How do you define wealth?

[Hannah]

What is wealth?

What would it mean to you to be wealthy?

Do you think of yourself as a wealth creator / wealthy?

[HomeAgain]

Monetary wealth, to me, is being able to take care of needs, emergencies, and some wants without stress.  It's having savings and a financial plan.

I don't think of us as wealthy, but I do think we are financially comfortable.  There have been years where our budget was down to a dime, and when our oldest wanted a specific thing or experience, we had to sit down with him and figure out what to cut (food? gas?) in order to fit in the new budget category.  Now, I don't have to be super vigilant about the bank account. When the fridge died the repair was able to be scheduled immediately. We go on yearly vacations.  We have a retirement plan.  We're doing okay.

[Scarlett]

I think of monetary wealth being having enough to be able to live comfortably off investments. 
 

Being financially comfortable to me is like what @HomeAgain describes.  

[Melissa in Australia]

Seems like some people define how wealthy they are by how many toilets they have managed to fit into their house

Mind boggling to me

[Carrie12345]

7 minutes ago, Melissa in Australia said:

Seems like some people define how wealthy they are by how many toilets they have managed to fit into their house

Mind boggling to me

🤣

Hey, there is real value in not having a line at the door!  
Also, in shooing a kid up to the kid toilet so you can be fairly certain guests have a clean one.

(My dream was to have a guests only toilet. That’s not exactly how it has turned out, but close enough!)

[Ann.without.an.e]

I agree with @Scarlett

Wealthy and comfortable are two different things. To me, Wealthy means you don’t have to keep working a job you don’t love because you can live off of investments, start a business, or have the assets to do something else. 
 

ETA: we’ve def never been wealthy since we’ve never had more than 2 toilets 🤣🤣

Edited May 17, 2023 by Ann.without.an.e

[mlktwins]

10 minutes ago, Melissa in Australia said:

Seems like some people define how wealthy they are by how many toilets they have managed to fit into their house

Mind boggling to me

We have 4 - one for each of us 🤣. 

[Melissa in Australia]

3 minutes ago, mlktwins said:

We have 4 - one for each of us 🤣. 

Boy, you are RICH

[Laura Corin]

3 minutes ago, Ann.without.an.e said:

I agree with @Scarlett

Wealthy and comfortable are two different things. To me, Wealthy means you don’t have to keep working a job you don’t love because you can live off of investments, start a business, or have the assets to do something else. 
 

ETA: we’ve def never been wealthy since we’ve never had more than 2 toilets 🤣🤣

These seem like good definitions to me.  We are comfortable, and I am job searching!  One bathroom w/ toilet, one shower room w/toilet, four bedrooms.

[Ali in OR]

I've always looked at number of toilets as an amount of cleaning/work, not wealth! Two have always been enough for our family of 5 (but one of those exclusively in diapers).

I also think of wealth as being able to provide the safety net for your family here in America--other countries do a better job of having something of a safety net in terms of provision of healthcare, etc.

[Melissa in Australia]

We are not wealthy, but really really good at living off very little

 

We have 2 indoors toilets, one reserved for guests and the 4 of us still at home all share the other one. We also have an outside toilet, but I am using it for storing gardening supplies.  So not sure if that is a sign of extravagant wealth or flagrant disregard of the importance of toilets 

 

[mlktwins]

Our house is too big for us. We will downsize, but we all love our space for sure. The people that bought it new paid a LOT of money in the height of the market. We got it as a short sale when things were upside down. We would never have paid what the original owners paid. They had a big family. We are a family of 4. It is more to clean, but we love the space. We will be downsizing a lot when the boys are out of college.

[fairfarmhand]

Comfortable=enough money to not worry about something breaking, having 6-12 months of living expenses in savings, able to care for needs and many wants without stress, and fully funded retirement.

