We all understand that it’s your net worth that defines how wealthy you really feel. So you can be rich while making $30k but feel broke making $300k! I figured since the year is starting out, perhaps now would be a great time to dream big and perhaps make “reach” goals.
But I was reading old MP Dunleavy articles and she wrote about “Just How Rich is Rich, Really?” How much would you need to be earning to really feel rich?
The answers are not surprising but here they are from a 2003 Gallup Poll. Only 2% of Americans describe themselves as “rich”. And rich is defined as income more than $120k or assets more than $1 million.
However, when they interviewed MSN money board readers (of which I’m one of the 11,000), most said it would take at least $5 million for them to feel rich. That’s how I feel, at least $5 million. $1 million doesn’t far nowadays it seems.
Further the Gallup poll participants said those making less than $30k thought people making more than $75k rich. Those making between $30-50k, felt $100k income would be rich. And those making more than $50k or the upper half of wage earners said $200k would be the level where they felt “rich”.
MP Dunleavy touches briefly on the cost of living variables and honestly it does matter a lot. But the truth is the bigger determinant of “rich” is what you define as “rich or comfortable.” What makes you happy and feel “rich”.
So that feeling will take into account where you live. For some the idea of making $100k is outrageous, yet for many that’s a minimum number to survive on high cost of living areas.
What is the minimum income you think defines rich?
Sorry, there are no polls available at the moment.
15 responses so far ↓
1 savvy // Jan 5, 2009 at 9:37 am
I don’t define ‘rich’ by income. You can have a high income but low net worth.
For myself, I will feel rich when I’m financially independent – meaning I can live off my assets without any need for other income.
2 Kristy // Jan 5, 2009 at 10:08 am
I agree 100% with savvy. Income to me does not define rich.
3 SimplyForties // Jan 5, 2009 at 10:10 am
Defining oneself as “rich” could be considered a bit vulgar and, as such, people might be hesitant to define themselves in that way. I wonder how much that might skew the results. I’d be curious of the different results you’d get for comfortable as opposed to rich. I’d also be curious about the size of the gap between people’s definition of rich and comfortable. I’m certainly comfortable but I am worlds away from describing myself as rich in a purely monetary sense. I’m happy, I’m comfortable and, when I free to really do as I please with my time, I’ll consider myself as rich as I care to be!
4 Barb1954 // Jan 5, 2009 at 10:48 am
One’s perspective on the level of income to be “rich” will vary based on where one lives. I live in a state with high state income taxes and high property taxes. After federal and state taxes are withheld and those for Social Security and Medicare as well as contributions to 401(k)s, health insurance and health reimbursement accounts, even a salary of $100,000 doesn’t leave all that much to live on.
5 fengshui // Jan 5, 2009 at 6:58 pm
I agree with Barb. DH and I also live in a state with high income, sales, and property taxes. Luckily we don’t have to contribute much to health premiums, but the income and property taxes are enough to make you want to puke.
Anyhoo, I think that “rich” is a really subjective term, and it obviously varies from person to person. I consider someone “rich” if they have no financial obligations with a positive cash flow, and assets to boot. For example, I consider a couple with a home that is paid for, and no other bills, with >$500k in the bank, is “rich”.
$5 million is a bit much, in my opinion. I mean, how many people out there have $5 million in the bank? I’m not talking about your home as an asset, but rather $5 million in the bank, above and beyond the home. I wonder how many people out there have a net worth in the millions? I don’t know.
I do know that the unemployment rate in my state just hit 8% and our state budget for 2009 is already $5 BILLION in the red. But, they keep giving out free health care to everyone here, so I imagine that my income taxes will probably increase again. Our gas tax is going up again too. It seems like it is getting harder and harder to get ahead…..
6 Meg // Jan 5, 2009 at 11:41 pm
Its not just where you live, but how big your family is. $100,000 would be “rich” for me personally (as I have no debt besides a modest mortgage), but if you throw in a couple of kids I’d need upwards of $200,000 to feel rich as a family.
