How do you define "rich"?

[Phoenix84]

The "is 250k/year rich" thread got me thinking. There seems to be a lot of disagreement about what being "rich" means. Some people say you're not rich if you have high income but little net worth. Others say you are in the top 1-2% of income earners and thus, are rich. Others point out that 250k/year goes farther in some areas of the country than others, citing HCOLA's where it might make you middle or upper middle class.

So, is rich defined by lifestyle, net worth, where you live, or some combination of factors.

Some people with extremely high net worth can have virtually no income, while someone can be high income but have debt up to their eyeballs. They may have even less net worth than the poorest person in a third world country. Can we say they are "more poor" than this person?

[Phoenix84]

This message has been deleted.

[Phoenix84]

I propose that the state of being "rich" is a combination of high net worth AND a quality lifestyle (from a resource perspective). You can't say someone who has a negative net worth is rich but they have every creature comfort known to man. Conversely you couldn't call Warren Buffet or Bill Gates 'not rich" if they decided to keep their net worth but live in a hovel in the Congo. Being rich means having both the lifestyle and the net worth to back it up.

[Phoenix84]

Sorry for the double posting

[Elizabeth]

Phoenix

[Deleted]

I consider rich:
- having a high net worth
- not needing to work, key work "needing" meaning they can drop their jobs in a heart beat and it will not affect their lifestyle or they don't need to find work for sometime.

but you also have to seperate between plain rich and wealthy. As a comedian said:

"Shaquille O'Neal and Kobey Bryant are rich, but the person who signs their paychecks is wealthy."

[schildi]

Having enough money to be able to quit your day to day job without any consequences, I think that's my goal. Don't know if that's rich, and I don't really care either to be honest.

[Sum Dum Gai]

Spending power or quality of life has to factor into it to a certain extent. Somebody who makes ten million a year is rich, even if they spend every penny of it on luxuries that the rest of us can only dream about. They may have a lower net worth than a burger flipper at McDonalds, but the burger flipper will never be able to spend $100k on a sports car just to drive it like they stole it for a month or two then junk it when it breaks. I don't know where I'd draw the income line exactly, but at a certain point having the freedom to blow a huge income every month makes you rich. Sure, if you lose the income for any reason you instantly become poor, but still.

[cronewitch]

To me rich is income and wealth is net worth.

A 16 year old with his first job can be rich because his parents pay all his expenses and his income is enough to have all the show off stuff. If daddy buys the first car and mommy still buys the socks and underwear the 16 year old making minimum wage can afford more than an adult.

For working adults I would say rich is enough income to finance a really nice car and a really nice home with money left to vacation and send the kids to private schools or to enjoy an expensive hobby like a 35 foot boat. When I say afford I don't mean just finance it then worry about payments but actually be the Joneses.

Wealth is enough to do all that and not need the income from jobs. They children are given trust funds at birth and the family has generational money. They consider themselves guardians of the money while living on the income and only working because they value work and need to run the family business. They don't show off but do like quality so will drive something like an Infinity not a Ferarri. They might have a nice boat and nice home on waterfront but so do most of their friends so they don't think about the cost much.

One of the guys at work is that way. He runs the company production part and is a VP, his grandfather was a founder. He works 12 hours days often but owns a home with a dock and has trust funds. He owns four nice vehicles that aren't really showy but nice one kid in college one going in the fall. The kids go to school out of state and go skiing on ski teams. Not a cheap lifestyle but not show off. He eats leftovers for lunch because he loves his wife's cooking and we don't have a good place to get lunch at work. He doesn't save for retirement.

[hcj]

It doesn't matter who you are, what you earn or net worth, "rich" is always twice or three times as much as you have/earn now. Seriously, they have done study after study on this. The guy who makes $1 million a year thinks rich is $3M/yr and the guy with $1B thinks it takes $3B to be rich. The couple making $75K/yr believe that $150K/yr would make them rich. You see, you can never actually feel rich because the more you earn or have in wealth, the higher the bar in your mind for being rich.

Of course, this is not true for every single human being, but it is for the majority. The take away is that rich does not equal happy. In fact, there have been a number of studies that show once we get to approximately 20% over what we need financially, happiness doesn't increase one bit with increased income AND happiness can actually decrease with incomes above "need." One thing I never strive for is to be "rich" in money. We want to be rich in health, happiness, experiences and pleasure. In finance, it's really just about being comfortable, granted, increasingly more comfortable, but you get the point, right?

Heck, I remember when I was making $20K/yr and thinking that man, oh man, if I can get to $40K, how my life would change. The thing is at $20K/yr I had no idea what a 401K was, didn't have health insurance and certainly hadn't imagined that I would need to have something like life insurance. Oh, and did I factor in subsidizing my mom so she's not in piss hotel? Nope. I just thought one day I would be rich and be able to take care of her. Never did get rich, but she did make it to her 80's with a dementia and can't live on her own., so here I am making the choice to make her last year better.

And then even when I hit $40K/yr, I would have thought something like a grafted gardenia on sale for $40 was something "rich" people bought, not the bargain I thought it was in January of this year My point is that it's not only all relative, but also that needs change. No, the gardenia was not a need, but life insurance kind of is as is health insurance, umbrella policies and even earthquake insurance. I buy a lotto ticket now and then because the $1 is worth the fantasies I have about what we would do, but I never forget that our lives could be a winning lotto ticket to the vast majority of the world. We're not rich, but boy, we sure do have it good.

