or need to. And finally, rich people recognize that they in fact are rich, and are generous with their money, sharing it with their friends/family and with charities.
I think of the divide between wealthy and rich in the context of the novella A Christmas Carol. Literally overnight, Scrooge goes from wealthy – having enough money that he should have no earthly concerns – to being rich – recognizing the value of his wealth both to him and to his community. Cheesy, I know, but I think it’s a good distinction between the two.
To me, being rich is having freedom. I’d count wealth not in $ terms but in the liberty to do the projects that I want to do and have the feeling of security knowing that my family is taken care of.
For everyone this will be different, there will always be someone richer than you, and if you wanted to, you could spend your whole life in the pursuit of material items.
Wealth is not $, it’s the freedom to live your life as you choose and being content with what you have.
Doesn’t mean that I don’t still desire a Porsche (or JD’s Cooper), but it does mean that even if I don’t get the Porsche I’m content with what I have.
I read somewhere that being rich is when small efforts yield large rewards, and being poor is when large efforts yield small rewards.
I like that definition. It serves me well. As I go forward in my financial journey I am mindful of my balance of effort and reward and try to improve on it whenever I can.
One of the most interesting things about your post, J.D., and the comments so far is the sharp difference between the internal sense of wealth, and the external measures of wealth.
There aren’t a lot of people who can fly to Paris for lunch on a whim — but there are a lot of people who are able to feel a sense of satisfaction and security without ever having to meet that standard.
If we must have an objective measure, I agree with Gunnar Tveiten (post #19), who noted that the truly rich own assets (beyond a traditional paycheck) that allow them to build more assets.
I just e-mailed my husband and asked him to read this post, stat, because we already agree about our goals, but we’ve never discussed what would make us FEEL rich.
Thanks for the thought-provoking questions.
I think that only in this country someone can have money in the bank, a home and food on the table and not feel rich. Interesting.
“Rich” is in your head.
If your monetary situation has a large impact on your daily life, then you’re not rich. “Rich” means freedom from monetary oppression. With those two definitions juxtaposed, it’s clear that actually it’s all in your head (well, 86% in your head, because we’re not perfect zen folk and we have to eat). People with lots of money who find that it controls their life are less rich than people with very little money whom are not influenced by that fact. How much control money has over you is very much a head game.
I agree with Andy’s post. There isn’t a specific amount of money that makes someone rich, it is their ability to use their income for the best possible outcome.
J.D. – great post. It’s this kind of post that makes me want to be first in line when you publish your first book.
In perhaps an unintentional way, Tzctlpc hit upon something important: “Can you … buy whatever you fancy …?”
That’s just it. I feel so rich, in part because, for the most part, yes, I can buy whatever I fancy. However, when I walk into a store, there’s not that much that I fancy in the first place. I’m quite content with what we have. We also have enough to give to others. My husband has a job he likes, and makes enough that I can stay home with our son. We have no debt. We are renting a decent little place for dirt cheap, and spend very little on gas because it’s so conveniently located. Yeah, I’d say that, for our current stage in life, we’re rich.
On the other hand, there’s that part of me that feels poor because we don’t own a house yet. There’s also some nameless thing in me that just doesn’t, and maybe won’t ever, feel rich no matter what. As another commenter described, I too grew up with a mom who talked about being poor when we had a house, two cars, etc. But my mom grew up under Japanese-occupied Korea, then was a Korean war refugee, so what JD said in the article makes a lot of sense. I don’t think she ever got over that haunting feeling of being poor, or the fear of being poor, even though my parents now live a very upper-middle class lifestyle.
What’s odd to me, though, is that my dad grew up in Korea at the same time, under similar circumstances (though he doesn’t talk about it much), and he’s quite different. He’s very content. He wouldn’t say he’s rich, either, but neither does he seem to have “poor” as such an ingrained part of his identity like my mom does.
This discussion is conflating two different words: wealth and prosperity. There are wealthy people who feel like they never have enough, and are driven to insanity by seeking more and more. They are not prosperous, no matter how much money they have.
Then there are poor people who always feel like they have enough to meet their needs, and a bit more. They are prosperous.
This was a doctrine I first encountered in LA in the 1980s, from New Age televangelist Terry Cole Whittaker. She was very popular in New Age circles, and released a popular bumper sticker that said “Prosperity is your divine right!” Of course people totally misunderstood the message, it was equated with “Greed is Good” and was used as justification for the selfish Yuppie era of the 80s.
I can totally relate to this. My husband and I were both raised in poverty, and even though we’re successful and “comfortable” now, I don’t feel rich. I guess everyone’s standards are different. I’m sure many people would consider us rich based on our net worth and our possessions. But I think of rich as in the “independently wealthy” category with diamonds and yachts and a butler or something.
I completely agree with the statement:
“Time is the only tangible luxury”
If you can do what “you” want, when “you” want then you are rich.
It has nothing to do with dollar amounts as many folks could be extremely happy on the $42K described above. (Especially if they have no debts).
Good question and one that we struggle with. We’ve spent the last two years so focused on our personal finances that we’ve trained ourselves to think we are poor.
Mr. Sam regularly states that he’s the richest poor person he knows. Why does he feel poor when we have no debt besides our mortgage, when we have $20,000 in emergency fund, when we are maxing out our 401ks abd IRAs and saving for other goals, when we also receive rental income from our investment properties?
I think because he and I both have to stop and think before we make any purchase, we have to discuss and agree to any purchase over $300, we don’t keep much money in our checking account, we don’t use credit cards, etc. Because each purchase, each bill paid, each financial move is discussed and debated and planned for we spend more time engaged in our finances and restricting our spending it feels like we have no money (more so for Mr. Sam because I manage our money and move most of it to ING or Fidelity). Because he can’t see our savings and can only see what is in his checking our our joint checking he feels like he has no money (this is part of my plan).
I’ve come to recognize that I need to loosen up a bit so that Mr. Sam doesn’t feel so poor. He needs to have more money in his account so he has a bit more comfort and freedom.
Ouch JD you are making my head hurt. Good post.
I agree with a lot of what’s been said here. I don’t feel rich, because we do worry about money, how we make it, and how we spend it. I feel safe, and we are able to make a lot of conscious choices about how we live without money being the most important factor.
On the other hand, I logically know that even after the recent stock free-fall, we’re in the top 15% of Americans in terms of net worth and income. And that puts us in something like the top 1% of the world’s population. If we aren’t rich, we’re very, very comfortable. Hunger and homelessness are not worries for us. We have more choices and freedom, because we have savings and no debt.
Maybe someday we will be rich beyond our conceivable needs, but it isn’t an active goal. DH and I have long joked about having the “our-combined-last-names” Foundation when we get older, and making enormous contributions to our favorite causes.
We define rich on many different levels (social, economic, spiritual). I have come to define rich as the point in your life when you are uninhibeted. When your access to the outer world is equal to your inner desires. Example: I am sure you, JD, as a writer have had bursts of creative energy. Yet, your economic needs required you to suppress that and head to the box factory. The day you woke up with a desire to write, and had the freedom to write all day because you were not “required” to go to work for someone else…..That was the day you became rich.
Be Well
To me, being rich is being able to do what you want — what you love — without much thought as to the costs involved.
That is, if you can make enough money blogging to live the life you want to live, and not worry much about money, then you are rich.
If you have to get up every morning and go to a job you hate, even if you make a ton of money, you are not rich… in my opinion.
Being rich is liberty. In theory, the closer you are to wealth the less you have to say to yourself “I have to do this”.
@36 ““Rich” means freedom from monetary oppression”
One is never free from monetary oppression if you live in an interconnected society. Image the heartache the supposed rich must of felt when their investment accounts dropped 20-30% this year? Further, what about the fact that they HAVE to be aware where there money is because they can’t just put in a bank.
As most people gain wealth their networks increase and that result in ever greater social obligations. As you make more people expect more of you. One has to be a special type person to delicately deal with all the new obligations that a 50k vs. 15k salary brings. At 15k no one judges you if you can’t afford to go to a wedding, or at least no rational person would. But as your income quadruples some excuses just don’t work. To go to 5 wedding in a year with a significant other costs easily over 1k. If you have a large network that only gets amplified. Add in to this the important birthdays 21, 25, 30, 40, 50 combined with big anniversaries parties for 10, 25. You have tons of parties. And you can’t just say that I do not consider spending 200 on 3 hours acceptable. It isn’t the people can’t afford those obligations, but it isn’t how they want to spend their money, so the only alternative is to weasel and lie and to miss some events of your friends that you truly want to go to but feel are worth the price tag.