As far as wealthy, I like Claire Huxtable's (from the Cosby Show) defintion. She said to one of her kids "Your father and I work very hard for our money. Rich people are ones whose money works hard for them" IOW, they can work or not, and have investments to fund their lifestyles.

ETA: While we're on the topic, we've only ever had 2 toilets. Which was sometimes a challenge (especially with certain members of the family) when we had 6 at home, but I think a lot of that was selfishness vs. true need. (The folks who are mostly more selfish and inconsiderate were also inconsiderate in their bathroom usage) If we'd only had one, I probably would have had to rigidly enforce more consideration of others.

Edited May 17, 2023 by fairfarmhand

[Arcadia]

Having much more money than you would ever have to spend in your lifetime without having to continue working (or even work). So people born into wealth like Paris Hilton, famous actors and singers like Katy Perry, CEOs like Tim Cook, sportsmen like Steph Curry. 

[Pawz4me]

The more I think about it the more interesting I think the question is.

My first reaction was that being financially comfortable means being in a position where one can feel reasonably assured that they can cover all basic living expenses for the rest of their life w/o working. I'm not talking about lots of travel or high-end everything (or anything), but rather the basic costs of decent shelter, healthy food, reliable transportation, all types of insurance and any OOPs associated with those, utilities, etc. And that my definition of wealthy would go beyond that, like being able to buy a new vehicle(s) every year or two, or to travel as much as one wanted, redecorate the house every few years or buy vacation homes. Except I know people who are financially comfortable who have no desire at all for any of those things. They don't enjoy travel, are perfectly content with their ten+ year old vehicles, don't want to upend their comfy home by re-doing things all the time. They just don't have a lot of big wants. So is it accurate to define someone as just financially comfortable versus not wealthy simply because they can't easily afford things they don't even want? That seems not exactly right to me, but IDK.

[marbel]

Being wealthy means not having to work unless one wants to, and not having to think much before buying something. The wealthy people I have known are able to replace furniture, cars, etc., when they are tired of them, not when they wear out.  I don't equate it with house size or number of bathrooms in the house necessarily. I know some very un-wealthy people who have large houses with lots of rooms including bathrooms. In those cases, they bought a run-down house at a low price at a good time in the market, and put a lot of "sweat equity" into the house to make it nice. 

Also a large house may be a sign of being in great debt, the opposite of wealthy.  (Which is not to say that wealthy people don't ever get into debit; they just know how to use it properly to their advantage.) 

Edited May 17, 2023 by marbel

[HomeAgain]

33 minutes ago, mlktwins said:

We have 4 - one for each of us 🤣. 

😄

We had 4 in one of our homes.  One master, one for the other bedrooms, one on the ground floor, and one in the basement laundry.  The basement one was rarely if ever used.

This house has 3 and it's a good number, plus the design of the house is amazing. The original owners had put in an expansion on the top floor, taking it from 2bdrm to 3, but they also moved the laundry to the top floor and added a master bath (it's half the size of the other upstairs bathroom, but it works).

But the best part about the house is the ground floor.  The "tv room" is actually meant to be a handicap accessible bedroom with a few modifications. It would need closet doors put on and a door at the hall restricting access to the newly created suite, with a bathroom right across the hall from the tv room.  This means it'll allow dh and I to stay in this house even if we cannot manage the stairs on a daily basis.  The laundry hookups on the ground floor are still accessible, so that's not even an issue, either.

[Hannah]

What I'm understanding from the conversation so far is that wealthy would mean that one can comfortably retire, at whatever age that is possible?  And comfortable is open to interpretation and individual needs?

 

Edited May 17, 2023 by Hannah

[Serenade]

1 hour ago, mlktwins said:

We have 4 - one for each of us 🤣. 

Same here, and there have been times when they've all been in use!

[mlktwins]

21 minutes ago, HomeAgain said:

But the best part about the house is the ground floor.  The "tv room" is actually meant to be a handicap accessible bedroom with a few modifications. It would need closet doors put on and a door at the hall restricting access to the newly created suite, with a bathroom right across the hall from the tv room.  This means it'll allow dh and I to stay in this house even if we cannot manage the stairs on a daily basis.  The laundry hookups on the ground floor are still accessible, so that's not even an issue, either.

