How Much Does It Take to be Rich?

Here's an interesting thought:

How much money would it take for you to feel rich?

I've been thinking about this a bit and have some thoughts to throw out to help you consider what it might take for you to feel rich. Here goes:

1. Is "rich" relative? For instance, could as "little" as $500k in net worth make you feel rich because it would place you so far ahead of most people's net worth?

2. Is "rich" absolute? Do you need a certain amount of money to feel rich -- such as $5 million, $10 million or some other absolute number?

3. Do you need a certain level of spending to feel rich or is it net worth related only? In other words, if you had $5 million in the bank but only spent $30,000 a year, would you still feel rich? Or would you need to spend something like $200,000 a year to feel "rich"?

4. When do rich people realize they are rich? And how do they realize it (by looking at their check book, by looking at their home and possessions, or something else)?

There's probably not much benefit by considering this issue, but I was feeling a bit philosophical today and thought I'd spring this on you. ;-)

Comments

[Mark]

I can tell you this, from being associated with some wealthy people, they would tell you they are not "rich" and that they never have "enough".

[MrAtoZ]

Basically the same debate was held yesterday in Robert Frank's blog at the WSJ: http://blogs.wsj.com/wealth/2007/11/29/does-a-97000-salary-make-you-upper-class/

[Katy Raymond]

For me, "rich" will be when we can live comfortably off the income from our investments. It will have little or nothing to do with comparing my house, possessions, cars, etc. with those of others.

Right now, my husband and I enjoy speculating about the comparative wealth of us and our friends. Most of them appear richer than we are, but I wonder if they really ARE richer. We may never know! :)

[Lynnae @ Being Frugal.net]

I think rich is a state of mind. My husband and I don't have a lot of money right now, but I certainly don't consider us poor. We are blessed in so many ways.

Matthew 6: 19-21 "Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also."

I already feel rich. My net worth may be dangerously close to a negative number, and I'm certainly working hard to change that, because I don't believe in debt. But I already feel rich.

[The Saving Freak]

I believe the most likely answer is, "One dollar more."

[MMJ]

Now this opens up a whole can of worms. There is financially rich or spiritually rich. The former I determine to be a point in our lives where we feel that we would not have to work 'day' jobs anymore and concentrate on raising the kids, volunteering more. The latter, I believe we have already attained. It is a matter of not loosing the latter while trying to achieve the former.

[MK]

MMJ raises an interesting point. In general, I would second what MMJ and MrAtoZ has already said, being rich is the point where you can live comfortably on the interest or dividends from your investments, and that is my personal goal. That is not an absolute number of dollars in the bank because it depends so much on how hard the money is working for you, and how much money you need to live comfortably. It also does not depend on how others around you are doing; if you are happy with the way you live your life, that's all it really is about. I guess that definition could also be part of that for spiritually rich, if you are unhappy and/or always want more, then you are not really rich, you just have a decent chunk of money.

My two cents. Coming from Europe, not worth much at present exchange rates.

[ROBERT]

Article some years ago ask How much to make you comfortable. The answer, over the spectrum of incomes, was 10 to 15 percent more than what they had coming in now. So I guess the answer would always be a little bit more.

[Mary McK.]

When I can pay our bills anytime before they're due, rather than putting them on my electronic calendar so I don't pay too many at once and run out of cash before the next paycheck.

[However, the calendar method has wealth-building properties so it isn't just to avoid spending too much money at once - if I wait to pay the bills until right before they're due (allowing enough time for the money to arrive on time), I get to keep the cash earning interest in my checking account (we have 5.12% interest). Still, I would like the *freedom* to be able to pay the bills any time.]

[GMan]

Rich = when you can buy anything you want and the check will clear.

Wealthy = when your wife can buy anything she wants and the check will clear;-)

[Richard]

"Rich" is a relative term but I would classify 97k in salary, net worth or both as working class. If the average guy with wife, kids mortgage is making 97k then I'd imagine he is almost living paycheck to paycheck. I wouldn't think there is enough slack in his/her system to cover price spikes in energy, food, taxes and healthcare.

I think being "Rich" is a composed of several components;

* Time management - having the ability to set your own schedule without getting approval from a supervisor. Having enough time spend more time on your true passions vs. "working for the man"

* Money - Having enough cash to pay for living expenses, having enough cash to buy the goods and services one needs to be happy in life while having at least 25% remainder from monthly expenses + "happiness" goods and services to reinvest in net worth.

[Todd]

Rich financially is 10 million dollars in investable assests today. You can invest very conservatively to earn 5% which would be $500k. You can then spend $250k to live which is the upper 10% of the world's salaries and save $250k toward building more wealth. This is Rich.

There was also a whole NPR segment about this, also with Robert Frank from the WSJ blog, which you can find here: http://www.npr.org/templates/story/story.php?storyId=16623741

Rich is relative. I live in Los Angeles and while my salary may be relatively high, I certainly don't feel rich.

To put some hard numbers on it though, in my city, and in my worldview, I think you need a minimum of $2 million in order to be "rich."

[olatunde arowolo]

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[Zook]

As a 20-something nearing 30, $10 million is NOT needed for me to call myself "rich". I would love to have a few hundred thousand now, and very little would change for me except peace of mind.

I would love to know I have $250,000 sitting in my brokerage account.

What can I say, I am easy to please....and to be "rich".

[Lord]

I am financial independent, comfortable, but I wouldn't consider myself rich. Rich to me would be $100k in investment income, or, using a safe withdrawal rate of 4%, $2.5m. One might half these living in the country or double them living in the most expensive areas, as long as I am content there. Otherwise, I care little for the opinions of others. Income and wealth are exchangeable as a passive investor at that rate. One realizes it when ones money exceeds ones desires, one earns more than one has any wish to spend, and one prefers investments and money to what they may buy. That probably varies greatly between people, some who need little to be happy and some who need collections, endowments, and prestige.

[Anonymous]

I have a number of milestones, but the one I'm really looking forward to is the day when I can say that the income from my investments will sustain my lifestyle adjusted for inflation ... forever. It isn't about a specific number for income or wealth. It is about having enough invested wealth to sustain the income my lifestyle requires.