Gareth Wilson brings something up in comments to this post. What do the parents among you say when your children ask you if your family is rich? I say, yes, we’re rich. Living in Asia as we do, our family has lots of chances to see really poor people in Indonesia, the Philippines and Thailand. We see these people because we’re going on family vacations to stay in villas in Bali. There doesn’t seem to be much to say about that except, being rich sure is great, eh? I tend to say, well, that doesn’t mean we can buy just anything we want, and we’ll often see other people we know having great things we can’t afford, but on the whole, we’re rich. This is ideally meant to inspire charitable thoughts rather than mercenary self-satisfaction. Am I going to deprive my children of their God-given American right to insist they are middle-class? And when is Richie Rich Euros going to come out and serve as the grave monument for the mighty US dollar?
{ 60 comments }
magistra 04.21.08 at 12:05 pm
I would probably tell my daughter that we’re not rich, but we’re better off than most people. That’s based on the fact that we have above median income for the UK, (but I’ll wait to explain that to her, till she’s older than 5).
I suppose mentally I think of whether you are ‘rich’ or ‘poor’ (or in-between) as being about discretionary spending, and thus crucially dependent on factors such as housing costs, which vary greatly by region. Very roughly, I’d say that in the UK if you have to think hard about spending five pounds on something you’re poor, if you have to think hard about spending a hundred pounds on something you’re reasonably well-off (like us) and if you don’t have to worry about anything much under five hundred pounds you’re rich.
Andrew Edwards 04.21.08 at 12:29 pm
I agree. “We’re much better off than most people, but not really rich” says that we do owe something to our circumstances and that we should have sympathy for others, but hopefully would leave my kids with a desire to strive for something better, which I’d also like.
Belle Waring 04.21.08 at 12:38 pm
“we’re much better off than most people, but not really rich” seems right in a lot of ways, but at what point do you think it would be appropriate to say “we’re rich” with caveats about how some people are much, much richer? surely there’s some family for whom the latter answer is right, a family not named Buffett. I will say that we talk about living in a rich country versus living in a poor country.
Dave 04.21.08 at 12:56 pm
@1: well, I wouldn’t have to worry about spending 500 quid, if I needed to; but I’d think I’d gone mad if I even thought about spending 500 quid on ‘discretionary’ items, say once a month, and I’d know I was heading for penury if I did actually start spending like that…
Old saws start to loom – anyone who is a fully-paid-up citizen of a ‘western’ country is far ‘richer’ than the majority of the rest of the population, even if they don’t have a penny in their pocket – they have all the amenities of advanced civilisation at their disposal [e.g. public libraries], can get unemployment benefits, free healthcare, their rent paid, etc etc… Bearing in mind, of course, that the USA is not a ‘western’ country in many of these respects, but a howling wilderness of primal greed and indifference. [/tongue-in-cheek]
This is why, of course, to expand the point, hopeful idealists in the West who look forward to a more just world find themselves in a position analogous to that of idealistic aristocratic Enlightenment philanthropists: for things to change much for the better, first their/our whole world will need to be torn apart brick by bloody brick…
perianwyr 04.21.08 at 1:00 pm
To say that you’re rich is a statement that the fate of the poor does not affect you. How true is this?
matt 04.21.08 at 1:04 pm
Also, family money + live-in servants = rich in most cases. That others are richer yet is true but doesn’t change the point. That “rich” is context sensitive is also true, of course, but that’s a bit subtle for most kids and shouldn’t be used as an excuse to think one is less well off than one is.
harry b 04.21.08 at 1:07 pm
I say that we have more money than we need, and that we are in the top 20% of income-earners in America and, I imagine, the top 1/2% in the world. I add that this is because we have been very lucky, and because income is distributed very unfairly, and that like other people with more money we have stringent obligations to those who don’t. My 11 year old understands all that. (I use more relaxed language with my 7 year old, and I don’t even bother talking to the toddler about it at all — he doesn’t seem to care).