7 fengshui // Jan 6, 2009 at 12:54 am
“but if you throw in a couple of kids I’d need upwards of $200,000 to feel rich as a family.”
Again, this is all related to how much you WANT to spend. It seems as if people feel that they NEED to spend a ton on their kids these days compared to years past, even 20 years ago was different. I plan to save for my child’s college education, but I refuse to give in to all of the “wants” (PS3, IPOD, cell phone, private guitar lessons, private schools, etc.). Some of my younger cousins are spoiled to the point that it is disturbing….
8 Kristy // Jan 6, 2009 at 4:18 am
“I plan to save for my child’s college education, but I refuse to give in to all of the “wants” (PS3, IPOD, cell phone, private guitar lessons, private schools, etc.). ”
I would like to save as much as I can for college for my kids as well, however, when you consider that a college that currently costs say $15,000 per year (that’s being conservative) and you have 18 years to save, assuming a 6% increase per year in college costs and an 8% return, you would need to save $322 per month for one child to go to college. It is going to cost our kids alot more to go to college than it did for us, estimates are around $200,000 to $250,000 per child.
Oh, my estimates were from:
http://www.savingforcollege.com
9 LivingAlmostLarge // Jan 6, 2009 at 9:37 am
Private schools, guitar lessons are not necessarily bad. My nephews and neices mostly went to public schools like myself. However one nephew because of ADHD needed extra care and so my sister sent him to private school with a smaller, more personalized environment.
Her sister-in-law is mentally handicapped and needed specialized care as well from birth. So there is no way to say that you won’t “pay” for things because the unexpected happens. And of course not all children are equal. Some may be brilliant and others not so much. One might be a super athelete or artist. It’s hard to judge and broad stroke all extra curricular activities as “unnecessary”.
10 fengshui // Jan 6, 2009 at 9:40 pm
I’m not talking about medically necessary things for children with health conditions. Those are things above and beyond what I was referring to. I just get the idea, from the media, from blogging, etc that parents of this time feel the need to make sure their kids have everything and anything they want.
I’m talking about most kids and the things that they think that they need. I went to HS in the mid 90’s, and I got to go to swim lessons at the YMCA as something “extra”. Wow. I had to start working at age 15, and saved to buy my own car at age 19. I didn’t get laptops, cellphones, and other expensive gadgets. I had to buy anything my parent’s considered “unncessary” such as designer clothes with my waitressing/ babysitting earnings. I turned out just fine not being spoiled. I don’t think that my parents spent much more on the household budget with me there, except extra food and utilities. I got a few $ worth of new school clothes at the begining of the school year and that was about it. I did have braces, and my parents paid oop for those. That was probably their splurge. LOL
11 fengshui // Jan 6, 2009 at 9:44 pm
Also, regarding the college tuition thing. Who knows what will happen with public education in 18 years. Perhaps our governement will realize that making public universities affordable will only help our society, and perhaps the price won’t keep going up every year…..
My retirement is more important, and if push comes to shove, the education fund won’t be “fully” funded and my child would have to take out some loans to cover the gap. $200k to go to college seems excessive, even if it is 18 years from now. That must mean that my $175k house will be worth a million dollars by then…. LOL
13 Monevator // Jan 17, 2009 at 6:59 pm
Good article, which sums up why getting ‘rich’ is as much about mindset as it is about bank balance.
Personally, if I could live the middle-income lifestyle I’m living now without *having* to work then I’d think myself rich.
Would I be able to buy a yacht on a whim? No. But would I be able to do what I wanted each day – be financially free of jobs and mortgages? Yes.
That’s a rich goal for me, and more achievable for most of us to aim for than being a billionaire.
14 LivingAlmostLarge // Jan 17, 2009 at 7:09 pm
Me too about not working!
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