I meet some people who say $100K is cool, but they make $80K. I know one family who pulls in $150K, but they say its not that much and they still have bills to pay.
My brother makes a pretty decent amount. He doesn’t complain. Hes quite a bit older, but still has probably spent upwards of $1mm for his children’s education. I think he’s at about $500-$1.2mm per year (he’s secretive). Then, I have the ‘special’ friends who are pulling in 7 figures and their bosses make stupid money. All they can do is obsess about 8,9 figures and 7 figures is nothing. Like, my one friend who started at a hedge fund and started making 7 figures — quit, then bought a house in the Hamptons (in addition to paying for his Manhattan co-op) and started day trading. 7 figures after taxes dries up pretty quick. When is it enough? Do you have some number that you would be ‘satisfied’ with?
I think about it a lot. Sadly, my conclusion is that you have to work all your life because if you dont have an income stream, you will be very scared to spend what you have accumulated. And how much salary is enuf? If you are spending less than what you earn, it’s enough.
I probably make enough already as a single guy. Sure I could and likely will make more, but what I’ve found is my marginal propensity to spend is very low. Given that I’m a minimalist, it makes sense since that greatly reduces the stuff I spend money on. The only real change would be how many times I travel abroad, I guess. I actually enjoy investing and analysis more than using that money for typical consumption. I only really spend money monthly on restaurants, so I guess if I lived in NYC or Chicago I could bump the spending up a multiple of what I spend now. I’d probably still be a net saver though. But I’m positive a wife/kids would change my situation entirely, unless she is a minimalist too!
I think about it a lot too. I definitely am a net Saver. And reduce my expense according to the overall income of the family. I have sold of my car when I shifted cities and use Uber/Public transport to commute.
this sums it up well…sadly, the ego plays a huge roll and people feel like they need to compensate for their own insecurities through money (and flash)
Everyone would probably say yes to more money. Even Bill Gates would take $100 if you hand it to him. My definition of “satisfied”, however, is when you would not work harder for more money. In other words, you would not change your lifestyle marginally for the additional income.
It’s not how much you make, it’s how much you spend. I have a buddy in commercial real estate that pulls down >$500k a year (and some years way more) but he and his wife are completely irresponsible when it comes to spending. They buy any and everything they want and throw it away a week later. The dude doesn’t even max out his retirement savings.
Earning more is nice. Spending less will make a bigger change though.
This is key. I mean making more money is great, but it only matters if you manage to avoid lifestyle inflation/creep.
A guy I used to work with, got a big promotion and then bought a nice shiny new truck, a motorcycle, etc. My income has more/less doubled in the past 5 years but my lifestyle has only changed in moderate ways. I live in the same house, I drive a cheaper and more hacksaw car than I did then, etc. I spend a bit more on restaurants, travel, and fun but the larger living expenses are more fixed.
At some point, that relationship breaks down though… Let’s say you have very low income but somehow live on an even lower spending (you eat cat food or something). It is much harder to accept that situation, compared to living with a higher income but the same spending/income ratio. So it goes back to the original question, which is what income level would you need.
For areas outside NYC and SF, I’ve always felt that as a single person $90k was enough to live well but not save much. At $120k you could live well and save well.
With a family, I think $120k is enough to live conservatively on a single income with mild saving. At $150k I think you can live well with some saving as a single income family and for me, above that number it simply increases the rate of savings.
It can always be a moving bogey with lifestyle creep, which is where growing up in a less wealthy area and keeping those friends can help to keep your lifestyle grounded and avoid the envy game. Costs will vary significantly by region as well, I’ve found Massachusetts to be unjustifiably expensive outside Boston (meaning it’s hard to understand why the area costs so much) verses other areas I’ve been.