Markup 04.21.08 at 1:15 pm
I am just a poor blogger
Though my story’s seldom told
I have squandered my resistance
For a pocket full of mumbles such are promises
All lies and jests
Still a blogger reads what he wants to hear
And disregards the rest
delagar 04.21.08 at 1:19 pm
My kid actually asks (anxiously), “Are we poor?”
What I say is, “Compared to what? Compared to most people on this planet? No. Most people on this planet would love to live the way we do. Compared to most people in America? Eh. We’re doing all right.”
I’d love to have enough money that I didn’t have to squeeze the budget to buy a pair of jeans, but hey, should have been born with better health and richer parents.
Andrew Edwards 04.21.08 at 1:25 pm
at what point do you think it would be appropriate to say “we’re rich†with caveats about how some people are much, much richer?
I would use the heuristic “rich enough to live a very comfortable lifestyle (i.e. not worry about money under any normal condition or normal purchase) without working“.
Conventional wisdom is that at ~$20-30M in wealth you are rich enough to no longer need to work (“F–k You Money”), and at $200-300M in wealth you are rich enough that neither you nor anyone in your family for generations will need to work.
The Modesto Kid 04.21.08 at 1:39 pm
Sylvia has asked questions like this (can’t remember precisely how she asked), and I have sort of hemmed and hawed.
magistra 04.21.08 at 1:48 pm
This got me thinking, so I looked up some statistics on household income from Department of Work and Pensions. Based on household income before housing costs, we’re actually near the top of the 8th decile, which is surprisingly high, (on one decent white collar salary). And to be in the top decile, so that you earn more than 90% of the population, you have to be earning 45,000 GBP with one child or 40,000 GBP with no children, which is certainly well-off, but not what I’d think of as stinking rich. So we are pretty lucky, (although we are not rich by a 5 year old girl’s standard, as we cannot afford a pony).
novakant 04.21.08 at 1:59 pm
A commonly accepted definition of “rich” is possessing enough material wealth to be able to finance an upper middle/upper class life style solely through interest/capital gains/income from property, thus not being dependent on a salary.
Belle Waring 04.21.08 at 2:04 pm
a person for whom that’s true is obviously rich, but I think some people with less money than that surely also merit the title. again, it’s “compared to what”, but the top 10% of a given country have to be rich, nu? %5?
bob mcmanus 04.21.08 at 2:38 pm
1) What Dave said ay 4
10:”Conventional wisdom is that at ~$20-30M in wealth you are rich enough to no longer need to work”
I think you put an extra zero there. 2 million check = 1.4 after taxes = buy house, car whatever = million invested returning 50k a year, even with 10k healthcare you’re living well with a security cushion.
Unless you “need” to vacation in Bali.
chris y 04.21.08 at 2:43 pm
A commonly accepted definition of “rich†is possessing enough material wealth to be able to finance an upper middle/upper class life style solely through interest/capital gains/income from property, thus not being dependent on a salary.
Commonly accepted by people who most of the world would regard as plutocrats themselves. I’m sorry, a good working definition of “rich” is not knowing you’re born as far as the stuff you take for granted is concerned, which probably applies to most people here. If you live in a country like Britain, where the government regards non-ownership of your own washing machine and colour TV as an indicator of deprivation, then unless you’re a vagrant you’re rich. Not being as rich as Lord Tomnoddy doesn’t make you poor, or even “getting by”.
A colleague of mine once went on holiday to Cuba and returned with horror stories about the people who had to get by on $20 a week. I recounted this to an Indian friend, who burst out laughing: “Bloody middle class luxury!”. Obviously she was bending the stick rhetorically in the other direction, but her point was basically sound. Which is why Belle is quite right to tell her children that they’re rich. Not the richest of all, but most of the way there.
harry b 04.21.08 at 2:51 pm
What about this: You’re rich if you have a reasonably good prospect of maintaining an income in the top 20% (or perhaps the top 10% — it depends on how unequal the distribution of income is) of the income profile without having to do work that really gets you down?
lemuel pitkin 04.21.08 at 2:53 pm
Novakant and Andrew Edwards are correct. Anyone who needs to work for a living, is not rich.
