How to know if you're rich

[mb196]

Is there a difference between being financially independent and being rich?  Or are they the same thing?

Is there a Mustachian formula for determining if one is rich?

I know what it takes to NOT have to work for money.

I also know that a certain income in San Francisco, Boston or New York is not the same as in Wichita or Alabama.   I'm asking for formulas, not actual numbers.   For example, savings equivalent to 10 times one's annual salary + no debt.

I'm talking about "Fkuc Oyu" money.   I think I may have the F the U and the C, but I'm on my way to all seven letters.

The other day, my daughter asked me  if we were rich and I said that we have a decent life and that that life depended on hard work and sacrifices and not spending money "like crazy", but no, we were not rich.  Of course, if we were rich I'd have lied and said no until she was old enough to understand how money works and understand that having some dough doesn't make you special or entitles you to anything.

[MrMoogle]

You're rich if you're pondering these things :P
You can look at where you fall compared to others in % income and % NW. 
https://dqydj.com/net-worth-by-age-calculator-for-the-united-states/
https://dqydj.com/income-percentile-by-age-calculator/

These are by age.  I live in LCOL, and am 90% in income and 96% in NW (for my age), so I am rich, baller even.  I don't know of a location dependent calculator, but they might exist for your location.

[zephyr911]

Do you feel rich? Do you worry about money or do you know you're going to have what you need, and a few things you want?
I'm starting to feel rich at a NW of $300K+, though I still have to work for a little while before really slacking off... maybe half a mil will get me there, maybe more like 750K, but it's pretty nice right here already.

[mb196]

I'm looking for a mathematical answer, a formula.

I know about the psychology of wealth and about feeling rich and about not worrying about money.   NOT what I'm looking for.

You can say that being rich is not about math, but the truth is that it partially -- if not mostly -- is about money.

[Zinsch]

There is no math for "rich". It's a relative term. You have to define it for your own.
Also, you can be rich, but not financially independent.
And you can be financially independent, but not rich

[TheAnonOne]

Do you feel rich? Do you worry about money or do you know you're going to have what you need, and a few things you want?
I'm starting to feel rich at a NW of $300K+, though I still have to work for a little while before really slacking off... maybe half a mil will get me there, maybe more like 750K, but it's pretty nice right here already.

Nearly same boat, 330k right now. I am starting to relax even though my current "plan" is 1.5m, and I am pretty far away (9ish years?).

I could give the "feel good" answer of "your rich if you have food ect ect" but for this forum, I think rich is MORE than 25X your spending, as in, being "above average" if we could count "average" as 25X AKA the 4% rule.

In absolute terms that is probably anywhere from 1.25 -> 1.75 million for a starting zone for many people spending 40-60k a year.

[stoaX]

There is no math for "rich". It's a relative term. You have to define it for your own.

Agreed.  It is obvious in the extremes - we all know dire poverty when we see it and we know that Warren Buffet and Bill Gates are rich...it's all the people that make it such a subjective term.

I'm rich by my own personal definition but most North American / Western European people looking at my lifestyle wouldn't think so.

[Miss Piggy]

What I think the OP is asking is for a formula to calculate his/her FI number. I've had the same question. Is it my anticipated annual spend times 25? Or is it something else?

[monte0930]

To go philosophical:

"He is richest who is content with the least, for contentment is the wealth of nature."
-Socrates

To call someone "rich" is to view them as being much richer than you are. It is a matter of perspective.

[mozar]

I don't think the word rich has on objective definition, only subjective. But I have read that the word affluent has a definition. I read some article that broke it down by age group.

[BTDretire]

If friends or neighbors knew how much money we have saved, they would say we are rich.
I can live on $45k to $55k for the rest of my life. But, I can't buy a new car every year, and I can't stay in 5 star hotels, my wife will not be adorned with expensive jewelry, I won't have a $1M or $2M home*, I can't take expensive cruises or buy a yacht. (spellcheck told me I couldn't even spell yacht!)
 So, my friends and neighbors might say, I'm rich, but I live just like they do, on the same amount of money or less.
Except, I don't have any money worries, hmm, that's a big deal.