This kind of content juggling that most middle class to upper class people is a monetary type of oppression. I can only assume it amplifies with wealth.
I suspect a lot of people do not realize how many sacrifices they have to make to become financially independent. It may very be that the social obstacles to independence are far greater than the financials.
Lastly, the post about the guy who makes 42k a year and chills out 24/7, for most people they would want more out of life than constant joy. Relationships are hard and rewarding. Most people want to have interaction with people, but at times if you climb too fast or become too different the things that bind you to your friends collapse and you become alone.
Steep price to pay…..
-ThatGuy
You can be rich financially but poor in many other areas. Money can be in your wallet but you can be lacking in many other areas- which in turn make the money in your wallet seem unimportant. Harmony in Spirtual, Relational, Financial, Mental are all important or that money you seemly have will either not matter or will be taken away.
http://www.101WaystoMagnetizeMoney.com
Christine Groth
Good topic to discuss!
Rich can be defining in many ways, it cannot be just judging by how much you earn or how much you have.
Different people may have different definitions of rich. But it all comes under a same principle — “Are you complacency with what you have now?”
In the Buddhism way of being rich, it is complacency.
If you complacence with what you have now, then you will feel that you are rich.
In the general view, living with no debt, no mortgage, no financial worries, enough saving plus enjoyable lifestyle can be consider as rich. Anyway it still depend country.
With my earning, I may be rich in my country (Malaysia). But, if I living in US with my current earning I may not consider as rich. So, am I rich?? Haha! I got no answer…
Ally Chan
http://www.allychan.com
I have a entry level engineering job paying $50k-ish a year. I just bought a house, below median price here in Baton Rouge but very cute and in a nice neighborhood.
Most of my family make less than $20k combined income per year. They also live in houses forever (never switch, never move) and use things until they break.
They all think I’m rolling in the money.
What a great conversation and a lovely way to start thinking this morning.
Dally, Matt Ranlett, EscapeVelocity, trb, Craig, Visitor and Andy have spoken eloquently and completely capture my ideas about wealth, prosperity and the concept of rich. Thanks for taking the time to spell it out.
I constantly need to remind myself I am rich, although my boyfriend and I bounce back and forth between the second and third tax brackets. We both make more than my father, and although we do not own (yet), we owe much less than other’s who many own their home (mortgage not included, I am just referring to consumer/credit card debt), including our own parents. As we continue to pay down our credit cards and save for an emergency fund, I fluctuate between feeling financially comfortable and constantly playing catch-up. Unfortunately, there is such a focus in the US on owning “stuff” that I battle internally when I am at my friends house who have the huge plasma TV and every gaming system ever, a BMW, etc. Then I remind myself that I have saved much more, and they are struggling to make minimum payments some months, and how I never hope to be in that position again (I admit, I still have debt, but due to the SNOWBALL method, I am blowing my own debt payback goals out of the water!)
This website has a great little “richness calculator”. http://www.globalrichlist.org
It obviously does not take into account the pressure we feel here to buy stuff and have a big house, but it reminds me that stuff doesn’t matter. I am lucky enough to have food and shelter.
I think being rich is achieving the ability of consistently saving more than is spent each and every month, and then making what is saved work for you. And only then, if you are completely able to live only off the interest generated, are you truly rich. If you get into financial trouble like some of these rock stars or sports athletes by purchasing a house(s) that costs too much to maintain and support, eventually going bankrupt, then your not rich. Rich is only a portrayal of what you think it is anyway…the Lexus, BMW, Mercedes commercials showing late-30s early-40s people w/ a family driving the product should certainly NOT be considered rich.
I wrote this in my journal two years ago:
“My idea of rich would be having loads of money in the bank, top-notch quality versions of the stuff I really want/need, lots of traveling to places and shows I really want to see, my dream home, a good insurance, and always, always having the power to choose how to get something because I can easily afford it either way. The rest is sand.”
I like Van Tharp’s definition of being wealthy:
To earn enough through passive investments so that you never HAVE to go to work.
“Rich”
What an interesting word? I think that the concept of being rich is solely in the eyes of the beholder. It changes throughout life. When I was a kid, I lived on base across the street from a corner store. It was called “Mini-Mart”. If I were to ever be so lucky to find a penny, so that I could buy a Tootsie-Roll from the Mini Mart, I was the richest kid in the world (through my eyes). I’ve grown quite a bit since then, but the concept is still the same. I am rich, if and only if I think that I am.
You drove this point home here.
Caleb
http://www.mefinanciallyfree.blogspot.com
you are definitely rich JD.. you’ve bounced back from that 30k debt to having 10k in emergency funds
more importantly.. you have your health and you’re wife with you!
i think we’ve all learned a lot about personal finance w/ the knowledge on this site over the past year or two
Ouch! Identity crisis…. gotta hurt.
What does it mean to be rich? To me it means that all my business and investment income is above my expenses.
Rich means having the freedom of time because you have enough income flowing your way so that you don’t have to commit a large part of your day to earn it. Yet at the end of the day rich people do have to work to maintain their status and net worth..
I agree that being Rich means not having to work to support yourself. While I am far from there yet I know I will be someday.
Sam – It is the same at our house. I put a lot of our $ away for the future and this does make us feel more “poor” than others at the same income level. I think this “poor” state of mind helps us not overspend. It is definately a balance though (which with a “saver” and a “spender” is re-negotiated regularly). I am happy feeling more “poor” today knowing that I am going to have a “rich” tomorrow.
If my wife and I wanted to go to Paris for lunch, we can afford it. But if we did it more than occasionally, we would have to scrimp on things that are important.
This is making my head hurt!
It’s not just in the US that people emphasise their hard upbringings. It’s common – though possibly to a lesser extent – in England, where social class is still an important defining characteristic.
In many ways, I’m not rich because I cannot afford the mid middle-class life that I *should* have based on my job status and educational background. Really, that doesn’t matter too much because I think you’re rich when you don’t have to work for a living. That’s what I’ve always understood getting rich slowly to be about.
As JD mentioned before, sometimes rich people don’t *feel* rich because at one time they were less fortunate. Comparably, I’ve certainly never felt beautiful because I used to be a gawky nerd with frizzy hair, glasses and crooked teeth. Now that I have braces, contacts and amazing hair products, people tell me that I’m beautiful. I never truly believe it because I see the girl I used to be, not who I am now.
So now that you *are* rich or beautiful, not only do you not realize/understand that it’s true, but you almost don’t want it to be true. You don’t want to be associated with all those negative stereotypes. I have friends from wealthy families who would try to hide that fact because they don’t want to be judged based on money.
In my opinion, the most wealthy and beautiful people are the ones that, basically, don’t realize it. If you don’t realize it, it can’t get to your head and affect who you really are. They’re the people that are giving and radiate kindness and loyalty. They’re the people that we all strive to become.
I agree that rich is a state of mind.
I have enough. I don’t live lavishly. Most, if not all, the people I’m close to thinks it’s weird I give 10% to charity, live in a small place, and that my place is furnished with almost all handmedown or used furniture. I explain I dont need much to be happy. I dont mind material things, they just don’t make me happy. I suppose I should have a good sized house and new furniture so that it is obvious I’m well off enough to be acceptable.
I feel rich when I have a full tank of gas and a week’s worth of groceries in the kitchen.
I am not rich however and probably never will be. My parents are “rich” – at least they were until this last month – but that is only because they don’t spend money.
I can feel rich but not be rich. Rich to me would be never working again for pay if I chose and being able to live the life I want without a thought to cost. Except for travel and giving, I could live comfortably on $35-40k net a year. Even less really, since my house would be paid for and I’d have no debt. Maybe $30k?
I dont mind rich ppl as long as they earned it themselves. I have worked for and been friends with too many rich families who did not earn it – their contempt for the ‘have-nots’ was clear and their work ethic sucked. (this is speaking in generalities). They key in this stereotype was in whether they *earned* it. I have several wealthy clients; the only family who treats me with respect earn their fortune. The ones who had it handed to them treat me with veiled contempt – esp. when they would see me drive up in my two tone beater of a car.
I feel rich pretty often, even though we’re not rolling in money. We have a home, reliable cars to drive to work, jobs we like and that pay pretty well, and family and friends. We have two wonderful, healthy children. We have retirement accounts and a 529 fund started.
