Corporette asked this question a while back and I still can’t stop thinking about it.
Reading Material
- Are you rich? (Corporette)
- Poor You! (Literally) (Sweet Hot Justice)
- $250,000 does not make you rich in my town (Above the Law)
- Job Satisfaction vs. a Big Paycheque (NY Times)
I read almost all of the 240+ comments, and it seemed like there were three camps of thoughts.
CAMP #1: Rich is relative to those around you and where you live
If you are making $100,000 among $500,000 income earners, you don’t feel rich.
Also, if you make $100,000 in a small town, it is nothing like making $100,000 in NYC.
(NYC’s cost of living seemed to be a huge factor for Camp #1)
CAMP #2: Rich is based on your choices and spending
What you choose to spend your money on determines how rich you are.
Basically, if you decide that you “need” a 3000 square foot, fully renovated downtown apartment, compared to someone who chose a 600 square foot studio, then you cannot complain when you have nothing left to save at the end of the month.
The people in this camp were intense and fervent that what you spent determined how rich you were.
CAMP #3: Rich is how you feel
If you feel rich, you are rich.
Everyone is a little bit in this camp, because we all know that we’re privileged and rich compared to the majority of the world.
People in this camp varied from mid-range incomes to higher incomes. They didn’t seem to compare themselves to other people or the environment they were in. They just felt rich.
They were also a bit in Camp #2, saying that expenses and expectations are the reason why people feel poor or rich.
So I ask you:
Which of the above camp(s) are you in?
What is rich to you?
What is considered a comfortable existence to you?
How do you determine to yourself when you’ve “made it” or are a success?
You can name anything — feelings, income level, debt level, experiences.
You don’t have to just base it just on money!
Just a girl trying to find a balance between being a Shopaholic and a Saver.
I cleared $60,000 in 18 months earning $65,000 gross/year.
Now I am self-employed, and you can read more about 
IMHO, you are rich when you are in control of your own money and time. If you can't decide to quit working today, then you aren't rich.
That\’s another good point. Being in control of your money and time, and not having your expenses dictate you = rich.
I agree.
My recent post Flickr Fridays 91
Imo, you only qualify as rich if you have enough money saved up to live off of your investments.
Oh I like that! 🙂
Wealth and riches are a state of mind. It's not gooey sentimentality that makes me see my family and friends as unimaginable riches, it's the fact that they've always been there for me. I have a small garden and can grow flowers and vegetables to pick as needed. I have no credit card and drive a 25 year old car. Everything is paid for and what is left over is mine to save or spend. I look around me and value the birds that visit my garden, the friendly people who walk past my gate, the colour of the sky or the shape of a tree, which I try to draw and best of all, music. All these things enrich the spirit, the soul, and surely that counts more than money.
I'm in camp #1. It's totally relative. I just moved to a higher cost of living area and the same salary in these two places would definitely feel rich in one and not the other. It's completely relative to where you live what is considered "rich."
I have to say that I have a very different understanding of wealth than the above options. I am a minimalist by nature, but I have a very strict definition of 'rich' and its very simple: Rich = having a passive income > or = to your expenses. My personal goal is passive income = 110% of monthly expenses.
That is what being a 'man of independent means' as the old saying went. Of course, I'd still work because the idea of not producing something of value is crazy making.
It's funny that most of those articles dealt with attorneys. I'm about to begin my career and plan to aggressively pay off my ridiculous debt. And no one has paid down student debt more aggressively than FB!
I created those Camp definitions just based on observations of commenting trends in the above articles.
Passive income being your full expenses — this is surprisingly something we agree on. I haven\’t really fleshed out the idea, but I\’d like to be able to live off my money, which I think is doable only if we save a few million… but then I wonder what the point would be to just sit on 3 million but spend only $1000 until I pass away. I\’d like to enjoy the money too (and pass SOME but not ALL on to my kids).
I too, am also lucky to love my work, career and what I do, so I\’d want to keep working, even just part-time (or maybe just half a year).
Aww. shucks… thanks. Good luck in clearing your debt. Are you becoming an attorney as well?
Yup, an attorney shall I be. I love the law and the idea of being a mercenary logician is exciting.
As for passive income – it's unlikely you'd reach it simply by saving, you'd need to acquire income-producing assets, which is also to incur additional risk. Of course, if you have no intention of leaving the accumulated wealth to future generations, then you'd be able to deplete your net worth towards the end of your life rather than maintaining equilibrium.
Reading the linked articles, I was appalled that someone could justify a chic address as a necessity. Right now I live in a 168 sq ft Los Angeles apartment and all of my possessions would fit in my car. I'm upgrading to a larger unit with a full kitchen, but the idea of spending a few thousand dollars more to live in the 'heart of the action' is ridiculous.