I'm proud to say that we can call ourselves "successful." We're able to support causes we care about, help our friends and family when they need it and are able to live life on our terms. Of course, that could change in any given moment, but tonight I will sleep well.

[SVT]

I think just having a few million net worth could consider you rich. There isn't a high percentage of households with a $3M net worth

[Deleted]

Rich can be high income or high net worth, or both.

[Regis]

Enough to take care of your every need (and maybe a few "wants", too!) without needing to work.

I have no clue what that number is but I'll let you know when I get there. ;D

[phil5185]

IMO, the measure of 'rich' is net worth. A high income helps you get rich, but it isn't part of the definition.
You can have $5M in the bank but have almost no income, just an SS check. Or you could have $4M in the bank, have a paid-for $900k house and a $100k car - you still have a $5M NW. The point is -with $5M you can chose the one that you want.

[april47]

Rich is not batting an eye when you donate $1million to the disaster in Japan like Sandra Bullock did.

[Phoenix84]

If we define rich as not needing a day job, then every retired person, SAHS, child, welfare queen, and bum would be rich. I think we need add the additional criteria that they have a high net worth to support the non working lifestyle. I like Cawiau's definition.

[Phoenix84]

"When people have serious, concentrated economic power like that, they can be scary."

I'm not disagreeing, but why do you think the wealthy are scary? I don't think they're that different from the rest of us. They either born into it or got there by some combination of hard work, luck, and/or connections.

[Deleted]

To me, rich is financial independence without having to pinch pennies.

[Deleted]

I would consider myself rich if I had enough to do whatever I wanted to do.

[Bob Ross]

Alls I know about the term "rich" is that it seems to be a stigma that no one will admit to being, except maybe billionaires to each other behind closed doors in gated communities.

[phil5185]

When people have serious, concentrated economic power like that, they can be scary.

LOL - you must be a Michael Moore follower, isn't he mad at Oprah (and 399 others) because they are hoarding the wealth of the US and making us short of cash? (He must have skipped a few math classes in school, the 400 hold only about 2% of the wealth, the rest of us have 98% - if we were given the other 2% it probably would not have a noticeable effect on the deficit.)

[Deleted]

Mar 29, 2011 10:57:15 GMT -5 phil5185 said:

When people have serious, concentrated economic power like that, they can be scary.

LOL - you must be a Michael Moore follower, isn't he mad at Oprah (and 399 others) because they are hoarding the wealth of the US and making us short of cash? (He must have skipped a few math classes in school, the 400 hold only about 2% of the wealth, the rest of us have 98% - if we were given the other 2% it probably would not have a noticeable effect on the deficit.)

What is up with all the political posts? I like and respect you but gods, these posts make me not want to read your posts. I like Moore, and his movies and never heard him going after Oprah, just those who try to take advantage or those who are idiots, who give someone a gun for opening a bank account?

[formerexpat]

I would say rich is having enough invested to withdrawal 4% per annum to cover your desired burn rate [i.e. all of your expenses].

So, if I need $100k per year [gross] to live the lifestyle that I want without working and without SS, then I would have to have investments that can earn $100k per year, or about $2.5m.

The number that = rich will be different for everyone depending on what their burn rate is, which will vary wildly depending on your locality and your desires in retirement [i.e. do you want to travel at a cost of $15-20k a year].

I don't prescribe to the theory that rich is only if you can afford a yacht or an island or some silly qualification like that.

For us, in the area that we live now and the lifestyle we want to have in retirement, that number is approx. $4m in todays dollars to pull in $160k pre-tax. We will be perfectly happy with that and will not look down the street at the billionaire in envy.

With that definition, I would not include the person with a $10m income as being rich if they spend it all because tomorrow they could be the burger flipper and not be able to remotely afford the $10m burn rate per annum that they once enjoyed.

[Sum Dum Gai]

With that definition, I would not include the person with a $10m income as being rich if they spend it all because tomorrow they could be the burger flipper and not be able to remotely afford the $10m burn rate per annum that they once enjoyed.

So what? One has nothing to do with the other. Bill Gates is currently one of the richest people on the planet. Tomorrow he could give every penny of it away, donate all his worldly possessions to charity, take a vow of poverty, and choose to live in an 8' by 8' room in a monastery or something. That doesn't mean he's not currently rich as all get out.

Right now he's rich. If he gave it all away, he would then be poor. Somebody making 10 mil a year is rich. If they don't save any of it, and lose that income, they'll also be poor. Anyone who can blow 10 mil a year on stuff is rich though. If they aren't saving any of it, they're probably pretty stupid, but I'd call them rich nonetheless.

[❤ mollymouser ❤]

Well, if we lived where we live now AND my wonderful DH earned $250,000 per year in our present circumstances, I'd be hard pressed not to consider ourselves "rich."

[zibazinski]

Rich is not worrying about every little thing under the sun. Like being able to heat or cool your home to a comfortable level without crying when the bill comes for the privilege. Like being able to shop at the better grocery stores. To not worry about gas and insurance and repairs for your car. To be able to buy some nice clothes for yourself as opposed to always sacrificing for others.