Our cars are old, our house is small, we’re working on paying off debt, and 25% of our take-home pay goes to child care. But our life is rich and will only get richer.
I’ll consider myself financially rich when I’ve got enough savings to cover my retirement, my parents’ healthcare, my kids’ college, and my med school debt; plus an income that will cover a modest lifestyle plus a couple vacations a year.
Am I there yet? Not even close. But I have my health, terrific people in my life, and the potential to achieve all that I listed above. The intangibles are what really affect whether you are rich or not, and I try not to lose sight of that.
Are two people with equal $100,000/year incomes rich? ” ……no
I never go by one’s income, only by their assets and cash on hand.
Rich is how much you save and invest not earn
I think in order for most folks to “feel rich”, it requires a level of income that you can purchase anything you want without considering the cost — a “wow, they just bought their own private jet and a million dollar mansion without thinking about it”. This may also contribute to what sends many folks into debt — an attempt to mimic the rich by buying things regardless of cost. However, the non-rich *do* need to consider the cost, because they’re paying from debt, not from surplus. Our household is likely in the top 99% of the world’s wealthy, but we still clip coupons, price-compare, and weigh cost-vs-benefit.
Being rich means that I don’t have to work to support myself, have absolutely no debt whatsoever, and have enough income to sustain a comfortable lifestyle without having to worry about the long term future.
I’m not sure when or if I’ll get there, but that’s okay. I don’t need to be rich to be happy.
Being Rich is relative, it’s different for everyone but in my mind, the definition is the same. Rich means that you have enough resources that you could stop working and would still be able to accomplish all of the things in your life that you want to accomplish.
It’s relative because the things people want to accomplish are different for everyone, cost different amounts and therefore require different resources. For example, if someone’s life goal is to climb the highest mountain on every continent, their requirements will be higher than the person whose life goal is to eat the world’s largest hamburger.
A couple of things to consider:
I never thought I was rich when I was a kid. Quite the contrary! My dad was a factory worker for a (currently beleaguered) car company; my mom stayed at home with us until I was a sophomore in high school. We always had computer equipment because that was my dad’s hobby (that he ran up thousands on the credit card for, but that’s another story) and hand-me-downs were readily available. But I never, ever had any sort of popular clothing (garage sales, thrift stores, or Kmart – take your pick) … we didn’t have the expensive Stuff other kids had … and since my dad worked nights and we didn’t get the second car until my mom started working, extracurricular involvement was nigh unto nonexistent for us. I felt isolated and different, at least in part because of the economic difference there. Mostly because of other things.
But we never went without food, never were in danger of losing the house – and other than my mom turning up her nose at some of the things I might have liked to have or do, I never had any sense of the financial difficulties they had. (Well, there were the times when they’d have fights and my dad would say, “I should just quit my job – that’ll fix you!” But that’s hardly descriptive of any economic problem.) My parents even made sure I never had to go into debt for my college education.
Since leaving home, I’ve gone through some very lean times. I’ve lived with a friend in subsidized housing, lived paycheck-to-paycheck, borrowed money from my parents at times. Since grad school and finding a steady job, things have settled out. It’s interesting, though – I still think like I’m poor. It takes a lot of work for me to realize how I’d like to spend my money because I just assume I can’t have it anyway, if I want to be responsible.
The other interesting thing: when my husband (who makes about a third more than me) and I started looking at each other’s finances, he was shocked at how much I was willing to give to charity on my income. It didn’t make me feel rich, but it did help me feel like I was using my resources (which ARE greater than those available to most of the world) to help others, at least a little. It’s easier to justify helping the poor children than buying a new sofa. At least in terms of my guilt complex. 🙂
1. The rich don’t have to work (although most of them do something with their days) for their income. Many clients own enough assets (bonds/stocks/partnership interests, rental properties, etc.) to produce enough income each year (in the millions, usually) so that they spend/do what they want without really thinking. (A $200,000 bar mitzvah? Not unheard of. Spending $19,000 for one month of landscaping at the vacation house? Not unheard of either. Having 5 full time household employees at approximately $300,000 total in annual salaries? Yep, that too.)
2. The rich/wealthy use debt, but to their advantage. They have mortgage debt to receive the tax break, then use the funds to invest and generate a larger return than the mortgage interest. A client recently had a $3 million margin loan to purchase an investment, which generated a larger return than the loan cost.
3. Most rich/wealthy do give to charitable causes, although some more than others. However, it’s usually a smaller percentage of their total annual income than what most “middle-class” folks give to charity, believe it or not.
A few more observations:
1. Even the very rich/wealthy can go broke (and certainly have!) if they continuously spend more than they make, so at some level they still need to worry about spending too much.
2. For everyone, everywhere, there will always be someone with more, and someone with less … so whether a person “feels” rich or not has more to do with one’s attitude and perspective than it does with actual numbers. The wealthy are notorious for their need to “keep up with the Joneses”. One client – already in retirement! – was worried that her $50 million wasn’t going to be enough to last her lifetime.
A discussion I would personally like to see on this blog is: Why would someone WANT to be “rich”???
Sounds like a dumb question, but I can honestly say that – after years of working for “rich/wealthy” folks – that they are certainly no happier than us non-rich, ordinary folks. They have more “stuff” and certainly can travel, party it up when they want, but honestly – their lives in general are not collectively HAPPIER than ours! (← and this has been repeatedly proven by statistical studies, although I don’t have a reference to submit at this time.)
Me, well I’m doing quite well, and I don’t make even close to a six-figure income yet (let alone, $250k!), but my perspective is different because I grew up rather working-class, and now I have all that I need and a family that loves me, and no debt except my mortgage.
I’m not sure I feel FINANCIALLY rich, but rather I have a very rich life.
To me, your situation, JD, is that of a financially secure person. In my mind, being “rich” entails having the option of quitting work, which you don’t.
Who is rich? By my definition: Warren Buffett, Bill Gates, etc. Because, even if something devastating happens, they would be able to more than compensate. Everyone else probably could not. Think about it…what if you or your spouse have a medical emergency? What if your townhouse catches fire & destroys all the townhouses connected to it? What if something happens on your property & you are sued? Do you really have the finances to pay for any of these things & still be ok? My guess is no, for 96% of people. This is why I’ll never consider myself financially rich. There are too many what-if’s and just too much that can happen that is completely out of my hands.
I do agree with one poster: being rich is a moving target for everyone & will change as your opinions change. Does the newly-graduated 23 year-old think he is rich if he is finally getting a paycheck but has no retirement savings? Of course he will. Will a 45 year-old have the same opinion if he is in the same situation? Not at all. As your priorities and needs/wants change over time, so will your definition of what it means to you to be rich.
However, my one definition of rich: being able to pursue the job that I want (involving being self-employed) without having to worry about bills being paid. That is my dream right now & would be wonderful. I’m actually quite jealous of those people (including you, J.D.) who are self-employed doing something that they LOVE and make enough money to support their part of the household.
Not only would I never consider myself financially rich, but I would never want to. I know people who are well-off, and their sense of money is a bit removed from reality, to put it nicely.
One other point…I grew up in a family where I thought my father did not make much money, and I don’t think he did. He worked in a manufacturing plant as an hourly employee and would never take promotions (he didn’t want to be next on the chopping block). However, he was able to put me through a four-year public state university without anyone having to take out a loan. And even after two divorces, at age 66 (next year) he will be able to completely retire. So, my father was “richer” than I thought he was. However, his entire life, he has been very, VERY thrifty (miserly almost) and has not (in my opinion) really enjoyed life. Maybe he feels differently. If he was “wealthy”, was he really rich? Being thrifty & saving money are fine, but being so thrifty that you won’t even enjoy some of your money (if you’re not in debt) is NOT being rich, in my opinion because you are not letting yourself live your life. “Life is a journey to be lived, not a problem to be solved.”
Also, being rich is not just about money. What is the point of having money if you have no true friends? What if your health is bad? All of these things contribute to being rich.
For us, being rich means we have enough financial resources to meet our basic needs, and a few wants. We are able to provide for our children. We are able to labor in the work we love, and are free of the burdens of debt. We are able to give to others to improve their quality of life. That is a rich life.
To be rich is, in my mind, to have enough not not be in need for food, clothing, ect, have enough to be generous and to share with those around you. Part of being “rich” is just being content with such things as you have. I think that once you have enough, you should be generous with those around you. If you are selfish, you ruin the joy and peace of plenty. Then worry and anxiety set in. I’d rather have enough and be happy than an abundance and be worried.