This is great!!!  We don't have that unfortunately! Am currently caring for my dad and DH and I went through caregiving for his parents before they passed. When we get our next house, it will be able to handle us aging in place easily!!! 

[mlktwins]

11 minutes ago, Serenade said:

Same here, and there have been times when they've all been in use!

YES!!!! My boys are heading off to college dorms in August. They are going to have a big change in the bathroom situation there -- LOL.

[Arcadia]

10 minutes ago, Hannah said:

What I'm understanding from the conversation so far is that wealthy would mean that one can comfortably retire, at whatever age that is possible?  And comfortable is open to interpretation and individual needs?

 

I have cousins that could comfortably retire but choose to continue working. However they aren’t wealthy in the sense that they won’t be able to cover high cost medical needs if they need them. My side of the family that has passed tend to need more expensive health care for a short period of time and so is less scary in terms of draining their own retirement savings. My husband’s late grandma had dementia and needed care for twenty years and that means two generations have to pool money to pay for medical bills. If either of my in-laws live to a hundred like his grandma, their retirement savings would be more than wipe out by medical care.  I have friends whose parents have enough savings to pay for high medical costs even if they live to a hundred without worrying. So my friends are coordinating health care without having to worry about the financial aspect.

[Sneezyone]

Wealthy to me is being able to do the things you want to do without having to plan/budget. I don’t think of us as wealthy or as wealth creators but we are relatively comfortable. I emergency expenses wouldn’t give us pause just cause annoyance/frustration. We can afford trips but haven’t any time. We’re also supporting a family member so that’s taking a big chunk and making me feel less comfy than we actually are.

[prairiewindmomma]

This is a loaded question, and some of that is comparison of relative wealth. Compared to the average world citizen, I am wealthy. Compared to the top 1% anywhere in the world, I am decidedly not wealthy.

——-

I went to a conference a couple of years ago for attorneys who do estate planning and wealth management, and most of the presenters and hosting banks used 5 million USD as a minimum threshold, professionally, for a lot of services.

I have pondered that number for a long while, looking at what retirement portfolios need to look like, and a number of other factors, and I think that is about right.

Wealthy is very different from comfortable. 

[mlktwins]

14 minutes ago, Arcadia said:

I have cousins that could comfortably retire but choose to continue working. However they aren’t wealthy in the sense that they won’t be able to cover high cost medical needs if they need them. My side of the family that has passed tend to need more expensive health care for a short period of time and so is less scary in terms of draining their own retirement savings. My husband’s late grandma had dementia and needed care for twenty years and that means two generations have to pool money to pay for medical bills. If either of my in-laws live to a hundred like his grandma, their retirement savings would be more than wipe out by medical care.  I have friends whose parents have enough savings to pay for high medical costs even if they live to a hundred without worrying. So my friends are coordinating health care without having to worry about the financial aspect.

I have to say that DH and I have been very fortunate that our parents saved a lot and had good retirements and were/have been able to cover all of their medical care until the end with money left over. My in-laws were not big spenders and saved, saved, saved. We do wish they had spent more during their life to make things easier on them as they aged, but all of their expenses were covered. My dad is still alive and I handle the money. Prior to the past 4.5 years, he was spending a lot (my mom has been gone since 2001), but his house was paid for so his expenses were low. He won't live that long, he is really declining now and wasn't expected to live past March 2023, but he has about 5 more years before he runs out of money. All of his expenses are really low except for the $8,400 bill every 2 weeks for 24/7 caregiving in his apartment 😬. Both sets of parents had Medicare, although my dad has both Parts A and B, which has made a big difference, and they are retired Federal workers with great health insurance. It is stressful enough just caring for them without figuring out where the money is going to come from. My heart really goes out to people dealing with that.