* closer to $170,000.

[Bruinguy]

You are rich if you can self-insure your house!

[EmpireOfDirt]

You are rich if you can self-insure your house!

So awesome and so true.

[mjs111]

"Millionaire and "billionaire" are quantitative terms: either you are or you aren't. 

Rich is more qualitative. It's especially more qualitative on the low end of the net worth spectrum, say $1M through $20M.  Most would agree that someone with, say, $20M or more is rich.  There is a fair amount of disagreement though once you get much below $20M, where some will say $1M is rich, others will say you need $5M to be rich, and so on.


Mike

[zephyr911]

I'm looking for a mathematical answer, a formula.

I know about the psychology of wealth and about feeling rich and about not worrying about money.   NOT what I'm looking for.

You can say that being rich is not about math, but the truth is that it partially -- if not mostly -- is about money.

It's still almost entirely subjective. Poor people in the US today have things ancient kings would have committed literal genocide to have. AC, smartphones, cable TV, cars? Sheeyit. Feel free to derive a formula, but it's still gonna come down to who and what you use as metrics, and those things can never be, will never be, universal.
I say I'm rich all the time, half joking, but only half... I really do recognize that we're better off than most ever will be. But I will really feel rich when I'm close enough to FI that decisions are no longer about money. For me that will mean passive income pays for bare necessities and everything else is optional... ballpark, $4-500k invested and minimal leverage on the house. You'll have to work it out for yourself what your threshold is.

[MrsDinero]

I'm looking for a mathematical answer, a formula.

I know about the psychology of wealth and about feeling rich and about not worrying about money.   NOT what I'm looking for.

You can say that being rich is not about math, but the truth is that it partially -- if not mostly -- is about money.

There is no formula because it depends on your income, cost of living, people in your circles, how much debt, etc.

To me being rich is someone who doesn't need to work for their money.  That might include some people on here that are already FIRE'd.

However if you need a formula here is a calculator, although I'm not sure how scientific it is.
 http://www.globalrichlist.com/wealth

This article talks about how much money it takes to be considered rich:  https://www.supermoney.com/2016/05/much-money-take-considered-rich-us/

"However, if you go global, it really isn’t that hard to make it to the top 1% richest people on the planet. An annual income of just $32,000 is all you need."

[galliver]

I associate "rich" more with a lifestyle than a wealth status; though it is odd to call someone living paycheck-to-paycheck "rich", the fact is spending at a certain level/on certain things means you definitely *have* enough money for "anything but not everything". So maybe that's it, in my perception: rich means you have the personal and/or financial capital that you are not worried about your needs, and can accomplish at least a few "luxury" goals with that cashflow, should you make them a priority (one of those could be saving a 'stache and becoming FI! :) )

Am I rich? a nonexhaustive quiz (for answers <0, put 0):

__ # of times per week you have household help (maid, housekeeper, gardener, nanny; if 2 services work simultaneously, counts as 2, etc).
__ tens of thousands of dollars you spend on your chidren's (K-12) tuition annually (if >$0 but <$10k, 0).
__ # houses you own, minus 1
__ # cars you own - # drivers in household
__ # of designer clothing items or purses you own
__ avg # fancy vacations per year ("fancy" defined as staying in 4+ star hotels and eating out 2+ times daily; or all-inclusive; or traveling first class with cash (not upgraded)).
__ # of plane(s), helicopter(s), or yacht(s) you own and "support" (i.e. maintain), x5
__ # pieces of art you own that you purchased for over $1000 (2016USD) ($5k if from someone you know)
__ # bottles of wine/liquor in your possession that you purchased for over $100 (2016USD)

0 points: no outward signs of being rich (might still be wealthy and very Mustachian :) )
1-5 points: you might be rich; or you might value a few things very highly and be scrimping to afford them on a modest income.
5+ points: probably rich. If you post on the internet about how you can *barely* make it on $300k anymore in this country, you'll get laughed at. If you lose your job tomorrow and go bankrupt because you have no savings, you really only have yourself to blame. You may also be marvelously wealthy, well done!