JD, you’ve asked a spiritual question on a personal finance blog … I’m not going to offer my answer as to what it means to be rich, but I will suggest to you that if you still feel an absence, a sense of lack, a feeling that material security alone is not the answer, then I would investigate the spiritual realms, realms that I used to consider outlandish and stupid … but not anymore. And I’m not talking about religion or theology, but rather personal spiritual awakening and the expansion of awareness, the very things that make us human. The spiritual realm just may hold the answer to your question regarding the richness you crave. To anyone who has found a great level of material success but then found that it did not satisfy, I would recommend the following books:
The Power of Now by Eckhart Tolle
The Way of the Peaceful Warrior by Dan Millman
Miracle of Mindfulness by Thich Nhat Hanh
Zen Mind, Beginner’s Mind by Shunryu Suzuki
The Essential Gandhi by Mahatma Gandhi
Cutting through Spiritual Materialism by Chogyam Trungpa
We’ve had many great discussions at Get Rich Slowly in the past; you folks always have intelligent, interesting comments.
But I think this is actually one of my favorites. I’m not getting any work done. Instead, I’m just reading all of the comments as they come in. (I never do that — too distracting!)
I’ve also been thinking about how lucky I really am to do something I love for a living. If I had to pick a job, this would be it. It’s most certainly work (I think many people view blogging as Not Work, but for me it’s more work than making boxes!), but it’s work I love.
Still, as some of you have pointed out, even I would rather NOT have to work, even if the work is writing. I’d rather be in southwest England, walking among the hedgerows. I’d rather be on a beach somewhere, reading Proust. I’d rather spend all my time with family and friends.
But if I have to work, I’m glad to be able to do this. That makes me rich enough for now.
Being rich is being able to afford what you want, when you want it. It means going to work because you want to and not beause you have to. It means, being able to smile when the Dow drops 20%, because you are still rich. However, without good friends, family and health, being rich is meaningless.
Hmmmmm? Who do you think donates time and MONEY to cancer research, the aids epidemic, breast cancer awareness and on and on and on. Poor people?
Statistically? Yes… poor people donate a higher percentage of their income to charity than the rich: “The 2000 Social Capital Community Benchmark Survey shows that households with incomes below $20,000 gave a higher percentage of their earnings to charity than did any other income group: 4.6 percent, on average. As income increased, the percentage given away declined: Households earning between $50,000 and $100,000 donated 2.5 percent or less. Only at high income levels did the percentage begin to rise again: For households with incomes over $100,000, the number was 3.1 percent.”
http://www.portfolio.com/news-markets/national-news/portfolio/2008/02/19/Poor-Give-More-to-Charity
I’ve been pondering this question too. I’ve got a short series on my blog wondering what exactly wealth is. Check it out at http://socalsavvy.blogspot.com/search/label/Wealth
Rich = Freedom
Diogenes the Dog of Ancient Greece was rich though he only had the clothes on his back, sandals on his feet, and a cup to drink water from the river. When he saw a dog simply lapping up water with his tongue, he threw away his cup and chose to kneel down to the river for a drink. For him, what he had was enough because that’s all he needed to be happy. Right now I live the life of a monk compared to my prior luxurious spending habits when I had a six-figure income. I gave it up to blog full time and I am so free it’s mindblowing — so I feel very rich indeed! I feel as if I’m living in a dream and if I suddenly woke up from this to have my old life back with all its luxuries, I’d scream and fall into a deep depression! ; )
Keeping this strictly to a monetary issue (which is a fairly simplistic way of looking at it in my view as it networth), there are two dimensions.
The rich and poor scale defines how much money you spend. For a company think of the income sheet.
The wealthy and broke scale defines how much money you can spend relative to your spending. For a company think of the balance sheet.
Under those definitions I’m poor but wealthy. I seriously have no intention of getting rich as spending money means that I have failed to provide utility by more ingeniuos means. More wealth never hurts though 🙂
I’m with (several) of the above posters.
To be Rich is to have the Freedom to choose what you want.
I’ve had several moments in my life. Look forward to a few more by keeping up with my Get Rich Slowly reading.
-Jim
This is so interesting. I think in a lot of ways, our money emotions are set early on. For instance, I was raised in a single parent home, and my mom always actively included me in the running of house, so I was very aware of being frugal (although never in a stressed out way – she made it more like a game). I’m still very frugal and I will probably never think of myself as rich, even though I do well. My goal really isn’t to be rich, it’s just to be secure. My younger sister, on the other hand, was raised in a different environment. My mom re-married and we had way more money than before. My sister is not frugal and still feels entitled to money that she doesn’t have. I would be interested to hear from people who were raised rich, to see what emotions they associate with money.
I dislike the label because of class warfare. The rich are those people dripping with diamonds and jet setting to Paris. When if you look at people who fit into that income level (making >$250k) there is a lot more grey area. There are many small businesses and other middle class type people who fit into that “rich” category. Just read “The Millionaire Next Door” to find out how the majority of these people actually live. So we are angry and jealous and want to stick it to the rich when it sometimes come back to bite us in our collective butts.
I think a big disconnect is the difference between wealth and income: If one HAS money vs one MAKING money. A rich person to me has wealth that generates high income (giving them freedome yada yada, but that’s not my point). But when politicians raise taxes they hit people with high INCOME, who may have no wealth. And once again hitting people like small businesses who need that capital to facilitate growth more than line their own pockets.
I would also like to say that reading these posts many of us will never feel rich because we will never not pay attention to what we spend. Even if I had millions of dollars I would never be able to not care what I’m spending. Money has value to me and wasting it insults that value. I might have more of it to spend but I would probably still drive a used car and live in a modest house (like most millionaires in this country, once again see “The Millionaire Next Door”). If I made $500k per year I would still have a budget. It would be much larger than my current budget, but I would still make sure I had enough $ in the ‘car fund’ before I bought a new car.
Regarding how rich I ‘feel’: sometimes I panic because I have an expense I didn’t count on and don’t have immediate cash for (for example my dog recently had a $500 emergency room visit). That isn’t to say I don’t have the money for it. I have $2000 sitting in my ’emergency fund’, but I only had $75 in the ‘vet fund’. I felt very poor. This week my annual bonus comes through and I will feel rich for a day and a half, and then the money will be transferred to whatever account my husband and I already decided it would go to. Then I’ll feel poor because being dilligent with your money and feeling like it’s spent before you get it (even if it’s spent on your saving account) will do that. Your emotional feeling of rich and poor is often dependent on how much money you feel you can waste, and a responsible person shouldn’t waste much.
The terms “rich” and “poor” mean very little to me because I’m still single. My “rich” lifestyle doesn’t involve a lot of money, it involves a husband, a home and a couple of children. Like many single people, I’m in a no-man’s land of sorts until I have a partner.
My married friends, who individually earn what I do, can afford homes, children and to travel because they have two incomes. I consider them rich even though they don’t have a lot of money because they “have it all”.
I am in exactly the same situation as Sam (#43) right down to the struggle to loosen the purse strings. Since I grew up in a barely middle-class family, I realize that we are far better off than my parents but I still have a difficult time spending on myself.
To be rich means not having to work.
Or maybe only having to work 4 hours a day, 4 days a week and still afford healthcare, bills, healthy food, entertainment, and some travel.
It seems to me the concept of “rich” is really about feeling in control of your life now and in the future. I am very much a control freak and used to feel constant fear about not having enough. But now, many years later, I know I’ll never have enough to retire early, so I’m changing my profession to something I love and can do past retirement age. I also want to hop around the Greek Isles, so instead of continuing to talk about it, I’ve resolved that next paycheck (Thursday) I’ll open a ING account specifically for this vacation and put $50 bucks a month and any extra money toward it. When it gets to where I think is a reasonable amount, I’ll GO!
Meanwhile, I’m aggressively saving for short- and long-term but don’t pay much attention to the balances anymore because even during my poorest times, I was always taken care of. I never starved, I never slept on the streets, so I have a kind of faith that life will provide for me. In short, the way I feel in control is by meeting life halfway by saving and living below my means. Sometimes I feel that old insecurity, especially when I make big purchases, but my days of trying to alter reality through fear and stress are over, thank goodness.
rich means you are content and happy. money is a medium for exchange of goods and services, not something to define and live your life.