Rich, middle class, working class and poor are sociological categories, not just slices of the income distribution.
Brock 04.21.08 at 2:54 pm
I thought the standard evasive answer was “We’re rich in love.”
novakant 04.21.08 at 2:58 pm
I don’t know, Belle, most of the definitions found in dictionaries and, I would say ordinary language too, point to wealth, which in turn means possessing a large amount of capital, property and/or other assets, so I don’t think being comparatively well paid is a sufficient condition. Obama is “well-off”, the Clintons are “rich”
Andrew Edwards 04.21.08 at 3:02 pm
Bob:
Fair ’nuff, but depends on what you’re used to. If you’re used to $50k a year and suddenly get handed $2M, then yes you can probably retire.
But most people who accumulate $2M are not used to living on $50k a year. That’s where the $20M figure comes from – it’s (very roughly) the point at which your income from investments (~$500k a year, for the sake of argument) can buy you a quality of life on par with what you’ve become accustomed to in the course of building that level of wealth in the first place.
abb1 04.21.08 at 3:10 pm
I thought I was quite well off, until I found out that a family with my income (about 120K) is qualified for subsidized apartment here. Damn. Brother can you spare a dime?
Barry 04.21.08 at 3:12 pm
“But most people who accumulate $2M are not used to living on $50k a year.”
And a lot of people who have $10M are probably not used to being able to live off of the interest on that, either. Makes no difference – they’re rich. They just have tastes which are even richer.
chris armstrong 04.21.08 at 3:14 pm
Novakant, at the level of ordinary language, I don’t think that (well-off / rich) distinction is that common. You may be right that ‘rich’ immediately calls to mind images of great wealth – but I’m not sure that ‘well-off’ calls to mind images of high income instead. If I had to define well-off as it’s used by the people I hear using it, I’d say it meant ‘a little bit less rich than rich.’
For what it’s worth, I wonder if we should be defining ‘richness’ in gross terms. If someone has lots of money, but lots to spend it on, lots of dependants, and so on, I’d still call them rich I think. But with lots of dependants. Otherwise defining rich-ness in terms of disposable wealth is always going to be misleading – people have a way of accounting for what comes in one way or another, and discounting ‘housing costs’ (magistra’s example) against rich-ness raises tricky issues. Someone who chooses to live in a big house in an expensive area does not, on my view, cease to be rich when they do so.
lemuel pitkin 04.21.08 at 3:39 pm
And a lot of people who have $10M are probably not used to being able to live off of the interest on that, either. Makes no difference – they’re rich. They just have tastes which are even richer.
No. There is a qualitative distinction.
First, consumption doesn’t rise in line with income, and even les so with wealth. This is about as well-established a pattern as social science offers. Second, as yor wealth increases, the passive income available to you will eventually surpass whatever you might earn from working.
Belle and a lot of commenters here would like to imagine there is a smooth scale of income and wealth, so it’s all relative — you’re better off than those people, worse off than that one, so “rich” all depends where you stand. Not so.
There are regular allometries between consumption, income, wealth and status — they don’t just vary proportionately.
Bruce Baugh 04.21.08 at 4:11 pm
I once asked my dad about this, and he thought about it for a while, and said something about like this:
“By a lot of people’s standards, I guess we are. We could get to what your mother and I think of as rich with a few years’ effort, but it would involve a level of risk and investment we don’t feel comfortable with. We’re certainly bourgeoise, if you’re wondering about where we are in up-against-the-wall lists.”