Such stupidity is rightfully punished with perpetual debt and negative net worth. . .
(Now if only American politicians would allow business to experience the same punishment by NOT giving them my tax money.)
That\’s great! I hope those blogs are interesting for you to read.
Mercenary logician — this is what I\’ll be calling attorneys from now on 😉
Wait. 168 square feet? I READ THAT WRONG. I thought it was 1680!!
Holy 🙂 You are really a minimalist then. I don’t like spending money for nothing, but apparently downtown is the only place I can get peace and quiet, so out goes $3000/month now.
I feel like I belong in all three camps to an equal extent; if you turned this post into a Venn diagram I'd be right in the centre.
I'm a student (in the Netherlands) and I live on 8,5 m2. This excludes the bathroom, which I share with 9 other students. This does not make me feel rich. It makes me feel crammed.
On the other hand, I don't feel poor either. I have everything I need right on hand, I live in a beautiful street in the middle of the city, I have great housemates.
My boyfriend however feels very unprivileged in his (similair) living space. This is not only because he used to live in a bigger place, but also because all of his friends and family live bigger and take pity on him. This makes me feel it's all a matter of perspective, really.
I think all three are valid ways of defining richness. Coming from a small town, $100,000 is a big deal. $50,000 is a big deal, even. It's unusual (but not completely unheard of in the "rich" neighborhoods) to have a house sell for over $200,000.
But having a lare income is only one way of looking at it; I've known many "rich kids" who were not the nicest people–in fact, it was rare in my experience growing up that people with money were down to earth, so to speak.
And I consider myself proof that income isn't everything–I live fairly well on less than $1000 a month, as long as I don't get too spend-happy! And that includes bills and dog care.
Which brings me to the last viewpoint–experiences. I'm very proud to say that my life is far richer since I got my guide dog a year ago, even if I have a bit less spending money! I love spending money on her (which is a very good thing–she's hard on her toys!) and wouldn't trade my experiences with her for anything.
And to conclude my babbling–frankly, if money is the only thing that makes one rich, I don't want to be rich. Not having a large income forces you to be creative and appreciate what you do have.
I think I'm a little of number two and number three, but mostly no. 3. My husband had a very good friend for years who paid in taxes every year what I earned and he was probably the most miserable human being I've ever met. And he KNEW he was miserable, he told me about it every single time I saw him, but he had it in his mind that he was going to become a millionaire by a certain age and he was going to do it, dammit, no matter how depressed he became.
He's pretty close to that goal now. I don't know how if it's cheered him up at all.
seeing as im an unemployed college graduate with student loans im going to say that im not rich… yet.
but as long as youre happy id say youre rich
Definitely relative.
I spend less than I earn, but I don't feel rich. I'm just living within my means.
Rich for me would be having more income to put towards my travel fund…I think…I'm not sure what dollar figure, if any, I could put on it.
In my 20 years of marriage, my husband and I have gone from $10,000 a year (more 20 years ago than it is now, but still under the poverty level), to… much more than that. We are comfortable.
One thing I've learned is that if you're not careful, you spend what you make. For many years our income increased, but our savings account did not. Therefore, we felt the same amount of stress when the bills came, and those last few days before the paycheck were always tight. We did not feel rich. It takes discipline, but when we learned to take that raise or that bonus and either reduce debt or save/invest it, that's when we started feeling "rich."
Now, the majority of my definition of feeling rich is being prepared for retirement. It's an unbelievable relief to know that when we retire we can be confident of living the rest of our lives comfortably.
That\’s a great point — you start to feel rich when you are out of debt and you are prepared for any financial emergency including retirement.
Wow. Well, I think I'm in camp number three. Here's my story:
I had a bit of a "nervous hoe down" sometime during college (like a nervous breakdown, only smaller and with comic overtones). I was the classic over achiever, and I was totally miserable. One night I decided that I was so miserable, that killing myself was the only option. After a failed attempt to off myself via hypothermia (note: it takes a really LONG time to freeze to death when you're not willing to get really cold) I had a bit of an A-Ha moment. It suddenly hit me that if I was so totally miserable that offing myself really seemed like a viable alternative (laughable though my attempt may have been) I really had nothing left to lose at that point! So I basically decided "phuck it". I decided I no longer cared if I was a failure or if my parents disowned me… if the alternative was being dead then so what. So I changed my major to music and punted on all of the things I was "supposed to do".
When I graduated, in 1990, I got a job making $100 per week at a music school. I learned the art of EXTREME frugality. For the most part I was happy, but then I got together with some old friends who had "real" jobs (and cars and houses and could afford to eat out). I started to feel like a failure.