For me, even though I may not BE rich, I FEEL rich, and that makes all the difference. I have no debt, having paid off college loan, my (used) car, and my credit card (which was never higher than about 5K). I fully funded my Roth IRA for 2007 and 2008, have a good chunk saved toward next year’s contribution, and am finally starting to contribute to a 401K. My husband and I have saved enough for a down payment on a house. Both of us still have to work, but we have time and leisure to do what we want in our off hours. I cook and can and have a vegetable garden not because I have to, the way my parents did when my sister and I were small, but because I choose to. In the end it’s like the song says: it’s not having what you want, but wanting what you’ve got.
We recently paid off our consumer debts.
I don’t know how to define “being rich” as I feel like it is subjective. however I know for certain that at the present time we are not broke.
JD,
Do you owe less than $10,000 on your house? If you still technically have more debt than money, do you still consider yourself rich?
I really this article…to me being rich means being able to have the freedom to quit your job and live within your means and not have to work because you live within your means. This does not mean quit indefinitely but if you were to quit would you still be able to survivor and feel free…then you are truly rich
I had thoughts about this a number of years ago, when I was really struggling. I thought I was poor because I stressed out about money, I carried credit card debt, I had no savings (though I did have a small 401k), I couldn’t always go out with my friends and there was never anything left at the end of the month.
It occurred to me that this is not poor. I had a home, a car, running water, heat, and food. I was in NO danger of being out on the street. I had a ridiculously high credit limit, and even though I had trouble paying the minimums, there was always room for an emergency. I have a well-off family who would never let me go homeless or hungry, or even without a computer! I also have a quality education, which can help limit unemployment risks; I’ve made better than minimum wage ever since I was 20 years old. Having these shelters and cushions from the really tough parts of life, I had no business calling myself poor.
So I felt poor because I didn’t have a lot of cash in my pocket. But the truth was I had everything I really needed, and then some. I was a rich person with a cash flow problem. The situation was temporary and easily remedied.
These days I feel a little bit rich. My paycheck always lasts the month, with large contributions to savings and retirement and no consumer debt. I do have a home mortgage – only one – and I give money and stuff to charity every year. I still make less than $40k a year – not a lot by many standards – and I still can’t buy everything I want, but what I have done is gotten my lifestyle under control. The context is the same – I am rich – but now I can actually feel it a bit.
I suppose the next level of “rich” is having the money for EVERYTHING I want. But the problem with everything is that there’s always more of it. I wouldn’t mind doing a bit better than I am now, but I’m also content where I am and have no complaints. I know I’m rich by world standards, and I intend to enjoy and appreciate it.
To me wealthy or rich means a passive income where your expenses are covered and you’re still well in the black.
If you own a house or a business some people consider that debt yet they are sellable.
A wealthy man told me that wealthy people don’t keep savings accounts because that ties up too much money that could be invested and making money elsewhere. They have more than enough money that they don’t have to save. They allocate. No retirement accounts because again that is money tied up that could be used elsewhere like a business or a property.
It’s all just a bunch of figures on paper.
Recently I’ve learned that I am ‘time wealthy’ but I’m not quite sure how to define that yet!
Certainly the ability to buy stuff is one way to define rich. Probably the most common way to define it. For me it is something else though. For me rich = financial independence. Not financial security. I have financial security – no non-mortgage debt, ample emergency fund, ability to save for most things I want and need, reasonable retirement savings, etc. etc.- but I do not feel rich in the slightest (although I do feel very fortunate).
For me to feel rich I would need to be financially independent. For me this means not having to work anymore. If we were without income (and our income comes from working at a bank so being without an income is a very real possibility in the near future)we would be fine for a number of months. However, prolonged spell of unemployment (6 months or more) would be a disaster. I won’t feel rich as long as that is the case no matter how much money we have coming in.
For me, being rich means being able to make choices in my life not tied to what I do to get a paycheck…
JD, I often have similar thoughts. It is easy to wax philosophical on topics like these, especially when you see major changes in the world economy.
I know that when it comes down to it, I am wealthy compared to 99% of the world’s population. I am extremely grateful for this. I know it is a result of hard work, good decisions, being born in a country where everyone has the same opportunity to succeed, and a lot of blessings along the way.
I’m not what I consider “rich” in terms of financial wealth, but I am very comfortable and very happy with my financial situation. I am rich with blessings in my life, and that is what is important to me.
So many of these comments indicate a total lack of understanding of wealthy people.
Being “rich” does not mean you no longer go to work every day. Most millionaires and billionaires work. They have found their callings and passions, which is how they got rich and why many of them will work until they die. They don’t have a poor mindset of clocking into a miserable job for exactly 40 hours per week.
Being “rich” doesn’t mean you buy a lot of stuff. Lots of rich people don’t buy a lot of stuff — that’s how they got rich, or they don’t care what you think of them (ie, Sam Walton and his old pickup truck), or they have learned that happiness and contentment do not come from accumulating material objects.
Being “rich” does not mean not having to worry about money. Lots of rich people worry about money even if it’s not rational. People can have millions in the bank and still think they are “poor” because they are comparing themselves to people with even more money, because they are greedy, etc.
For me, being rich is partly a mental choice of realizing that I have enough, that my basic needs are met and plenty of my wants are also met, and that I’m living better than 95% of humans around the world.
Practice gratitude and you’ll feel richer.
Money Mag Interview of Jack Bogle:
Question: Vanguard is a not-for-profit company. If you’d organized it differently, you’d be a billionaire today. Any regrets?
Answer: I read this story recently: There’s a big cocktail party on Martha’s Vineyard. Someone comes up to this writer, I think it’s Joseph Heller [author of “Catch-22”], and says, “Joe, see that guy over there? He’s a hedge fund manager, and he made more money yesterday than you made on all the books you have ever published.”
Heller looks over, pauses and says, “Yeah, but I have something he’ll never have: enough.”
And I have enough too.
I define rich as, “how long one can survive maintaining current lifestyle should income stops today”.
A low income but frugal person is likely to be “richer” than a high income person that lives above his/her means.
I agree with comment # 101 – Kristina.
Why are so many people thinking that rich don’t work?! They may not have a boring 8 to 5 job like most of us, but THEY DO WORK ! In fact, I am sure a lot of them work 50-60 hours a week.
This reminds of me of an article I read on Clever Dude blog about appreciating what we have is hard. Majority of the people living in the US are VERY VERY lucky ( no matter poor or rich). People make mistake by just looking at one side ( the better) and comparing themselves with their richer peers. Please look at the other side – the worse side, look at the poor people. Next time you need a reminder how rich are you, look at the under-developed countries and how much average people make there!
I also agree with other readers that without good family, friends and health – the money is no good !
Good discussion and yes, once again JD you did it – 100 + comments !!
I’ll tell you whether I’m rich or not if you tell me in comparison to *whom* and *what*?
For example, I’m probably richer than J.D.Roth in terms of having cooler gadgets, cooler car and way too nightlife.
But of course, J.D. would beat the shit out of me if we start talking about how I live life month to month and J.D has a cool $10,000 stashed away in evey room of his house!
I stand by my comment @36. Your “rich/poor”-ness is all about the impact your finances have on your daily life. But I apparently wasn’t clear that it’s not the money that is the important part, it’s the “your life” part: When I’m home in bed with my wife at night, I’m rich (money makes no difference) — except when I left my finances distract me from what is really important at that time, then I’m very poor; when I really want that one item but can’t afford it, I’m poor — except when I rise above and control my “wants” instead of my “needs,” then I’m quite rich. Again, the important part is not the money, it’s me. _I_’m the one who dis/allows my monetary situation to impact me at any given time. Unless I’m one of the (fewer now than in times past) people who is near unto death due to exposure or mal-nourishment, then I have the capacity to be rich just by changing me. Easier said than done, I’ll grant you that.
I’m sure this has already been said, but I guess your conversations go to show that being rich and being truly happy aren’t the same thing! I view being rich as being secure with my finances, with no worries. Am I there yet? NO! I hope to be. But, I am happy because I have all the important things in life: family, love, peace, and enough money for food and shelter. 🙂
We love your baked potato soup recipe! Thanks for the blog.
Rich is when I don’t **have** to compare prices on basic food items.
It’s a definition I came up with after my divorce, when I was paying back debt equivalent to two years of income and raising a child who turned out to have all kinds of extra needs that I had never heard of before the diagnosis.
A roof over my head, enough to read (this was pre-Internet. I have enough to read now), the OPTION of going wild with my food purchases – riches.