Note: basically, this identifies the "not-not-rich" rather than "the rich", I think. Also it was kind of fun to write. Feel free to add if you like it.

[BTDretire]

I scored 1, it's an extra vehicle, but it's a van used for our business.
So, I'm claiming zero!

[DailyGrindFree]

I will consider myself rich when I don't have to work for money.

[aceyou]

I think of FI as a purely monetary idea, but I think of rich as being more than that.  My children put me further from FI, but they make my life far more rich.  Just one example.  I'm far from FI, but I'm rich beyond belief. 

[Radagast]

I'm looking for a mathematical answer, a formula.

I know about the psychology of wealth and about feeling rich and about not worrying about money.   NOT what I'm looking for.

You can say that being rich is not about math, but the truth is that it partially -- if not mostly -- is about money.

There is no formula because it depends on your income, cost of living, people in your circles, how much debt, etc.

To me being rich is someone who doesn't need to work for their money.  That might include some people on here that are already FIRE'd.

However if you need a formula here is a calculator, although I'm not sure how scientific it is.
 http://www.globalrichlist.com/wealth

This article talks about how much money it takes to be considered rich:  https://www.supermoney.com/2016/05/much-money-take-considered-rich-us/

"However, if you go global, it really isn’t that hard to make it to the top 1% richest people on the planet. An annual income of just $32,000 is all you need."

I am super excited. I just learned I am in the top 0.1% of the world by income. Insane.

[Kakashi]

That global one is humbling.  Really.  To think how much Americans bitch and moan about their income pay.  If you put in $30K as income, you are like near the 99th percentile for the world.  And yet $30K is considered below poverty line for a family. 

Yes I know our expenses are higher than other countries, but still.

[Radagast]

That global one is humbling.  Really.  To think how much Americans bitch and moan about their income pay.  If you put in $30K as income, you are like near the 99th percentile for the world.  And yet $30K is considered below poverty line for a family. 

Yes I know our expenses are higher than other countries, but still.

Yup, we should probably consider the source, which obviously wants our money and is probably biased. And someone in Indonesia can probably get 5 or 10 times the standard of living on $0.39 that I can. Even so, it is amazing.

[Bicycle_B]

What I think the OP is asking is for a formula to calculate his/her FI number. I've had the same question. Is it my anticipated annual spend times 25? Or is it something else?

Yes, your FI number is 25 times annual spend.

http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

Mb196, does the linked article answer your question? 

If not, then rich is to some extent an opinion, therefore formulas can only express each person's opinion.  Mine is that "rich" is a state where:
1) the person feels unconstrained by money worries
2) the person at least meets the FI criteria of investment income >= annual spending.

Why are you seeking a formula to define rich?  (Not opposed to the question, just asking to figure out how to help).

[marty998]

One outrageous definition is that Rich is when you can live off the interest on your interest*
Quite a feat when rates are where they are :O

*If rates are 2% then your annual spending needs to be below (Capital x 2% x 2%).

In my mind, Rich is a feeling, not a number.

[RobFIRE]

"Rich" is subjective.

FIRE is 25x annual spending, but the same person/family could have multiple levels of annual spending, from very basic to moderate to luxurious. But "luxurious" to one person means driving a 3 year old car, having steak for Saturday night dinner, but to another person means private helicopter and caviar for lunch.

From a global perspective I would say that anybody in the western world who is working and has an emergency fund or is FIRE is "rich", their position is secure, they have freedom and leisure time, so are better off than the other 99% of the world and won't be in significant danger if they lose a month's income. Of course "rich" still has limitations as even the Buffets and Gates of the world could have a health issue for which there isn't a cure, therefore no amount of money would (at least at current point in time) save them.