Bruce Baugh 04.21.08 at 4:17 pm
Oh, I should note: Dad was an engineer at NASA. If memory serves, at the time I asked, he turned out to be earning at about the 70th percentile, or a bit under that.
jeet 04.21.08 at 4:33 pm
Shouldn’t that be Richi€ Rich, then?
mpowell 04.21.08 at 4:41 pm
First, consumption doesn’t rise in line with income, and even les so with wealth. This is about as well-established a pattern as social science offers. Second, as yor wealth increases, the passive income available to you will eventually surpass whatever you might earn from working.
Belle and a lot of commenters here would like to imagine there is a smooth scale of income and wealth, so it’s all relative—you’re better off than those people, worse off than that one, so “rich†all depends where you stand. Not so.
There are regular allometries between consumption, income, wealth and status—they don’t just vary proportionately.
This is very interesting. It makes sense to me, but I didn’t realize there was data to back it up. Is that actually the case?
I think it would be possible to retire on 2M, but very risky. You could be ruined by inflation, an economic downturn or a medical emergency. Plus you have to manage your finances carefully. At 20M you can mostly just do what you want and very little short of economic disaster could hurt you (and being well-diversified this should be very unlikely). There is some middle ground, however. You’re doing fine at 10M, I’d think. And with 5-6M, I think you could justify retiring. (With only 2M, I would always argue against retiring early. Too risky for it to be worth giving up your income and career)
At the same time, age plays a factor here. Having saved 2M at the age of 65 and therefore being able to retire comfortably and safely (with SS coming added in) is a lot different than having 20M at 45. Both cases are well-off and upper class, but it can be helpful to draw a distinction between upper class or well-off and ‘rich’.
Even if you don’t like this distinction I would argue that nobody in the United States with a moderately high income and little wealth qualifies as rich b/c they don’t have the social safety net to fall back on if things go wrong like they do in Europe. This is by design, of course.
roger 04.21.08 at 5:50 pm
With my children, I’ve faced this same problem! I’ve told them, kids, not every family is able to afford solid gold plateware. After you finish wiping the grease from your fingers off in the hair of the slave, er, personal assistant kneeling next to you, I want you to take a moment and remember that he or she is A HUMAN BEING.
I like to think that me and my wife have tried to be good role models for the children. For instance, the other night, Jr. opened the bedroom door and it was one of those embarrassing things every parent has to confront – he saw me and my wife rolling naked and oiled in mounds of hundred dollar bills. You know how it is! I spelled the word f-o-r-e-p-l-a-y to him, then stuffed two thousand dollars in his adorable Armani designed pj pocket and told him to wake up the chauffeur and go to town and have a good time. I think, in this day and age, that we shouldn’t be afraid to let the kids know that we are human.
Jr.’s such a chip off the old block! The next day, I saw he maxed out his platinum credit card. My, how they grow up! Next year, he’s finally going to be old enough for kindergarten. Although I’ve been thinking of having him skip that, endowing some business school at some university, and just having him rewarded an honorary doctorate of some kind.
notsneaky 04.21.08 at 6:05 pm
“You’re rich if you have a reasonably good prospect of maintaining an income in the top 20% … of the income profile without having to do work that really gets you down?”
Uh… what if you’re in the top .00001% and likely to stay there but are doing work that DOES get you down? You’re still rich.
leederick 04.21.08 at 6:09 pm
I think mpowell makes the right point. It’s more natural to interpret being ‘rich’ as a measure of wealth, not income. There are lots of old ladies who live on very low incomes but live in very expensive houses. And there are young people who earn a lot, but don’t have anything in the way of net assets. I’d say the first group are rich, but the second aren’t.
Dave 04.21.08 at 6:09 pm
Going back to #12, that’s a very scary statistic. It puts me in the top 10%, and I know damn well that I ain’t even well-off, let alone rich. In a country with 20 million cars for 60 million population, I take the bus to work, and it’s only partly ‘cos it’s the green thing to do… I presume we’re looking at a wealth/population curve that’s pretty flat until you hit the 95th or 99th centile, then goes into orbit…?