I hope it is the same for DH and I as we age, but who knows. We are savers too.

[Hannah]

20 minutes ago, Arcadia said:

I have friends whose parents have enough savings to pay for high medical costs even if they live to a hundred without worrying. 

Wealthy would then mean that one can live off investments and that the income covers a reasonable standard of living (again whatever that means for the individual) + emergencies + extended high medical costs (ie dementia care for 20 years if required).  

[Brittany1116]

4 minutes ago, prairiewindmomma said:

This is a loaded question, and some of that is comparison of relative wealth. Compared to the average world citizen, I am wealthy. Compared to the top 1% anywhere in the world, I am decidedly not wealthy.

——-

I went to a conference a couple of years ago for attorneys who do estate planning and wealth management, and most of the presenters and hosting banks used 5 million USD as a minimum threshold, professionally, for a lot of services.

I have pondered that number for a long while, looking at what retirement portfolios need to look like, and a number of other factors, and I think that is about right.

Wealthy is very different from comfortable. 

This was my first thought. Just because of my current location, I am wealthier than most of the world. Within my own country, I am not considered wealthy. I am quite a bit ahead of the estimated 60% of Americans who don't have $1000 in the bank or can't foot an emergency bill of $300 or so, but my grandchildren won't be reaping the benefits of my financial planning unless something dramatic happens. 

[Hannah]

11 minutes ago, prairiewindmomma said:

I went to a conference a couple of years ago for attorneys who do estate planning and wealth management, and most of the presenters and hosting banks used 5 million USD as a minimum threshold, professionally, for a lot of services.

I have pondered that number for a long while, looking at what retirement portfolios need to look like, and a number of other factors, and I think that is about right.

I live in a developing country and with our current exchange rate, that's a mind-boggling number.  (eta it would be interesting to know what the equivalent number for estate planning and wealth management of 'high worth individuals is here).

Edited May 17, 2023 by Hannah

[SKL]

To me, wealth is simply how much you have a claim to.  If your assets (house(s), car(s), clothes, books, electronics, cash, financial investments, business, jewelry, etc.) exceed your debt, then you have wealth.

Wealthy is a bit more subjective, I think.  It seems to me that even people who are objectively wealthy don't view themselves as wealthy, because they aren't Bill Gates or Elon Musk.

My personal view is that you're "wealthy" if your assets so exceed your debts that you (a) have enough to [probably]* live on comfortably for a lifetime without ever working again, and (b) have enough beyond that to significantly influence what others do.  For example, if you could build a community wellness center or run a political campaign with your spare change, you are probably wealthy.

Do I consider myself wealthy?  I don't really think in those terms, but if you asked my 10yo self if a person in my situation was wealthy, I probably would have said "yes."

*Disclaimer - nobody knows what the future holds for any of us.  All we can do is project based on what we know now.

**Second disclaimer:  I have two 16yo college-bound daughters.  Ask me again after their education drains my assets.  😛  Maybe I should have added that being wealthy means you get the privilege of paying full price for everything and being ineligible for a lot of things others take for granted.

Edited May 17, 2023 by SKL

[SKL]

Oh, as to whether I'm a "wealth creator" ... I'm not really sure what that is ... does it mean that I have wealth I didn't inherit?  Then certainly yes.  🙂  Does it mean I made the pie bigger?  In some ways, along with my business partners, yes.  We have bought nasty old abandoned buildings and turned them into places where businesses thrive and individuals and communities find enjoyment.  To a greater or lesser degree, each was/is a catalyst to nearby economic development by others.  We've also taken over failing operating businesses and turned them around to bring them out of bankruptcy and vastly improve their balance sheets.  We have put a fair amount of elbow grease into these projects.  So if that's what you mean, then yes, but on a relatively small scale by mega-bank standards.  🙂

Edited May 17, 2023 by SKL

[prairiewindmomma]

3 minutes ago, Hannah said:

I live in a developing country and with our current exchange rate, that's a mind-boggling number.  