[2lazy2retire]

"A man is rich in proportion to the number of things he can afford to let alone"

[Crusader]

I would personally say it is when for me I can buy any luxury at the drop of a hat with negligible effect on my net worth. The obvious example would to buy a Tesla with what equates to the spare change in my pocket. Same thing with taking a casual plane ride in first class to anywhere on a whim. That to me is rich. To throw a number to start for a lifestyle like this I would say $10 million portfolio.

Otherwise being financially independent for me is having all you basic expenses covered indefinitely with a little margin to still increase your portfolio slowly. For this would depend on your lifestyle, but to throw out a hard number example let us say $1 million portfolio. With the ability to withdraw $40,000, but only withdraw $30,000.

[MrMoogle]

You guys are crazy saying $10m+ makes you rich.

According to:
https://dqydj.com/net-worth-in-the-united-states-zooming-in-on-the-top-centiles/
$10m puts you in the top 0.5% of Americans.
The top 10% is just under $1m, if you have that, you're certainly rich.

[mb196]

Thank you all for your kind and informed replies.   The links provided have helped me but much more so, the formula of 25X or 4%, which I had read years ago and had forgotten.

The answer about using one's annual expenses as the starting point was also very good.

I also understand better what is FIRE and what is wealthy.  FIRE having enough to not have to work and cover all your expenses and Wealthy being spending like crazy "at the drop of a hat" and not being affected by it.

Coincidentally, a friend at work yesterday told me that he and his wife make 200K and live a very middle class life.   200K is considered a truckload of money in Des Moines but it's interesting to see how where he lives, he feels like he's barely making it.  I pointed to his nice house, nice car, significant 401K savings and told him to feel better about himself and that he was still in the top 5% (actually he is higher).   It's very relative, but it definitely starts with a frugal lifestyle and good values from the very beginning of one's life.   

Now that I'm responsible for the life of two little girls and since I've made every imaginable mistake with money in my youth, I want to show my girls what's important in life and what's BS.   The beauty of taking a walk in the park or camping or going to free concerts or the library versus constantly shopping for clothes and shoes and bags and frivolously spending....at the drop of a hat.

Thanks again for your kind answers.

[Guesl982374]

While I only agree with about ~50-60% of what these guys have to say, it does put some back-of-the-napkin formulas around wealth and how to drive it...just ignore the chauvinism / wall street is the only career bull and only take the useful bits...

I find using their knowledge/perspective to drive income, while using MMM to maintain/reduce expenses can result in a very explosive situation for growing ones wealth.

http://wallstreetplayboys.com/savings-rates-are-worthless-and-what-real-net-worth-is/

"Focus on Annual Spending Multiples: This is the fastest way to see an acceleration in your real net worth. Your real net worth is how many years you can live if you don’t do anything. It does not matter if you’re making $50K or $500K because your real net worth depends on your annual spend. To put some brackets around it, 20x annual spending is rich, 10x annual spending is comfortable and 1x annual spending is an abysmal disaster."

http://wallstreetplayboys.com/calculating-individual-total-worth/ <--an interesting, but different perspective than what's mostly posted on these boards. Adjust as you see fit.

[aspiringnomad]

Here's an attempt to concoct a formula. Let's take this ancient bit of wisdom as a truism (I removed "with the least" from the quote because it's superfluous to the point that contentment is the measure of richness).

To go philosophical:

"He is richest who is content...for contentment is the wealth of nature."
-Socrates

Let's then add the assumption that those reading this site are most content with the most autonomy. In other words, we are all aiming for financial independence, and perhaps with that, the time and space that this independence allows (i.e., early retirement). For now, let's add no other complicating assumptions about the folks here, such as the cost of living in their specific area or their individual propensity for badassity, other than the assumption that we live in the US (sorry, but necessary to generalize from the research below) and are equally happy drawing income from our stash as we are from a paycheck.