In which case, as another old saw has it, ‘rich’ is just another word for ‘more money than me’….
mollymooly 04.21.08 at 6:14 pm
Being rich is being able to say things like “If you travel as much as we do you appreciate how much more comfortable aircraft have become. Unless you travel in something called economy class, which sounds ghastly.”
bemused 04.21.08 at 6:39 pm
Not sure who pointed to this recently, but I find it very useful as a way to understand income distribution:
notsneaky 04.21.08 at 7:03 pm
If you flip it and ask “who’s poor?” you get the same relative vs. absolute problem which is why you have, um, relative poverty (less than some % of median income of the economy) and absolute poverty (less than some fixed amount of income for any economy).
Actually, thinking about it for a second, I believe it’s easier to know if you’re poor than if you’re rich. Other people will let you, (or your kids), know it.
On the wealth vs. income thing – yeah you’d wanna convert both into flows (how much that wealth would be worth per year) or both into stocks (what is the present discounted value of the stream of this income into some future). But while there may be some noticeable weird cases (Steve Jobs’ income, at least salary income, was 1$ I believe) since income and wealth tend to be pretty closely correlated it won’t change things that much.
notsneaky 04.21.08 at 7:10 pm
Oh yeah, in many countries there’s a much clearer distinction between the “rich” and “poor” (in the relative sense) then there are in the, um, rich countries. If you look at income distribution for the rich countries then, yeah, it’ll be right skewed (except Japan which looks like a textbook case of the normal distribution, at least since the 90’s) but they’ll be pretty much unimodal (maybe with some bumps along the way). But if you look at the income distribution for any Latin American country, particularly in the 70’s and 80’s it’s gonna be bi-modal (big hump at low level another smaller hump at a higher level) (this is pretty much Brazil) or at least tri-modal (like an m) (this is pretty much Mexico in the 1970’s, in the 80’s and 90’s the “poor” catch up to the “middle” but those 2 don’t catch up with the “rich”). Basically, for a country like Brazil if you’re looking in the range of 10% to 50% of roughly the max income, there ain’t nobody there.
So it’s pretty easy to know the answer to that question.
john-riley harper 04.21.08 at 7:38 pm
I always have remembered a line from the book Emil and the Detectives, which is how the topic came up in my childhood. Emil very much understands how poor he and his family is, and when a new friend asks how he knows, Emil asks back if they talk a lot about money in their house. When the reply is in the negative, Emil concludes that the family is well off, for he and his mother and I talk about money all the time.
Rich and poor do seem to be divided by how much one has to think about allocating resources.
Slocum 04.21.08 at 8:53 pm
I’ve found it doesn’t really matter what you tell your kids, because kids seem to judge wealth or poverty in comparison to the conspicuous material possessions of their friends and their friends’ families and that this is far more concrete and persuasive than anything their parents tell them. By that measure, they judge that we are poor (even though we are actually rich in a millionaire next door sort of way. But their thinking that way is OK with me.
michael e sullivan 04.21.08 at 8:59 pm
Conventional wisdom is that at ~$20-30M in wealth you are rich enough to no longer need to work (“F—k You Moneyâ€), and at $200-300M in wealth you are rich enough that neither you nor anyone in your family for generations will need to work.
That must be conventional wisdom among the wall street and silly valley crowd. 2-3M would be enough for my household to live like we do now without working, and I would consider 1M plenty for F-U money (just not enough to stop working for money entirely). I know plenty of retired people whose pensions, SS and income from savings amount to less than what 2M would generate that aren’t suffering.