It is. I think it is also reflective of the fact that wealth has become extremely concentrated in the hands of a few in the last few decades. There are an estimated 3,500,000 households in the US who have a net wealth over $5,000,000 USD. There are about 4,500,000 who top $4 million USD.

One of the grand delusions of our society is that the middle class here is wealthy. We are not. But, it keeps us peaceable regarding tax reform and not demanding better and more equitable policies.

[Arcadia]

My late grandma would probably be a wealth creator for herself. She was a SAHM and a landlord. My cousins who run small manufacturing businesses would probably count as wealth creators for themselves and others since they hire people and offer apprenticeship and do pay better than market rate just like their dads did. 

[prairiewindmomma]

24 minutes ago, Hannah said:

I live in a developing country and with our current exchange rate, that's a mind-boggling number.  (eta it would be interesting to know what the equivalent number for estate planning and wealth management of 'high worth individuals is here).

A quick google says R15.5 million, or roughly 1 million USD is the high net worth threshold for SA. https://www.news24.com/amp/fin24/economy/degrees-of-separation-heres-what-sas-super-rich-studied-20220426

ETA: looks like the exchange rate has changed since 2022–1 million USD is now 19.9 million rand?

Edited May 17, 2023 by prairiewindmomma

[elegantlion]

My definitions stretch from wealthy to comfortable to content to paycheck living. 

Wealthy would be having enough passive income to choose not to work and also be able to have free time to travel/hobbies, etc. 

Comfortable is enough to pay the bills, have some excess, no debt except perhaps a home, being able to step away from your income source temporarily without it directly affecting your lifestyle. That could come in good benefits from a job and good health care coverage. 

Content is living within your means. SO & I are content. We are frugal as I'm still a student and he had to retrain for a new career and lost a goodly portion of his income along the way. The only debt we have is student loan debt and his car. We have savings but do not own a home right now. We're hoping to buy a house once I finish my degree. 

Paycheck living - not an official descriptor - is living paycheck to paycheck with little to no savings, carrying credit card debt, not able to step away from work for a week or two without it directly affecting your income, and probably just making enough money to not qualify for food aid or subsidized health care. 

I've been three out of the four in my life. Not wealthy probably never will be. I'd like to get back to comfortable though. 

Edited May 17, 2023 by elegantlion

[Carol in Cal.]

$10,000,000

[SKL]

FTR although many might consider me "wealthy" if they knew my net wealth, I am nowhere near the multi-million figures cited above.  😛

I think that if you're born into a frugal lifestyle, the skill of stretching a buck (which may be how you built wealth in the first place) can follow you all your life, no matter how much wealth you accumulate.  I'm not uncommonly frugal for an American, but I do have life habits that save money still.  So I don't need as much money in order to feel "comfortable plus."

Edited May 17, 2023 by SKL

[Hannah]

14 minutes ago, prairiewindmomma said:

A quick google says R15.5 million, or roughly 1 million USD is the high net worth threshold for SA. https://www.news24.com/amp/fin24/economy/degrees-of-separation-heres-what-sas-super-rich-studied-20220426

ETA: looks like the exchange rate has changed since 2022–1 million USD is now 19.9 million rand?

Thanks @prairiewindmomma.  

[wintermom]

I don't see wealth as a monetary fixed amount, as that can vary hugely depending on where one lives, what taxes look like, what you get for your taxes (heatlh care, pension, etc.), what you choose to spend your money on, and what it costs to maintain your chosen standard of living. A lottery winner can be wealthy for a week, then lose it all if they make certain choices.