Finally, let's add behavioral research and polling that consistently shows that the correlation between income and happiness begins to diminish significantly at around an income of $75,000 USD across a broad swath of Americans (see link below). Applying the 4% SWR gives us a net worth of $1.875 million to maximize the correlation between our wealth-derived income and our happiness in the US in 2016. Anything beyond that is subject to rapid diminishing returns in contentedness, and therefore, diminishing returns in richness. So while one may still increase their contentedness with more wealth, I think this demarcation where the correlation falls off is fine a place as any to draw a line between rich and not rich for the average American.

To nitpick my own formula, the number can probably be revised downward somewhat to account for the fact that the maximally correlated contentment an annual paycheck of $75,000 provides probably includes some small amount of savings for the average American and a higher tax rate than a similar income derived from investments. I also realize that I'm blending assumptions about the average American and the average MMM forum user, which is why MMM and other folks here are maximally content with much lower FIRE numbers.

http://gogirlfinance.com/is-the-formula-money-happiness-true/

[radram]

Here's an attempt to concoct a formula. Let's take this ancient bit of wisdom as a truism (I removed "with the least" from the quote because it's superfluous to the point that contentment is the measure of richness).

To go philosophical:

"He is richest who is content...for contentment is the wealth of nature."
-Socrates

Let's then add the assumption that those reading this site are most content with the most autonomy. In other words, we are all aiming for financial independence, and perhaps with that, the time and space that this independence allows (i.e., early retirement). For now, let's add no other complicating assumptions about the folks here, such as the cost of living in their specific area or their individual propensity for badassity, other than the assumption that we live in the US (sorry, but necessary to generalize from the research below) and are equally happy drawing income from our stash as we are from a paycheck.

Finally, let's add behavioral research and polling that consistently shows that the correlation between income and happiness begins to diminish significantly at around an income of $75,000 USD across a broad swath of Americans (see link below). Applying the 4% SWR gives us a net worth of $1.875 million to maximize the correlation between our wealth-derived income and our happiness in the US in 2016. Anything beyond that is subject to rapid diminishing returns in contentedness, and therefore, diminishing returns in richness. So while one may still increase their contentedness with more wealth, I think this demarcation where the correlation falls off is fine a place as any to draw a line between rich and not rich for the average American.

To nitpick my own formula, the number can probably be revised downward somewhat to account for the fact that the maximally correlated contentment an annual paycheck of $75,000 provides probably includes some small amount of savings for the average American and a higher tax rate than a similar income derived from investments. I also realize that I'm blending assumptions about the average American and the average MMM forum user, which is why MMM and other folks here are maximally content with much lower FIRE numbers.

http://gogirlfinance.com/is-the-formula-money-happiness-true/

I like this assessment.  +1

[redbird]

I am FIRE. I have zero debts. Am I rich? According to some people, yes.

My household only owns 1 car, we bought it used, and it's only worth about $10k. I don't eat out much. I have never flown anywhere in any higher class of seat than economy. I don't own a smartphone. I rarely buy new clothes or shoes. I clean my home myself. Am I rich? According to other people, no.

I don't know if I'm rich or not. I only know I'm happy, so that's good enough for me.

[dycker1978]

I remember reading some where that if you lived in Canada, and were just on social assistance, you were already in the top 3% richest people in the world.  I think that we need to realize this.

[zephyr911]

While I only agree with about ~50-60% of what these guys have to say, it does put some back-of-the-napkin formulas around wealth and how to drive it...just ignore the chauvinism / wall street is the only career bull and only take the useful bits...

