Here’s a loaded question for you: Are you rich?
One of the numbers that is repeatedly thrown about to represent “being rich” is an annual salary of $250,000 a year. Others, though, don’t consider you “rich” unless you make $1 million. I know some families who would consider themselves “rich” if they could hit the $100,000 mark for an annual salary.
Obviously, the definition of “rich” is something that is completely subjective. One person’s “rich” is another person’s “poor”. Indeed, most of us probably just prefer to think of ourselves as “middle class”, even though many of us think it would be nice to be “rich” some day.
So let’s try to define it despite all the baggage. We could run into problems though, since “richness” can’t really be defined by something as simple as a dollar amount. Here’s a few more pointers to consider:
Location, Location, Location
One of the biggest issues affecting how “rich” you are is where you live. I live in an area where my earnings as a freelance writer have garnered us a comfortable (yet modest) home, and the ability to meet all of our expenses with ease. We are saving for retirement, and saving for short term goals. And we still have money left over to enjoy eating out sometimes, watch movies on occasion and even travel to see family. My husband can buy video games when he wants, and I can get the new book I’ve been waiting for when it comes out. However, if we lived somewhere else, our income wouldn’t go nearly as far.
As long as we are living where we do, we might be considered “rich” — even though we don’t make anywhere near $250,000 a year. But if we moved to someplace along the coast, we’d quickly find ourselves feeling “poor”. Indeed, even those “rich” folks making more than $250,000 a year might feel themselves “poor” when living in a high priced area where a big chunk of their income is taken up by expensive housing, and where discretionary income dwindles, even with a large salary.
As Vered once said, your address can make a big difference.
Do You Need More Money to Feel “Rich”?
Another consideration is that “rich” does not always equate to money. If you are content with your current income, making extra money is not as important. Many people feel “rich” even when they make less than $100,000 a year because of other factors:
- Good health
- Surrounded by family
- Enjoy time with friends
- Content with frugal entertainment choices
- No need to clutter the house with stuff
- Feel accomplishment when saving up for goals (such as travel)
For many, being debt free and able to save for the future, while enjoying the simple pleasures of life, constitutes “wealth.” And, truth to tell, a lot of my contentment comes from being able to take my son to the little zoo we have in town ($1 for each of us), or heading up to the lake, an hour away, for a little camping trip. No need to spend big bucks, and I feel richly blessed just floating in a $3 tube on the lake after waking up to a chorus of birds.
In the end, whether or not you are “rich” depends little on an arbitrary dollar amount. It really depends on your own situation, your money motivations and how you feel about your personal finances.
So, with that in mind, are you rich? What makes you rich (or poor)?
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{ 20 comments… read them below or add one }
My fiance and myself make $125k per year. However we live in DC which negates what seems like a large income. I had at one point lived in Tulsa Oklahoma and at about $25k per year lived about the equivalent lifestyle I do in DC at about $55k per year.
I feel pretty rich right now because I make enough to do the things I want to do and save a big chunk of what I make. Granted, I live with family and although I help with the bills, I would spend a lot more if I lived alone. But all I really need is to be able to live how I want (which is mostly frugally, but sometimes I want to travel somewhere), no matter how much I make.
Your description of “rich” sounds a lot like my descriptions of “happy”. Although I’m not going to lie. Hitting the $100K, $250K and $1M marks in my lifetime will be exciting moments for me.
Rich is opening my eyes and able to see. To walk in the morning and thank God for this wonderful life. Gratitude, is what makes us rich. Not money.
I think being able to think about and plan for tomorrow is one of the keys to feeling rich and financially secure. Having a lot of money today but spending it all today seems like it would lead to a lot of stress and anxiety.
I think we can define rich by percentiles of income. If you make more money than let’s say 90% of other Americans, then you are rich. If your expenses are higher based on where you live, it is up to you to save money on other expenses to compensate. (It shouldn’t be that hard with a 90th percentile income.) You are still rich in terms of income and ultimately nobody is forcing you to live there, although it may be hard to find certain types of jobs in cheaper cities.
The other benefit to earning a lower income in a city that has a lower cost of living is that your taxes are lower and you get to keep a higher percentage of your income.
When you said that there are many ways to feel rich, including being surrounded by family and friends and being content in general, I nodded enthusiastically. One can lead an incredibly rich, fulfilled life without being rich in the technical sense of the term – whatever that is.
A man is rich proportionally to how easily he can satisfy his wants. The easier that is for him, the richer the man. Very easy.
You know, I’ve already said that, but I will repeat this wise statement: A rich person is not one, who has more, but the one, who needs less. And I completely agree with that.
I consider anyone who has savings socked away, and no debt (except maybe a mortgage) rich.
My wife and I have well over 6 figures as a savings, but we are living mortgage free in a large house also. We paid our first house off within 6 years of purchase and lived in it another 5 years socking money away until we had a savings of double of what our house was worth. Moved and bought a house double the size. After a CD was up, and we sold our old house within a year, we took that and paid our new house off. Still had a sizable chunk left in the savings. 3 years later, well over 6 figures in the bank once again and debt free still including no mortgage at the ripe age of 40 makes me feel rich. And to boot mine and my wife’s salaries are a little over 6 figures. You can get/be rich easily with 100g a year, if you start out young debt free.
My older brother has been a director and a VP making much more than my wife and I, and he is struggling with debt and has a mortgage on a smaller house.. This is how your VPs are living.
Well, Dr Thomas “stop acting rich” Stanley discusses balance sheet rich vs income rich. Is the $300K/yr doctor with zero savings rich? Or the $100K couple who are both teachers, filling their pensions and have 10X their income as retirement savings?
Is rich a fixed number or comparison to others? The US is rich compared to the rest of the world. See http://www.globalrichlist.com/ The median USer is in the top 1% in the world. So to poster above, top 10% in US must be uber-rich.
I remember when I was in about fourth grade asking my parents if we were rich. My mom replied that as long as we have each other and a roof over our heads than, yes, we are rich. You bring up really great points about location though. Great, thought-provoking post.
We recently moved from an area where housing and taxes were reasonable to the shore where housing is more expensive and taxes through the roof. But being boomers, this is where we want to be at this stage of our lives. Settling for a small house, still employed, we are doing what we want. That is my definition of rich: reaching a point in your life where you have choices.
Of course this is all relative and dependent on many factors. Personally, rich means factors like having good health and family around. Financially, it is being able to meet all of my obligations with ease while still saving for the future (babies, 2 years savings etc) including retirement.
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Some of the richest people I have ever known, were rich in love, friendships, family, knowledge, humility, kindness, curiosity and life-long learners, as well as sharing, patience for the young, enjoyment of their pets, personal talents that they nurtured and enjoyed all their lives from tap dancing to playing musical instruments to singing, thinking of others and doing good deeds, faith in and belief in a higher power, and their eyes sparkled like sunshine on water….those people were RICH….
Well, I currently make more $$ than I know what to do with – that makes me pretty rich, I think, despite the fact that I make ~$30k and live in Brooklyn, NY.
Perhaps I’m just really frugal. Or perhaps it’s the stark comparison to living on ~$15k in 2009 and most of 2010 out here.
Who knows?
I do feel rich at times and that despite a meager 25kEUR yearly salary (in Cork, Ireland), but I guess this is related to the fact that I have my first income now and am able to live very comfortably without having to worry about the future so much. I also for the first time feel able to spend semi-frivolously (nice food, etc) in the few times I feel like it.