I don't see myself or dh as weathy. We're doing a lot better now that I'm working full-time, that's for sure! Four to Five years ago we were stuggling, but we've managed to turn things around nicely, and our dc are almost all finished with they university. The big expenses are going to be moving out soon. 😅

Edited May 17, 2023 by wintermom

[KungFuPanda]

I don't think of a middle class lifestyle as wealthy.  To me, wealth is being able to comfortably live off interest without touching the principle or being able to live off investments.  It's a lifestyle that goes on even if something happens and the main wage earner can no longer earn.  I know plenty of people who are getting by without crippling debt or extreme financial stress but that's not true wealth in my book. This lifestyle comes from work and luck and should probably be enough to make most people happy  I'm not on board with calling upper middle class, or middle class comfort "wealth."

[Jean in Newcastle]

How I define wealth depends on the context. I have been around extremely wealthy people who had no concept of my plebian concerns and worries about money. And I have been around people living in shanty towns where my simplest conceptions of food, shelter and water are untold luxuries.

I have lived paycheck to paycheck (including times when that paycheck didn’t actually make it until the next paycheck).  I have lived more comfortably than that too. I want to point out that my character was the same with or without money since some people equate having little money with virtue and yet others glorify having lots of money with virtue.  And conversely some equate having little money with bad choices and character and others equate having lots of money with bad choices and character. Ie. It’s not that simple. 

[TexasProud]

3 hours ago, marbel said:

Being wealthy means not having to work unless one wants to, and not having to think much before buying something. The wealthy people I have known are able to replace furniture, cars, etc., when they are tired of them, not when they wear out.  I don't equate it with house size or number of bathrooms in the house necessarily. I know some very un-wealthy people who have large houses with lots of rooms including bathrooms. In those cases, they bought a run-down house at a low price at a good time in the market, and put a lot of "sweat equity" into the house to make it nice. 

Also a large house may be a sign of being in great debt, the opposite of wealthy.  (Which is not to say that wealthy people don't ever get into debit; they just know how to use it properly to their advantage.) 

 

2 hours ago, Sneezyone said:

Wealthy to me is being able to do the things you want to do without having to plan/budget. I don’t think of us as wealthy or as wealth creators but we are relatively comfortable. I emergency expenses wouldn’t give us pause just cause annoyance/frustration. We can afford trips but haven’t any time. We’re also supporting a family member so that’s taking a big chunk and making me feel less comfy than we actually are.

 

1 hour ago, SKL said:

FTR although many might consider me "wealthy" if they knew my net wealth, I am nowhere near the multi-million figures cited above.  😛

I think that if you're born into a frugal lifestyle, the skill of stretching a buck (which may be how you built wealth in the first place) can follow you all your life, no matter how much wealth you accumulate.  I'm not uncommonly frugal for an American, but I do have life habits that save money still.  So I don't need as much money in order to feel "comfortable plus."

 

27 minutes ago, Jean in Newcastle said:

How I define wealth depends on the context. I have been around extremely wealthy people who had no concept of my plebian concerns and worries about money. And I have been around people living in shanty towns where my simplest conceptions of food, shelter and water are untold luxuries.

I have lived paycheck to paycheck (including times when that paycheck didn’t actually make it until the next paycheck).  I have lived more comfortably than that too. I want to point out that my character was the same with or without money since some people equate having little money with virtue and yet others glorify having lots of money with virtue.  And conversely some equate having little money with bad choices and character and others equate having lots of money with bad choices and character. Ie. It’s not that simple. 

I am wealthy. One thing that has surprised me, even though I knew it mathematically, is how much compounding truly works. When you earn 300,000 but save 200,000 of it at a certain point, you can live off the interest if you consistently live on 100,000 a year.  ( And 200,000 over 20 years is 4 million without any compounding, so I can see how many more people have 4 or 5 million in savings than they did a long time ago. 

I think the for people who are wealthy like me ( not like Paris Hilton), we will NEVER get to the point where we @marbel don't think about things before we buy them.  Yet, I consider myself wealthy.  But I will never ever just buy something because I can. @Sneezyone again, I have a feeling you would definitely call me wealthy but we still live under a budget.  I am wealthy BECAUSE we lived on a budget ( and yes, I know luck and family privilege).