For me I need to stop comparing my balance sheet to others. There will be those with more and those with less.
For me having and fufilling a purpose in life is being rich.
I find it funny how many posters said they felt poor because they did not yet own their home. When my husband and I first graduated from college and got jobs I felt rich. We had few expenses, no debt, and free time. The amount we saved in one year would have supported our lifestyle for three. I could splurge occasionally.
Three years ago we bought a lovely house. It cost less than the bank said we “could afford,” we put 20%down, and are making more than the minimum payments. Despite this, I feel broke and am growing to hate this golden cage. We spent over $50,000 on our house this year (mortgage, insurance, taxes, new hvac system, etc.). If my husband loses his job during a down economy we’re toast. We’d have about three months before we’d have to start selling our assets at a loss. Also,I feel like the bulk of my free time is now spent mowing, painting, weeding, and scrubbing. Trust me, a house is not going to make you feel rich.
Rich, in my opinion, is having the freedom to do whatever you want with your time without having to sacrifice any luxury whatsoever that you desire (necessities are satisfied by implication).
Of course by this logic, the homeless person who doesn’t desire a thing with all the freedom of time is rich (granted he has his necessities satisfied). But then who is to say he isn’t?
To put it bluntly, if I feel empty spiritually and can buy a Ferrari tomorrow, without the blinking of an eye, in an attempt to feel that void, then I would be rich by any sane definition of the word.
Of course there are relative levels of wealth. For a Namibian labourer pretty much any person from a developed country is rich, but that misses the point.
To be rich is not to have plenty of time, or to do what you want. An unemployed person with a good severance package has plenty of time and can do pretty much what he wants, but most likely is not rich.
We all understand intuitively who is rich and who isn’t, but the interesting thing is how several people on this discussion try to move the frame of reference to things that have nothing to do with finances , it is like if we try to convince ourselves we are rich when in reality we aren’t.
So let me try to have a 2nd stab at a definition of who is rich. Rich is somebody that has an almost certainty to have enough assets to cater for all his needs for the rest of his life, plus a disposable income comparable.
Allow me to explain. Lets talk about a family of 4 people. I would very arbitrarily say that such a family would need $50000 a year to live and that such a family will remain together for 20 years. In order for them to be OK they will need a house, of lets say $250000 and enough insurance to cover their health in even the worst case scenario (somebody mentioned $1000000 for a bad heart attack, so lets multiply that by 4).
Add all that up and you have $5250000. Now double that to account for a rich family’s disposable income and we get a tidy sum of $10500000.
Arbitrary? Absolutely, but I propose that you can actually calculate a number for your own situation which would make you unambiguously rich. Less children? Bigger or smaller house? You think you need more money for a health crisis? Suit the numbers, you will find a total for you.
After all finances is about numbers, so if one wants to know what would it take to become rich, throwing around some numbers will yield an answer that could become a personal yardstick.
@Lara (#110)
I used to be a huge proponent of homeownership. I thought it was the key to riches. I still think it’s a good idea for many people, but I’m less zealous about it than I used to be. It’s not the key to riches.
Kris and I love our house. It’s a beautiful building on a beautiful lot. But damn, is it expensive. There aren’t just mortgage and interest payments, but there are also insurance payments, utilities, and — most of all — upkeep and maintenance.
Because the building is over 100 years old, there are all sorts of things that need to be done. We can’t afford to do them all at once, so we have to prioritize. This year we did the electrical system. Next year, we’re going to paint the exterior (or, more likely, have it painted). After that, who knows? There are many things to do be done, and we’re not sure how to prioritize them. (We tend to tackle the thing that has us most worried about structure or safety. If we don’t get it painted next year, I’m afraid we could have some damage to the wood.)
So, yes, your phrase “golden cage” does seem apt.
Wealth is attainable, anyone who works hard and spends wisely can be wealthy, and sometimes exceptionally wealthy. But I think being rich requires having a sense of security or a lack of consideration regarding money that very few people can attain, they are born with it.
My grandmother and her sisters were born to a millionaire real estate investor who never taught his three daughters how to manage money because they’d have husbands to take care of that for them. These ladies were rich, they never even THOUGHT about money their entire lives. Well… two of their marriages ended in divorce and one was a young (too young) widow. My great grandfather’s fortune in Seattle real estate? Sold through the years, there is one shabby strip mall that’s managed between the three estates, otherwise it’s gone and all the proceeds are too.
Which is fine, but also demonstrative of what I’m trying to say.
What I’m trying to say is that rich is hard to either attain or sustain, and I’m not placing a moral judgement on that it just is. Wealth however can be attained and sustained.
That made me feel very rich. I didn’t have the heart to tell her I owned two.
Does your family own a car? Do you have more than one pair of shoes? My freshman social studies teacher asked us these questions in the first day of high school (some 20 years ago), and everybody answered affirmatively. “Guess what”, he said, “That makes you very rich”. For me this was all abstract, and people outside of America were faceless and meaningless, until I actually started traveling abroad and becoming friends with people and learning how they lived.
What does it mean to be Poor? Having visited urban slums in India and three or four other continents, rural villages in sub-Saharan Africa and Southeast Asia, gangland suburbs in Latin America, I’m convinced that Poverty does not exist in America, and hasn’t since at least WW2. Driving a twenty-year old wreck does not make you poor; it makes you rich (only 13% of human beings own any type of car). If you think you are poor, show me your house made of mud and sticks, no running water, no electricity, and living in constant threat of dying of malaria (a reality for 1 Billion plus sub-Saharan Africans).
I probably earn less, and have less than many people on this thread, but I do feel very, very rich. In my opinion everybody in America is extremely rich; even people who earn minimum wage live a vastly more comfortable lifestyle than the overwhelming vast majority of our neighbors on the planet, or for that matter, people of generations prior.
Ironically, Americans are also some of the poorest people on the planet – on paper at least, because of debt (mainly mortgages). You don’t see too many rural Cambodians who take on $200,000 in debt just to put a roof over their heads.
Having 2 pairs of shoes does not make you rich. Not even in a poor country.
Being a poor Cambodian labourer without access to credit clearly makes you poor.
But having a car, although would make you richer than the Cambodian labourer, does not make your rich per se.
Ask yourself this: would your lifestyle change for the worse if you crash that car?
And need extensive emergency treatment?
And are left disabled?
I am not talking about the obvious above, but about your financial situation only.
If the answer at any point is yes then you are not rich.
We all know this but keep beating around the bushes for scenarios that make us feel better.
Having enough does not make you rich, only a fiction writer could suspend reality to contrast literary and personal achievements with economic wealth.
Having enough may make you content and self sufficient perhaps, but not rich.
I sometimes wonder if there is a vested interest in rich countries to make people believe they are rich when this is verifiable false. In developed countries we are certainly wealthier , but in all seriousness only a privileged few can claim they are rich in a sense that leaves no need for questions or peripheral non financial explanations.
@ 81, Libraripagan, I think that all that Boomie (@16) was trying to say is that the rich can do a lot of good. . . and I think that the statistic you quoted does not not contradict that.
Even though the poor may give a higher percentage of their income to charitable efforts, their donations don’t have the effect that is achieved by a donation of a smaller percentage of the income or assets of the rich. A donation of 3.1% from a rich person is going to be larger that the collected 4.6% donations of many, many poor people.
A 3% donation by a rich person can make the difference in whether a charity succeeds or fails. That 3% can provide stability to a charitable organization that enables it to keep operating when the level of other donations fluctuates. And 3% of a megarich person’s income or assets can create new charitable efforts.
The effect of a rich person’s giving can range from the huge efforts of a Gates Foundation down to the much more modest efforts of a small-town rich person. Here’s a really modest example — in my town, there’s a food pantry that this former drug addict runs, and she helps the very “lowest” people in our town. She doesn’t take money from the United Way, and she has no endowment. I’m one of her “rich people.” I promised to send her a check for a couple hundred dollars every month, and that check pays her power bill and phone bill and a little more. Other people bring by canned food and an odd check or two, but I have been a key part of her baseline support for 7 years now. She almost surely would have closed shop without that reliable, steady support.
The super-rich can do for big charitable causes, what I can do for the food pantry, only on a much bigger scale. Poor people can’t help at that scale.
BUT, I think you would say that the rich ought to give more than 3%, and I would agree.