Then I happened upon an article in the local free paper about a couple who had just immigrated from Russia (it was the early '90's – people immigrating from Russia was a big deal). They had a studio apartment in the crummy section of town and both worked minimum wage jobs, but felt rich beyond compare. They went on and on talking about how they could never have had their own apartment in Russia, or have afforded to eat meat every day.
It completely changed my perspective. I went home and took stock of my life, I looked at my cupboards full of food, I thought about how I never had to wear pantyhose or high heels, or use an alarm clock, or sit in traffic, or do any of the other BS that most people take for granted. And I realized that I was rich beyond compare.
Over the years I earned more money… my best year was about $85K, but I stayed frugal and put most of the money in the bank. I now make about $20K working less than 5 hours per week from home. It's more money than I need, and I LOVE MY LIFE!
Wow what a story!! Thank you so much for sharing. I went through something similar when I read \”The Millionaire Next Door\” and realized how real rich folk lived, and that it was not what I expected at all.
Wow – I read that article, too, and was amazed at not only the audacity of the writer, but the commentators as well!
Here's my breakdown: I'm certainly in Camp 2. While I'm not saying that people aren't entitled to buy cool gadgets and have nice places to live and fancy furnishings if they can afford it, I've learned while beginning this personal finance game that having a whole lot of shiny things doesn't make me happy. Having financial security makes me happy.
I also learned a long time ago that life requires a number of compromises, and it seems like that girl mentioned in the article was refusing to budge on her desired lifestyle in order to work in a job she'd like. And I agree – it's ridiculous to have such expectations in this economy, and it's frankly insulting to everyone who's scraping to get by to hear her complain about not being able to go out to fancy bars for expensive drinks. Full disclosure: I'm one of those people, as I'm a part-time teacher, fresh out of college (with 30K in loan debt) and will only make around 12K this year. I'm not going to be very sympathetic.
As for me, "comfort" or "success" will not be defined by the crowd I'm hanging around or the car I drive, but whether or not I'm still in debt and don't have to live paycheck to paycheck. And guess what? I'm going to have to work some jobs I don't love to get myself there, but eventually, I'll find a happy medium (read: compromise! It's kind of a theme…) with a job I love, friends who are fun to hang around and support me, and a simple lifestyle that leaves me feeling fulfilled!
I agree with Christian that if you spend less than you earn then you are rich. Also if you dont spend that overtime/bonus on whatever then you are rich unless of course you are saving it for travel. I agree again with his comment on spending your money wisely on experiences and toning down the "stuff" you have because you either just have to move it, give it away or trash it or recycle it.
I belong to camp 1. It's all relative. However, I will know I am rich when the following things occur:
– I can go on 2 great vacations each year where I am not watching every dollar I spend while away.
– I can hire somebody to clean in my house once a week and I think that it's worth it.
– I no longer have a mortgage.
That there is my dream life.
This isn't to say that my life isn't pretty freakin great right now. In fact, I think I am probably "rich" compared to many people.
Well, that definitely is relative.
Compared to most of the world, I feel insanely rich. It's amazing the standard of living we have in the U.S., even with the recession. And in many ways I do feel rich already. My husband and I may be in debt, but we're not living paycheck to paycheck and we can afford to buy good, healthy, tasty food. We have a house and we don't have to decide between taking care of a sick kitty or eating. We certainly aren't poor by any stretch.
As far as money goes, that's tricky. Salary-wise, I think there are the rich and those that *should* be rich. If you make a million dollars a year and our bankrupt, you're not rich, but you probably should be.
It is relative to where you live somewhat. My husband and I have a good income for our area, but not stellar. Above average, though. It would be a lot harder to live on it in New York, though. But, on the other hand, there are perks of living in New York just as there are perks of living in places like Greenwich, CT (not that I think they compare to my more humble home, but obviously a lot of people want to live in places like that).
But I think I'd really feel rich, compared to other people in the U.S., when I was out of debt, had retirement funded, had a really good emergency fund, and really didn't have to worry too much about the next paycheck — even have money to splurge now and then on a good vacation. It's a ways off, but I look forward to seeing how that feels.
I find that as long as you spend less than you earn you are rich. That is, if you can buy what you need and what you want (Don't overdo the wanting though…) and still are left with a (small) monthly savings.
Do you really need to make a lot of money to feel rich? You can't take it with you when you kick the bucket. I'd rather spend it wisely on experiences.
That\’s partly how I feel too. I feel rich just because I feel rich and lucky. That\’s a good measure — as long as you spend less than you earn, and can save the rest, then you\’re rich. If everything goes to your fixed expenses and you have nothing left over at the end of the month, things are too tight to feel comfortable.