@SKL completely agree with your quote

@Jean in Newcastle  Yes, we bought our house 27 years ago and paid it off 20 years ago.  I like our house.  We have done some renovation. It is nice.  However, I would be embarrassed if  other doctors he practiced with came over here.  Our house is NOTHING like any of their's. Nothing.  It looks so shabby. On the other hand, when our Honduran missionary pastor came over here on a stateside visit, I was so embarrassed about how nice my home is...how ostentatious compared to anything we saw in Honduras.  

We keep our vehicles for 20 years. Obviously, we chose a house and stayed in it. My husband had a nice job, but we decided on a level of living and stayed with it over the years and didn't feel like we needed to keep up with the Jones'. And we chose to live in a low COL place.  

Edited May 17, 2023 by TexasProud

[fairfarmhand]

1 hour ago, prairiewindmomma said:

This is a loaded question, and some of that is comparison of relative wealth. Compared to the average world citizen, I am wealthy. Compared to the top 1% anywhere in the world, I am decidedly not wealthy.

——-

I went to a conference a couple of years ago for attorneys who do estate planning and wealth management, and most of the presenters and hosting banks used 5 million USD as a minimum threshold, professionally, for a lot of services.

I have pondered that number for a long while, looking at what retirement portfolios need to look like, and a number of other factors, and I think that is about right.

Wealthy is very different from comfortable. 

Yeah, this conversation does feel a bit odd to me. I grew up with hardly anything. I remember as a kid seeing homes like the one I live in now and thinking that rich people live there. And on a global scale compared to most citizens of the world....yeah. 

[Corraleno]

To me "comfortable" means someone who is working but has a good emergency fund and enough savings/investments that they can replace things that need to be replaced and cover an unexpected layoff or medical emergency. I would define "wealthy" as someone with assets well into 6 figures, who can afford expensive things, and may or may not have to continue working to maintain their lifestyle.

I would use the term "financially independent" (FI) to describe someone who has enough money and assets that they can live in whatever style they prefer without having to work. That could be someone with $20M in the bank and a private plane (wealthy FI), or a retiree with a paid-off house and enough retirement savings to support them comfortably for the rest of their life (comfortable FI), or a 30 yr old ex-tech bro who FIRE'd (retired early) with 500K in investments generating 25K/yr, who lives in a paid-for tiny home and drives a Kia (frugal FI).

I grew up dirt poor (often hungry, hand-me-down clothes, shoes with holes, etc.), and as an adult I've been poor and in debt, I've lived paycheck-to-paycheck with no margin, I've had a good job with a good paycheck and great perks which made me fairly comfortable, and now I'm retired and financially independent but with a reasonably frugal lifestyle. (I have a modest 1970s fixer-upper house and drive a Subaru, both of which are paid for, I don't eat out, don't buy expensive clothes, if I fly I buy cheap tickets, etc. But I have enough savings/investment to live on for the rest of my life, I can replace things that need replacing, etc.)

Edited May 17, 2023 by Corraleno

[Jean in Newcastle]

I will also say that culture frames a lot of conceptions around money.  When we were in the Philippines people had such a hard time wrapping their minds around the fact that I didn't have servants to do my laundry etc. here in the US.  There, anyone with middle class money was expected to have servants and to "spread the wealth".  It was a cultural expectation.  I kept helping the servants clear the table etc. because I just couldn't wrap my mind about sitting around being served while I sat around.  And I put my foot in it when relatives there were complaining that they had no idea what to have for dinner.  I offered to help cook something and they explained that what they were actually saying was that they weren't sure what to tell their cook to make!  But despite the servants and nice houses, they saw us as being wealthy because we had opportunities for advancement that they didn't have there. 

[marbel]

Just another thought that occurred to me:  I think of the old line "How much money is enough?" "A little more than I have." I bet many people who would be considered wealthy by, say, a middle class person would define wealthy as "a little more than I have."