I find using their knowledge/perspective to drive income, while using MMM to maintain/reduce expenses can result in a very explosive situation for growing ones wealth.

http://wallstreetplayboys.com/savings-rates-are-worthless-and-what-real-net-worth-is/

"Focus on Annual Spending Multiples: This is the fastest way to see an acceleration in your real net worth. Your real net worth is how many years you can live if you don’t do anything. It does not matter if you’re making $50K or $500K because your real net worth depends on your annual spend. To put some brackets around it, 20x annual spending is rich, 10x annual spending is comfortable and 1x annual spending is an abysmal disaster."

http://wallstreetplayboys.com/calculating-individual-total-worth/ <--an interesting, but different perspective than what's mostly posted on these boards. Adjust as you see fit.

Not very logical, these guys. I find repeated instances of "do X not Y" ignoring that X and Y are mathematically linked.

Exhibit A: They say SR is irrelevant and earnings multiples are everything... ignoring that SR is a direct predictor of the time to arrive at any given multiple. See: MMM/"Shockingly Simple Math".

Exhibit B: "there is no ceiling to the amount you can earn and there is a floor to the amount you can save"... no, there is a floor to spending, and the amount you can save increases 1-for-1 with the amount you earn. I'm not sure if they accidentally used the wrong word there, but it sounds like they're trying to be clever with semantics and tripped over themselves.

Exhibit C: "We don’t care much for saving because all of your energy should be spent creating recurring income"... doesn't saving and investing achieve that?

Beyond that, I take issue with the unlimited earning pie-in-the-sky statement... reality disagrees violently. Between ability, connections, and willpower, most of us do actually have a ceiling, if a slightly elastic one. We can't all earn 7 figures, and if we did, we'd all be right where we are today, since cash is just a placeholder for resources anyway. But it doesn't matter, because low earners here are still going FIRE in their 30s by doing what these authors say is impossible/irrelevant/whatever.

DW and I are at diminishing returns on income... very much in a place where cost cutting gets us there faster than clawing our way up our respective corporate ladders. The moment I realized small habit changes would push me to FI faster than that elusive promotion I'd been chasing for years, I shifted all that wasted effort into savings. Stash is blowing up, and I'm going to beat my superiors to retirement by 2-3 decades.

[englishteacheralex]

That global one is humbling.  Really.  To think how much Americans bitch and moan about their income pay.  If you put in $30K as income, you are like near the 99th percentile for the world.  And yet $30K is considered below poverty line for a family. 

Yes I know our expenses are higher than other countries, but still.

I was hoping somebody would bring this up. The average American is rich beyond most of the world's wildest dreams. Keeping this in mind is a game changer as far as personal finance goes. This is why my husband and I give so much money away. With a global perspective, we realize that we are incredibly rich.

[Guesl982374]

While I only agree with about ~50-60% of what these guys have to say, it does put some back-of-the-napkin formulas around wealth and how to drive it...just ignore the chauvinism / wall street is the only career bull and only take the useful bits...

I find using their knowledge/perspective to drive income, while using MMM to maintain/reduce expenses can result in a very explosive situation for growing ones wealth.

http://wallstreetplayboys.com/savings-rates-are-worthless-and-what-real-net-worth-is/

"Focus on Annual Spending Multiples: This is the fastest way to see an acceleration in your real net worth. Your real net worth is how many years you can live if you don’t do anything. It does not matter if you’re making $50K or $500K because your real net worth depends on your annual spend. To put some brackets around it, 20x annual spending is rich, 10x annual spending is comfortable and 1x annual spending is an abysmal disaster."

http://wallstreetplayboys.com/calculating-individual-total-worth/ <--an interesting, but different perspective than what's mostly posted on these boards. Adjust as you see fit.

Not very logical, these guys. I find repeated instances of "do X not Y" ignoring that X and Y are mathematically linked.

Exhibit A: They say SR is irrelevant and earnings multiples are everything... ignoring that SR is a direct predictor of the time to arrive at any given multiple. See: MMM/"Shockingly Simple Math".