Based on what I know from people who live in NYC/Boston/SF, 2-3M would not be enough to live comfortably, but somewhere in the 5-10M range certainly would. People who don’t think so, have very high expectations about their living standards. Expectations that mark them as “rich” in my book.
michael e sullivan 04.21.08 at 9:17 pm
But most people who accumulate $2M are not used to living on $50k a year. That’s where the $20M figure comes from – it’s (very roughly) the point at which your income from investments (~$500k a year, for the sake of argument) can buy you a quality of life on par with what you’ve become accustomed to in the course of building that level of wealth in the first place.
It’s tough life making 500k a year, I’ll bet. You just get used to those round-the world trips in luxury hotels and servants and second homes and all.
At anything over about 5M in wealth, you’re rich even by american professional standards, even if most of the people who have that much money are too privilege-blind to realize it.
Alan Peakall 04.21.08 at 9:41 pm
Why not take the opportunity presented by the child’s question to teach some astronomy (as well as sociology and economics) by drawing the parallel with the way in which the Sun is a relatively inconspicuous yellow dwarf by comparison with almost all the stars we see in the night sky, while being in the 10% of most luminous stars measured against the more representative of those in its immediate neighbourhood?
MR. Bill 04.21.08 at 9:42 pm
Richie Rich!?!
Pifui!
YOu need a real titan of finance, not some nambypamby heir! You need a self made man, er fowl, Scrooge McDuck!
harry b 04.21.08 at 9:50 pm
notsneaky — I thought of that. Here are thoughts:
1) I only gave a sufficient, not a necessary, condition. But lets’s suppose I’d proposed it as necessary.
2) Most people in the top 0.00001% could do a job that doesn’t get them down while remaining in the top 10% (they just have to shift to a lower paying, but still high paying) job.
3) My intution is that you are truly not rich if the only way of maintaining a high income is by working at a job that really degrades you, or inflicts very serious mental health or physical health risks that you find unwelcome.
4) What I said was very crude, because rich has to be about wealth as well as income.
Andrew Edwards 04.21.08 at 10:31 pm
Michael:
That must be conventional wisdom among the wall street and silly valley crowd.
Yes.
2-3M would be enough for my household to live like we do now without working
Would you call yourself rich if you had your current quality of life? Not saying you’d be poor, of course, but “rich”?
It’s tough life making 500k a year, I’ll bet. You just get used to those round-the world trips in luxury hotels and servants and second homes and all.
Indeed. It’s almost like you’re “rich”. Though for what it’s worth I think you over-estimate what $500k a year buys.
notsneaky 04.21.08 at 11:47 pm
1) Well, sure, being in the top 20% AND having a high degree of job satisfaction is certainly sufficient. My point was that actually just being in the top 20% is sufficient. I.e. that job satisfaction is not necessary. and on that note, skipping to 3)
3) actually the few “rich” people I know (annual income of 120k+, but usually negative wealth at this point in their lifetime earnings) do work their asses off. I’m not sure if they’re “degraded” but there’s probably some negative impact on their mental health (no time for friends, no time for family, no time to just kick back and chillax) and physical health (4 to 6 hrs of sleep a night can’t be good for you if sustained over a long period of time). Still, it’d be weird to say that I, who’s chosen the more laid back academic life, am “richer” than them.
Anyway. I think you’re trying to stretch the word “rich” to do more work than it was meant to do. “Rich” is about how much money you got, either in terms of annual flow (income) or the lifetime stock available (wealth). Being “rich” AND satisfied with your job is bonus. I think it’s called “being rich AND satisfied with your job”.
vivian 04.22.08 at 1:27 am
My son asks this regularly. I say “Money is good to have only because of what you can do with it. We have enough money to always have good food to eat, a nice, safe place to live, nice clothes, and some things we like. Lots of people in the world don’t have that. But being rich isn’t about numbers of dollars, it’s about what you can do with the money.”
