And that life can range from costing mid 5 figures to several hundreds of thousands depending on location, what finishes are in the house, what kind of cars, what the public vs private school situation is, what activities the kids are into, etc, etc.
This is so true! Our neighborhood is master planned, with different sections being built by different builders. One section has homes similar in size to ours, but 30% more expensive. Same number of bedrooms, same square footage, same number of rooms total, but just higher-end finishes and more expensive layouts (like bay windows). Same schools, same access to roads/shopping/etc.
Indeed. We live near two families that we are very close friends with (HCOLA). All of similar age/education, 2 kids each. We all purchased houses that cost a similar amount of money several years ago, and for the most part, you wouldn't think we live lives that are very different.
Compared to couple 1, who have similar income to us, you'd take our expenses and add (gross estimates of monthly cost):
Frequent, expensive home renovations (+1500/month)
Maid service (+200/month)
Cable TV (+150/month)
Premium cell phone service with frequently purchased new devices (+200/month)
Groceries without an attempt to economize (+400/month)
Eating in restaurants a 'normal' amount (+400/month)
Moderately expensive wine (+200/month)
Newer cars - not luxury, driven until old, but nice enough (+600/month)
Driving everywhere, no bicycling (+200/month)
More frequent vacations involving flying the whole family, and general spending while on vacation (+700/month)
Several different classes/lessons for kids (+400/month)
Visits to the salon for hair coloring and such (+100/month)
Expensive gifts for each other (+400/month)
All told, the lifestyle that doesn't outwardly look that different from ours is costing $5500/month more, which is more than our entire non-mortgage spending.
Comparing to the third couple, who used to earn a similar amount but now earns 10 times what the other two couples earn, you'd add:
Financial advisor
Frequent travel, often first-class, often international
Full-time nanny (not live-in)
Luxury vehicles
...I'm sure other things I'm not aware of or don't pay much attention to
If you squint, even the third couple could be middle-class in behavior (though they will admit they are rich at this point). None of us are dealing with private school bills, private jets, butlers, or whatever. Which of us is middle class? Some would even say that we are not middle class, on the basis of income. Some might say that we all live upper middle-class lives. Nonetheless, there's at least a factor of 3-4 separating us in non-mortgage spending.