Exhibit B: "there is no ceiling to the amount you can earn and there is a floor to the amount you can save"... no, there is a floor to spending, and the amount you can save increases 1-for-1 with the amount you earn. I'm not sure if they accidentally used the wrong word there, but it sounds like they're trying to be clever with semantics and tripped over themselves.

Exhibit C: "We don’t care much for saving because all of your energy should be spent creating recurring income"... doesn't saving and investing achieve that?

Beyond that, I take issue with the unlimited earning pie-in-the-sky statement... reality disagrees violently. Between ability, connections, and willpower, most of us do actually have a ceiling, if a slightly elastic one. We can't all earn 7 figures, and if we did, we'd all be right where we are today, since cash is just a placeholder for resources anyway. But it doesn't matter, because low earners here are still going FIRE in their 30s by doing what these authors say is impossible/irrelevant/whatever.

DW and I are at diminishing returns on income... very much in a place where cost cutting gets us there faster than clawing our way up our respective corporate ladders. The moment I realized small habit changes would push me to FI faster than that elusive promotion I'd been chasing for years, I shifted all that wasted effort into savings. Stash is blowing up, and I'm going to beat my superiors to retirement by 2-3 decades.

Agreed, like I said, at least 50% is flawed however:

A: I took the title to mean that 1) saving 10% is irrelevant/never going to get you FI or wealth quickly and 2) if you fix your savings rate and your income balloons, you are actually discounting your current 'stache because you are INCREASING your spending proportionally. I chalked it up to poor word choice

B: Agreed. In my opinion, most people here at MMM tend to focus too heavily on reducing spending. Other PF bloggers like these guys tend to focus solely on income and to ignore the expense side of the equation. Both methods have drawbacks. My personal opinion is that one should focus on both sides of the equation, completely decoupling income from expenses: Maximize income while minimize expenses. Eventually you will hit some sort of marginal return on effort on either side of the equation, as you've referenced in your own situation. I typically believe that the right balance (depending on COL, starting point, family situation, etc) is total gross household income between $100K-250K and expenses between $20-60K before either side of the equation (raising income or lowering expenses) start to really become more difficult.

C: Agreed. Their definition of "saving" is incorrect. You should interrupt their use of the word 'saving' as "someone who just accepts their income is fixed and solely looks at reducing their expenses".

Like I said, take the golden nuggets, leave the rest. In this case, the idea of looking at one's wealth in terms of future potential, health, and focusing on Annual Spending Multiples.

[zephyr911]

I was hoping somebody would bring this up. The average American is rich beyond most of the world's wildest dreams. Keeping this in mind is a game changer as far as personal finance goes.

Didn't I? xD

Poor people in the US today have things ancient kings would have committed literal genocide to have. AC, smartphones, cable TV, cars[...]

But anyway, this:

This is why my husband and I give so much money away. With a global perspective, we realize that we are incredibly rich.

...is spot on. As my SR goes up and up, and as we grow into a happier and more fulfilled life increasingly free of material concerns, I find it gets easier and easier to give more, knowing how lucky we are and how much suffering and need there is. Everyone here knows about saving their raises instead of spending... I also try to give a portion of each raise. It's still small as a % of income, but seems like a lot... more than some people's car payments, many times what I used to give, and it happened with such ease. In the end I hope I'll massively overshoot my FIRE requirements and end up giving away more than I spend... nothing would make me happier.

Like I said, take the golden nuggets, leave the rest. In this case, the idea of looking at one's wealth in terms of future potential, health, and focusing on Annual Spending Multiples.

Fair enough, and I do agree that there's some value in there. Nobody should live in a bubble, be it Wall Street or MMM-orientied... xD

[englishteacheralex]

Right--don't think about keeping up with the Joneses, just watch Vice or read about Haiti in the New York Times or watch anything on Netflix about the developing world--it quickly becomes apparent that by living in a stable, peaceful society with the ability to buy a car, have running water and reliable electricity and access to modern medicine, we are incredibly rich. It makes me a lot less complain-y pants about things like old appliances or flooring that is out of fashion.