Rich is a relative term, it has no absolutes, and what is rich to one man may not be to another. That said, all of us here are rich compared to much of the world since we obviously have access to computers, education and knowledge. If we are talking financially rich, then it only makes sense to compare ourselves to our peers. Large parts of the world live on less than $2 a day, you can’t eat in America for less than $2 a day.
I know on the financial score card I am ahead of alot of my peers, but way behind others. I have friends with 6-figure retirement accounts, I’m hoping mine makes it out of the year with 5. I don’t know what rich is for me, in money or income. I often walk by this restaurant on my way to the office and look in on the people enjoying their breakfast. I wish I were sitting there, lingering over coffee and the paper with no where I had to be. I guess rich for me is being able to eat out for breakfast whatever day of the week you want, whenever you want. Pretty simple.
Great question.
What does it really mean to be rich?
Having enough net worth and invested assets to maintain one’s regular lifestyle without having to worry about a regular job & income. The interest income should take care of regular lifestyle.
Being in a position to take a complete pause mid-career to evaluate where one is heading in life and then being able to take appropriate action to nudge oneself towards the chosen path without the need to worry about bills to pay.
Having found real juice in this post and more than a hundred useful comments, this alone can make one feel that he is rich.
Anyway, I agree when one says that being “rich” is only a state of mind as I think one may go crazy if his riches will get stuck in his mind.
If someone who has extra money is very kind to help the needy, then I would rather call him A Good Samaritan than being “rich sharing his riches”.
I’ve heard people say that the rich/wealthy man is not who he who as the most but rather he who needs the least. I’m not sure if you agree but its a pretty interesting point.
@Lara (#110),
I feel the same as you do too… In fact, I just posted something similar on my site. You can find the article at http://moneychurner.blogspot.com/2008/10/how-much-is-enough.html
This is an interesting post, and I have only one random thought to add- how funny is it that you’ve written all of this questioning the meaning of a main word in the title of your blog? 🙂
I don’t know that I can add much to this discussion that hasn’t already been said by the 123 posts before mine, but I just needed to chime in and say that I struggle with this exact same condition as well. I am debt-free other than my mortgage, have lots of savings, 401k, Roth IRA, etc. Am even making extra payments on the mortgage. And yet, I feel broke all the time. I sometimes wonder if I’ll ever “get there” or if I’m just going to spend my whole life like a hamster in a wheel. I think part of it may be that I spent my late 20s and early 30s deep in debt, and went through a financially devastating divorce in my early 30s that keeps me in this “broke” mindset.
Time
Being rich means having time. Holding it in the palm of your hand every morning and doing whatever you want with it without any constraints.
Wealth is what you hold in your other hand, tangible or intagible, which helps you in spending that time however you want.
Wonderful discussion. I asked my wife this question over dinner last night. She is very concerned about the amount of chemical additives in food and other products we use. Her answer was that some people cannot afford organic vegetables and other healthier choices because they are too expensive, and that she would define rich as having the wherewithal to always be able to make healthy choices for your family’s goods, without regard to the cost.
I’m not rich in terms of wealth. I have a good job and I’m solidly on my way to becoming a good, debt-free member of the middle class.
I don’t know what rich is. Politicians seem to think everyone with a job is rich (yet claim only the rich will get taxed) and socially we tend to almost say rich is a bad thing.
I like the old Porter Wagoner song, “A Satisfied Mind” which is something that is my financial plan. I don’t want to have a fleet of vehicles or a score of rental properties or three houses. I just want the ability to be able to take a day or two off to do whatever I want and not worry. I’d love to be able to just say “Yeah, I’m not going to work this morning. I’m going to stay home and watch anime.” but I can’t. To me, being rich would be the ability to do that.
Oh well, I won’t be rich but I think someday I’ll be content. 🙂
@117 shalom
I made a post about this in my own journal & ran the numbers. Assuming that you have most people at the bottom of the scale and working upward, here’s what the numbers look like:
10,000 individuals making $20,000 per year and donating 4.6% of it would add up to $9,200,000.
1,000 individuals making $50,000 per year & donating 2.5%: $1,250,000.
100 individuals making $100,000 per year & donating 3.1%: $310,000
10 individuals making $250,000 per year & donating 3.1%: $77,500
1 individual making $1,000,000 per year & donating 3.1%: $31,000
Obviously, my breakdown is not accurate. It’s an overly simplified scale. And, I wish they’d broken the percentages down further as you moved up in income. But even if you made it 100 individuals making 20K, they’ll still contribute more than 10 individuals making $250,000 per year.
While I agree that the rich *can* do a lot with their money, I’m tired of the assumption that the rich are the ones who do the most when it comes to charity. I’m also tired of the assumption that if you reduce taxes and cut services, the rich would donate to make up for that. And I’m tired of the “poor” being slammed as useless or lazy just because they’re poor.
Libraripagan, you’re right. I agree — completely — with your numbers, with your statements about the poor. I clearly touched a soft spot, and unintentionally. I was NOT trying to slam the poor, and I don’t believe that I did.
Affirming the good that the rich can do, does not negate the good that the poor can do. (And this labeling of “the poor” and “the rich,” like they’re some monolithic, homogeneous types of people, is misleading, but I guess that’s for another discussion.)
My point was about the good that the rich could (and ought to) do. I actually was thinking mostly about the megarich, since those are whom Boomie appeared to be referring to in the original comment.
The $20,000-income person’s donation is very valuable, but the fact is, it can be hard for small gifts to drive policy, to find solutions to big problems, or to be made consistently.
Looking at the the $50,000 people or even the $1,000,000 people doesn’t show the “rich effect” that I was talking about, except maybe on a small, local scale. To stick with your method of comparison, 3.1% of Oprah’s income (as reported by Forbes) would be $8,525,000. It would take 9,266 people earning $20,000 to give the same amount. My point was that a rich person can give money away in larger increments, which can bring charitable efforts into existence and keep them going.
EVERYONE, rich or poor, ought to help his fellow man; and the fact that the rich can have a larger individual effect is not a slam on those who are poorer.
Sheesh! Sorry — I meant “sore spot,” not “soft spot.” Freudian slip?
To me, being financially rich is having enough money saved and invested to be able to live off the income for the rest of my life, in a style that suits me, without needing to work (I might still choose to work, but there would be no financial compulsion to do so). And to be able to reinvest a large chunk for capital growth too.
Although I’m not at that point yet, I do feel rich in many other ways already, when I consider what a great life (in both material and non-material terms) I already have!
To me, and I am still young, being rich is having enough money to not worry about stuff going on in the world (i.e. the current economic crisis). Sad thing is, we look at the term rich in a monetary term.. which as your wife feels, is a negative thing.
I believe somewhere along the line, the meaning of the word needs to change. I don’t care how much money one has.. The richest person I know is the person who is happiest.
Chris Rock talked about the difference between Rich and Wealthy at one point in a comedy sketch.
He says, “Shaq is rich. The guy who signs his checks is wealthy.”
Personally, I think rich is $125,000 income for one person. Just because if you make that much you can afford to live and then purchase anything realistic you would really want as well.
Wealth is when your assets are making the money for you. When they pay all your expenses and continue to grow, then you are wealthy because you no longer have to provide for yourself. That is wealth.
It goes both ways. I was raised in upper middle class/affluent circumstances and now, even though I am “poor” by my birth family’s standards, I don’t feel poor. I think sometimes it is easy for me to live above my means, not because I particularly care about status symbols but because there are certain things I take having for granted. I tend to take it for granted that we can go out and replace an appliance, a car, something big, without worry. That we can spend on expensive cheese and coffee and that’s just something we “should” have. But this isn’t true. It requires planning, sacrifice, giving other things up, savings and budgeting. I’ve had to learn this. To learn to live within my true and not perceived means has been a really interesting journey.
Our household annual income is around $300K. My husband and I both have good (great) high-paying jobs. We are in our mid-30s. The last time I checked, our household net income was over 2 million dollars. We have no debt except our mortgage. Our house is very modest, nothing special compared to houses of my friends. I still drive my 10 year old van. My husband still drives his 7 year old jeep cherookee.
But do we feel rich? NO. I was born and raised in the 3rd world country… My husband was a farm boy – lower middle class. I lived with the poor of the poorest in my childhood.
I will always feel poor and can relate to the poor no matter how much I make. I can only hope I impart most of my values to my 3 children. I hope they don’t feel entitled to have things.