He HATES that. Quite compassionate, but, like Slocum’s kid, he expects “rich” to be a threshold number of bills. He’d be slightly disappointed with a relative measure like deciles, but the idea that it’s relative to other, harder-to-measure relative things is utterly unsatisfying. This is probably good. Eventually.
novakant 04.22.08 at 2:28 am
By that measure, they judge that we are poor (even though we are actually rich in a millionaire next door sort of way. But their thinking that way is OK with me.
I’d say it beats the heck out of having an unrealistic view of their familie’s financial status as it prevents future disappointment and embarrassment.
Chris 04.22.08 at 3:36 am
Interestingly, the Richie Rich Wikipedia page features a comic cover showing a gypsy who looks for all the world like the caricature on the Italian political poster for the racist Northern League in the entry immediarley above this. Doing stereotypical gypsies didn’t seem to count as racism in American comics, presumably because none of the artists had ever actually met one except in roleplayings as violinists or fortunetellers.
a 04.22.08 at 5:31 am
I say “we’re rich because we have four healthy sons.”
Randy 04.22.08 at 6:43 am
You could read with your kids If the World Were a Village and also, The Table Where Rich People Sit, and you could get a lot of these ideas across pretty powerfully.
agm 04.22.08 at 7:03 am
This is amusing. Mainly in a dark because I am 2 weeks out from being unemployed, but whatever… Rich is just not as hard to quantify as some people want to make it out to be.
If you ever have to think about the flow of money in and out of your personal treasury, you are not rich. Please note carefully that I did not make any statement about whether it is wise to think about your money flow — this is purely a statement that if you are not ever are required to think about the topic by your circumstances, you are rich.
notsneaky 04.22.08 at 7:55 am
“this is purely a statement that if you are not ever are required to think about the topic by your circumstances, you are rich”
What if you have a high average, high volatility income? Like say you make 20 mil a year but with probability of, I don’t know, 10% per year you can loose it all (and your dog dies).
I don’t know why people want to make this hard. Being rich, in the context that Belle gave us, has nothing to do with whether you like your job, your psychology, or whether you’re full of cream and filling. It means you’ve got lots of money. Specifically it means that either your wealth is more than X amount of $ or possibly (and this is about as far as I’m willing to extend this) that the present discount value of your future income stream is more than X amount of $ (then you’re rich in expectations).
If you pick X relative to say the median amount of wealth (or income etc.) in the economy than you’re “relatively rich”. If you pick some absolute number for X that you like then you’re “absolutely rich” (and fabulous).
Now we can argue about what X should be. But there’s no reason to argue about whether folks who are full of cream and filling, who dislike their jobs but never worry about their finances are rich or not.
notsneaky 04.22.08 at 8:00 am
Now, as to what you should say if your kid asks you “Mommy/Daddy, are we rich?”
If you have less than X amount of $ you should NOT lie to the kid and say “We’re rich because we have each other” or “We’re rich because Jesus loves”. Leave that crap to the Family Circus. You should be honest with your kid and tell’em “No, we’re Poor, Ugly, and Happy”.
‘ts my plan.
chris armstrong 04.22.08 at 9:24 am
If your kids ask, ‘Mum, are we rich?’ the answer is no. If your kids ask, ‘Mummy, are we very wealthy?’ the answer is yes.
novakant 04.22.08 at 10:41 am
Good plan notsneaky, and your children will have the advantage of qualifying for properly living the American Dream ;).
c.l. ball 04.22.08 at 4:21 pm
Re 35
The L-curve author conflates wealth w/ income. Bill Gate’s $50 billion is not his annual income; it’s his wealth. The median income in the US is not the median wealth. That might be negative for the median earner, if debt were taken into account. Nonetheless, the reversed L is probably the accurate shape of the curve.
Who is rich?
Jim is 70, owns outright a 1,200 sq. ft. condo in a duplex appraised at $200,000 that was remodeled 10 years ago, has a 5-year old Toyota Camry, has a pre-tax annual pension and Social Security income of $60,0000. His expenses for home and car maintenance, energy, insurance, food and healthcare total $30,000 a year.