[galliver]

I remember reading some where that if you lived in Canada, and were just on social assistance, you were already in the top 3% richest people in the world.  I think that we need to realize this.

As an American resident, I can't speak specifically to Canada but I would agree that anywhere in the "developed world" we experience a very high standard of living on a daily basis. But I have always found the comparison with global incomes somewhat misleading... someone on here pointed out on a different thread that while the official exchange rate for USD to Indian rupees is $1=66INR, the consumer price equivalency is more like $1=10INR, which meshed with what I saw during a short visit several weeks ago. So, $10/day or ~$300/mo sounds scary low, but if you look at purchasing power, that becomes more like making it in the US on $1800/mo, which is a lot less scary. The average is actually $4/day, which of course means lots of people make less, which does start getting very tight; I'm not trying to say that global poverty doesn't exist, just that comparing US/Canadian welfare/social assistance to global incomes doesn't account for the fact that this same amount (by exchange rate) in one of these other countries could afford you a truly extravagant lifestyle, whereas in in North America you need that amount to pay rent on a run-down apartment and buy a few groceries.

[rantk81]

If you are sitting in a comfortable chair, in a climate controlled environment, with food in your stomach, while staring at illuminated rectangles in order to ponder whether or not you are rich, then you are rich :P

[Schaefer Light]

I will consider myself rich when I don't have to work for money.

Yep.  That's my definition.

[SeaEhm]

__ # of designer clothing items or purses you own

Haha - designer purses - any girl into designer purses could have 0 on every item on that list with 10 next to designer purses. 
   

[SeaEhm]

I will consider myself rich when I am able to join elite clubs where the fees are ridiculous just to keep the poors out. 

People think having LV on their purse makes them perceived as rich, wait until I pull out a hat that is like the one Neil Patrick Harris is wearing.

[marty998]

I will consider myself rich when I don't have to work for money.

Yep.  That's my definition.

I like that one. Succinct and to the point.

[galliver]

__ # of designer clothing items or purses you own

Haha - designer purses - any girl into designer purses could have 0 on every item on that list with 10 next to designer purses. 
 

Well she must be rich! I can't spend in the neighborhood of 100k on purses ($10k x10), even on credit.

Sent from my SM-G900V using Tapatalk

[Metric Mouse]

That global one is humbling.  Really.  To think how much Americans bitch and moan about their income pay.  If you put in $30K as income, you are like near the 99th percentile for the world.  And yet $30K is considered below poverty line for a family. 

Yes I know our expenses are higher than other countries, but still.

Right? Just punching one's numbers into that calculator, and seeing the result, should make them feel rich. Like, insanely mind boggleling rich. Like dance around the over-sized living room in their lavish house under their electric lights that ALWAYS have power rich.

[human]

To base the idea of being rich on assests makes no sense. A guy making a million a year but blowing it on lambos ain't rich?

If your income is in the top 10% of income earners in a developed "northern" country you are filthy rich, just get your spending under control. I personally fall in this definition with only two and a half years expenses saved up right now.

It always blows my mind when this type of conversation come up and people ignore 98% of the 7 billion people that live on this planet. You live in a developed country and have a low income and manage to amass the assets to be fininacially independent you are of course rich but you shouldn't ignore incomes.

[Metric Mouse]

To base the idea of being rich on assests makes no sense. A guy making a million a year but blowing it on lambos ain't rich?

If your income is in the top 10% of income earners in a developed "northern" country you are filthy rich, just get your spending under control. I personally fall in this definition with only two and a half years expenses saved up right now.

It always blows my mind when this type of conversation come up and people ignore 98% of the 7 billion people that live on this planet. You live in a developed country and have a low income and manage to amass the assets to be fininacially independent you are of course rich but you shouldn't ignore incomes.

What about a business owner who makes a million dollars in income, but spends $950,000 in supplies/insurance/staffing costs etc? Would they still be 'rich'?