 

 

[Bootsie]

Like many adjectives "wealthy" is a relative term and depends upon the context.  It's "hot" today can mean something different in Houston than it means in Buffalo.  "Wealthy" is even more difficult than "hot", because with hot we can use a standardized measure of temperature.  If a person owns a house, a measure of their wealth includes the value of the house, but that is not a precise (or consistent) number.  And current income level and the wealth of a person is not nearly as highly correlated as one might first assume.  A young lawyer making $300,000 per year may have no wealth, while a retiree with no income may have $3,000,000 in wealth between the value of a house, cars, jewelry, an retirement accounts.  

It takes about $1,000,000 in wealth to be in the top 1% globally.  It takes about $100,000 in wealth to be in about the top 10% globally.  With about $5000 in wealth, you are in the top 50% globally.  

[Hannah]

2 hours ago, prairiewindmomma said:

A quick google says R15.5 million, or roughly 1 million USD is the high net worth threshold for SA. https://www.news24.com/amp/fin24/economy/degrees-of-separation-heres-what-sas-super-rich-studied-20220426

ETA: looks like the exchange rate has changed since 2022–1 million USD is now 19.9 million rand?

Working out the numbers, savings of R15mil at a retirement age 65 would not actually cover lifelong frail-care + medical costs. 

 I'm going off the assumption that currently with R15mil one would be able to buy a life-time inflation-linked pension which would provide an after-tax income of R 52 500 per month.     Two people would be able to live off that very comfortably, though, if they dind't need long-term frail care.

24/7 frail care in a reasonably well run home in Johannesburg is around R25 000 per person.  And medical insurance for hospital and chronic medication cover would be R 5 000 per person.  So, if a couple both needed frail-care, they would be short of R8 000 per month that their family would need to cover.

If they were living off the earnings from investment and we assume a 2.5% above inflation growth and no dipping into capital, then their monthly income comes to only R25 000 after tax.  They would have to start living off the capital when they need frail care and could run short.  

 

 

 

Edited May 17, 2023 by Hannah

[Hannah]

56 minutes ago, Corraleno said:

I would use the term "financially independent" (FI) to describe someone who has enough money and assets that they can live in whatever style they prefer without having to work.

I like this definition.  It speaks to an individual's preferences.

[SKL]

I do struggle with the idea of knowing when I have enough.  This is partly because of some economic crashes we've experienced when, just before, I thought I had enough to quit working and live off of interest.

I mean, part of me says I'll have enough on Social Security/Medicare alone, since I own a home free and clear, and it seems likely the house will stand at least as long as I will.  The other part of me says, who knows what unexpected event will occur?  What if SS / Medicare ceases to exist, or becomes too little for survival?  What if I'm 65 and I have a catastrophic health situation that Medicare doesn't cover?  (I don't plan on signing a DNR when my kids are only 25.)  What if I experience an uninsured home catastrophe?  Of course I could go on all day until no amount would ever be "enough" to satisfy all the "what ifs."

So a lot of it depends on what day you ask me.  If I'm feeling optimistic today, I don't have a financial worry in the world.  If I'm having a different kind of day, I think, better keep working!

I did gain some wisdom years ago from Chopra's "Seven Spiritual Laws of Success" - specifically, the law of giving.  Give without worrying, and rather than draining you, it will prepare you to receive more.  Call it snake oil, but as soon as I started living this law, my financial limitations started to turn into financial bounty.  Which means, the less time one spends in the "I don't have enough" mindset, the more likely one is to be financially comfortable sooner or later.

[Hannah]

47 minutes ago, Jean in Newcastle said:

There, anyone with middle class money was expected to have servants and to "spread the wealth".  It was a cultural expectation.  

That is very much the expectation here.   We have 33% unemployment in the country.  Us employing a cleaner and gardener feeds 9 mouths.