Jane is 35. She owns a 3,000 sq. ft. home appraised at $600,000 with a $400,000 mortgage, has a new leased Mercedes SLK, and has pre-tax annual salary and bonus income of $300,000. Her expenses for home and car maintenance and financing, energy, insurance, food and healthcare total $70,000 a year. She used her savings to buy the house.
Jane’s life-style is clearly more luxurious than Jim’s, and most of us would consider her to be rich, but if she loses her job she’s in deep trouble — she’ll have to sell the house w/ condo-like equity leftover, end the car-lease, and scramble to find a new job.
Fred is 30. His parents’ trust pays him a $100,000 annual stipend. He lives in a 1,200 sq. ft. Manhattan apt. his parents bought him outright. He runs an art gallery that nets him $30,000 annually. Let’s face it — Fred’s rich.
magistra 04.22.08 at 7:35 pm
A high net worthindividual is apparently someone with more than a million dollars (or 500,000 GBP) as assets apart from their main residence. I think they count as rich.
michael e sullivan 04.22.08 at 9:22 pm
Would you call yourself rich if you had your current quality of life? Not saying you’d be poor, of course, but “rich�
Yes. I live in a nice house in a safe neighborhood of a cool small city, drive a new car, eat out a couple times a week and pretty much buy whatever house/geek stuff I need.
If I could continue to do all that without needing to work for money again, especially if I got there early enough that I still *could* work, I would consider myself rich.
My parents are about to retire and their lifestyle is pretty similar (bigger house, less fine dining) and won’t take a hit on retirement unless their (low risk) portfolio tanks. I think they are rich.
This is obviously a different sort of rich than many people imagine, even just down the road a piece in Fairfield county (CT US). But my current state of a good paying job, 20% equity in my house and savings on track to retire at my current lifestyle in my 60s would probably be considered rich by a large number of americans and 95% of the world.
I’m aware that there are New Yorkers and Bay people who have ~5M net worth but don’t think that is enough to retire. By most people’s standards, even professionals in the very high cost areas where they live, that’s plenty. It’s not enough to live like a celebrity, but it’s plenty enough to live like a normal, successful professional.
bad Jim 04.23.08 at 4:56 am
I meet at least some of the criteria for being rich: around $5M in wealth, which is around the 99.75 percentile, unearned income over $100k/yr, which is more like 90th percentile, and I don’t work, which in the eyes of my former employees makes me a bum. Most mornings I can sleep as late as I want, and that, to me, is wealth. (As it turns out, I am a bum, though I prefer to call myself a flaneur.) I live with my senescent but loveable 83-year-old mother, who owns the house, whose wealth is a bit less than mine but whose income is comparable.
On the way to this exalted status, starting a company, growing and finally selling it, I went from a couple of years of no income, a couple of years of middle class income, to several years of upper middle-class income. I never really had the opportunity to acquire lavish tastes. Only on special occasions can I bring myself to spend more than $10 on bottle of wine, even now. I drive a ’99 Integra. My best suit is Macy’s store brand ($225, on sale).
However, we buy season tickets for the Philharmonic Society and the Pacific Symphony and the Chamber Society and the local playhouse, plus whatever else comes along, and we have excellent seats. We dine out every day (neither of us can cook worth a damn). We have gardeners weekly and housecleaners semiweekly (we’re slobs). I’d say we’re pretty well-to-do, and I don’t think I know anyone much wealthier.
Which probably says more about my reclusiveness than my community. In this wealthy California beach town, displays of wealth are routine. Maseratis are commonplace; Lamborghinis barely draw a second glance; a Mercedes or a Lexus is the sign of a pushy parvenu. We used to fret about people building “monster homes”; now we call them “starter mansions”.
My mother’s house is barely 2000 ft² (the yard is huge, though). My car is nine years old (and still kicks ass). I’m not really rich, am I?
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