We went to eat at Denny’s and look around… my husband said, don’t you know that we are rich? We are at the top 5% earners in America. I said, “oh yeah?!, I know I file our taxes and our AMT is ridiculous!” And he said, why are we eating at Denny’s? Simple: we love the price of the food there! 🙂
Being rich is freedom. Freedom from want, freedom from fear of want, freedom to spend your time as you want, and having the werewithal to do so.
So I’d have to say that being rich is actually variable. Someone who wants to travel the world and buy half of what Tiffany’s offers, and fill a wardrobe every year with couture clothing, would need a different income level than I would; I’d need good medical coverage, and if I had a guaranteed income that paid my bills, let me make necessary repairs to the house and let me stay home, that would be rich.
“No retirement accounts because again that is money tied up that could be used elsewhere like a business or a property.”
I don’t believe this.
Rich people understand retirement accounts are immune from civil judgments, and their advisors know about other investments that are also immune from creditors.
Well before Enron blew up Ken Lay & his wife put millions into deferred annuities, also immune from creditors under state law.
No matter the civil judgments against her or his estate, his widow is currently enjoying a very nice income from those annuities:
http://www.motherjones.com/news/feature/2002/02/enron_insure.html
Look at that JD, you are an industry leader. US News has a great article on the topic of are you rich:
http://biz.yahoo.com/usnews/081014/14_how_to_tell_if_youre_rich.html?.&.pf=banking-budgeting
I believe one reason you’re doing better than your folks is because you have no children. I’m not stating that as a bad thing, just want to include that in your formula…
Well, it’s easy recourse to the J. Brotherton quote: “My riches consist not in the extent of my possessions, but in the fewness of my wants.”
On the face of it, this seems paradoxical and even nonsensical to people who really haven’t thought through the issues surrounding money, frugality, quality of life, and wealth. But the more I think about these issues, the more I see the wisdom in what Brotherton was saying.
Like you, my husband and I have no consumer debt, we enjoy a very solid income, have no kids, pay extra on our mortgage, and practice what a lot of people would consider extreme frugality. I don’t feel poor, but neither do I feel rich. I wonder whether this will change when our mortgage is paid off. Part of me hopes that I’ll feel a little freer with our money, and part of me hopes that my frugal mindset will continue unabated. A lot of the frugal things I do (hanging laundry to dry, cooking from scratch, gardening, canning) I think I will always do because they either feel morally right, or because they palpably contribute to a high quality of life that money cannot replicate.
To me, being rich means having enough money to live the lifestyle you want.
Being wealthy means having enough money to live the lifestyle you want and the freedom to do whatever you want. (Not having to work to maintain the cash to support that lifestyle.)
For me, being rich is being able to quit working and still maintain a lifestyle you feel comfortable with. I guess on a worldwide scale the standards are much lower since so much of the world lives in poverty. I’d say that the vast majority of people in the US are rich if we’re talking about a worldwide scale.
I like what Warren Buffett has to say about wealth. A dollar is simply a “claim check (cheque)” against society and is redeemable for one unit of consumption. You earn claim checks by providing value to others, and you can do whatever you wish with them. Warren will be giving the vast majority of his to charity upon his death.
Essentially, being rich means that you have a high number of claim checks, and that society owes you a whole lot of consumption should you decide to turn them in.
I think we have to differentiate between the subjective rich and the objective rich.
Anybody can feel rich anytime they want to. Like you, I have a nice house, good job, great family, etc. Am I rich? To me, I am happy and content. But I am NOT rich, yet. Not according to me.
Objectively, I’m definitely not rich, although again, even for the objectively measurable “rich” we can all come up with all kinds of definitions to include or exclude ourselves. Does 6-figure income make you rich? A lot of people think so. As you can see, I don’t:
http://blog.5m10y.com/2008/09/23/how-much-money-do-you-have-to-make-to-feel-rich/
The thing is, during this kind of discussion, the definition of rich shifts so many times, and usually in the end everybody agrees that “rich” is a state of mind, everybody has his/her own definition, and everybody’s happy.
Which is good and interesting to read, but useless for comparison since it’s so subjective.
Rich can mean having “stuff”. A big house, fancy cars, nice furniture, etc.
Do the rich have to budget?
I guess what it really comes down to is living a comfortable lifestyle. Having enough money for rent/mortgage, transportation (even if it’s the subway), clothing, quality food, and something leftover for savings/retirement.
I guess I meet this criteria. I share a 1 bedroom/1 bath apartment with my boyfriend. It’s small, but it’s comfortable, in a good location, new appliances, etc. I drive a new car and am able to successfully make payments. I may not have a designer handbag, but I have a closet full of clothes that I am lucky to have. We always have enough money for groceries and occasionally have a dinner out. I even have savings.
At the same time, like J.D., I don’t feel rich. I have a budget. I have various loans that are being paid off. I clip coupons and watch for sales. I’m creative with money. I think, though, if my salary doubled or tripled — I would still be watchful of my bank account. I’d be richer by income, but will always have a frugal mindset.
Have you ever dreamed about winning the lottery or ending up in Hollywood as an A-list star? In my mind, I’d still be very careful with money. Maybe splurge and get a few nice things, but live in a modest home and invest the earnings. Maybe start a charity/fund of some kind. Would I feel rich then? Possibly.
I do know, however, that I do NOT feel poor. I’m comfortable.
Money it’s not just about numbers so to me been rich means peace of mind and be able to do the important things that you love, just as simple like that
Being rich to means never having to work , never having to worry about your day to day expenses
Great Question… I’ve always thought of RICHNESS and WEALTH as two different things.
If you earn enough to have and buy whatever you want, but still need to work to keep up your lifestyle, I define that as being rich. If you stop working, your lifestyle will change.
On the other hand, if you can stop working today and still have enough money coming in (indefinitely) that can sustain you, I define that as wealth.
Beyond money, I think Richness and Wealth also entail having balance, quality of life, meaning and overall contentment and happiness.
Eff Jay
i think your rich if you can walk into a store and buy something exspensive not asking or caring about the price.you walk into a store y9ou see a nice car and even though you werent shopping for cars you buy it.because you can and only because you can.thats rich
everyone here is overlooking a simple concept, one that unfortunately i have to live with every day. And that is, if you are rich, you have the time and money to do the things you want, when you want to do them. conversely, if you are poor, you struggle to get by and have to sacrifice time with your family for shitty hours and shitty pay, that is if you are lucky enough to not get laid off for no reason. i am 21 years old, and an aspiring computer programmer. when i graduated high school, i had a false hope that there would be entry level positions in businesses near where i lived so i could work up and save enough money to go to a community college and get my associates degree and get a decent job afterward. i knew in high school that i was no great scholar, i knew that my only chance to make more money and to improve my life would be to slowly work my way through. the problem with my plan for the future was that never once was i warned about the job market. no one ever told me how hard it was to find a simple starting-wage job. it took me about 3 weeks after i graduated high school to find a job, at that point my parents were fed up with me being there, so as soon as my first paycheck arrived, i moved to an apartment in Kent, Ohio. i was making enough money at this job to get by and put some away, and life was looking good. but not for long. after working for FSI ( ravenna aluminum ) for 4 months, the company had a meeting during our lunch break. they said they were closing down and we had about 3 months left. during these months the plant manager at the FSI foundry was kind-hearted enough to let us work some overtime.
after the lay-off i spent the next year bouncing around from unemployment to temporary service work. until i went back to FSI under a new company name. then once again i was laid off. now i am currently laid off and using any available recourse i can get a hold on to go to Stark State college in canton Ohio. i have been poor my whole life, and i have to struggle with it every day.
this is why i KNOW what it means to be rich.
and someday, I WILL BE. however, until then i will continue to struggle. i hope this gives all you who read it some perspective on the subject.
my wife and i make over 300k a year. we dont spend a lot of money in clothes or non sense.. we do use around 30k or more a year eating out..while i work because i want to i could be managing at the moment without working. but we work a few days a week. most peoplr think we make around 4000 a month not more than 5 times that. i guess because we dont drive expensive cars.. rather buy clothes from walmart… i am not rich, yet… i probably will be in 10 years. while i could buy most of the things i want, i dont see myself spending 2k a night in a hotel…. i could but i would rather get in debt rather than rich. rich to me is having around 30 million or more that you can buy any car and live anywhere… i am just starting though i am 24 yrs old and starting in business just 3 years ago.. dont have much saved anyways.. still middle class with half paid home and 100k in change… thats is moving up rapidly though..