More than half of six-figure earners said they would have to double their income to feel financially secure.
“People used to feel when you got to six figures or above that it was a sign of financial stability,” said Libby Rodney, chief strategy officer and futurist at The Harris Poll.
Mr. Rodney is full of shit, whether he knows it or not. There was a study done on the psychology of earning more money than you need to live. There’s an interesting phenomenon that arises; people always think they need more to feel secure. $100k feels they need $150k, $400k needs $600k, and this pattern continues all the way up to $15m, on average. I wouldn’t be surprised if the peak is even higher nowadays, the study was conducted in the early 2000’s I think. I will come back and edit this with more details of said study so I’m not just talking out my ass.
I thought that there was a study that showed limited returns on happiness beyond a certain threshold ($75k at the time, which is now surely well out-of-date).
Those could both be true. People feel like they need $125k more to be secure, but when they get it, it doesn’t make them as happy as they thought it would. They need another $25k more to feel that way.
the issue is they get that extra $125K. And then the start spending 95% of it on shit they weren’t buying before. They don’t get the extra 125K and not spend it.
It’s called lifestyle creep.
The ‘poorest’ people I’ve ever met were often part of the 300K+ club. Most of my friends making 100K or under aren’t the ones whining about how poor they are. It’s the people who are buying designer clothes and luxury cars.
so many people I meet are making like 100-150K a year. but they are spending way about their means on luxuries they don’t need but feel are ‘necessary’. like dropping $500 each weekend going out, which is $2000 a the end of the month. gym memberships, travel, luxury apartments, designer clothes, etc.
I think I could be creative enough to make myself happier.
Give me a lavish bunker on a small island with a hill looking over the ocean in the edge of the Caribbean latitude, let me take most of the people I care about. Food, gadgets, internet, maybe a helicopter or a small plane to come back to the mainland for concerts. Enough money to pay for protection.
But I don’t think that fits linearly into the scale of money versus happiness.
for most rich people those aren’t goals. the are forgone assumptions.
rich people care about going to elite expensive institutions, working for elite companies, and having designer level lifestyle in clothes, housing, and consumer goods. they love to go on about how they value ‘experiences’ while they drop 30K on some week long spiritual retreat in Bali, or some $10K weekend spa weekend in Palm springs.
the 100K people who feel poor feel poor because they thought they could afford a designer lifestyle. and all they are getting is a basic middle-class lifestyle
I think that the idea was that there is a special point where you feel secure and nothing beyond that makes any difference. But that $75k number sounds familiar. It’s probably more like $120k today.
Also, people’s goals change and “secure” means something different.
When I was making half as much as I am now, I felt fairly secure. I could pay my rent, I had no credit card debt, and I had a few months’ worth of savings. Money was not a day-to-day worry. Most of my peers were in debt and/or living paycheck-to-paycheck so I felt like I was living large.
Now I am objectively more secure but I feel less secure because I am thinking about retirement, childcare, college funds, and elder care. I have nowhere near enough savings to retire in the foreseeable future. I honestly don’t know if I’ll ever get there.
Keep your head up bro, you’ll make it. Sounds like you’re already putting in the effort and thinking about the hard stuff and the costs involved, which is more than most ever do. Lotta folks just spend and spend and put their heads in the sand when the future comes up.
Bingo. People typically spend more and more as they make more… making themselves financially insecure in perpetuity.
When I was making 30K a year I was spending only about 20K in expenses. Now that I make 150K a year I’m spending more like 120K. According to most of my peers I am ‘struggling’ because I’m not driving a brand new BMW 5 series and living a 2 million dollar house. So much of people’s fiancially problems is just them overspending to impress other people. I drive a 10 year old Honda. It works great. I also chose to get rescue animals rather than designer purebred animals. I shop at a cheap grocery store, not the luxury ones. and I live in a ‘boring’ area where rents/mortgages are cheaper.
I have a very modest setup and as of last year it required eighty something thousand per year to be in the black. Basically 90k if I was to be handle even the slightest of externalities. Im afraid to renew the math for prices this year and don’t even know yet for healthcare which I have to figure out by end of month.
Mr. Rodney is full of shit, whether he knows it or not. There was a study done on the psychology of earning more money than you need to live. There’s an interesting phenomenon that arises; people always think they need more to feel secure. $100k feels they need $150k, $400k needs $600k, and this pattern continues all the way up to $15m, on average. I wouldn’t be surprised if the peak is even higher nowadays, the study was conducted in the early 2000’s I think. I will come back and edit this with more details of said study so I’m not just talking out my ass.
I thought that there was a study that showed limited returns on happiness beyond a certain threshold ($75k at the time, which is now surely well out-of-date).
Found it- from 2010. Today that is $111,333 if you believe the bls CPI.
https://time.com/archive/6597645/do-we-need-75000-a-year-to-be-happy/
Those could both be true. People feel like they need $125k more to be secure, but when they get it, it doesn’t make them as happy as they thought it would. They need another $25k more to feel that way.
the issue is they get that extra $125K. And then the start spending 95% of it on shit they weren’t buying before. They don’t get the extra 125K and not spend it.
It’s called lifestyle creep.
The ‘poorest’ people I’ve ever met were often part of the 300K+ club. Most of my friends making 100K or under aren’t the ones whining about how poor they are. It’s the people who are buying designer clothes and luxury cars.
so many people I meet are making like 100-150K a year. but they are spending way about their means on luxuries they don’t need but feel are ‘necessary’. like dropping $500 each weekend going out, which is $2000 a the end of the month. gym memberships, travel, luxury apartments, designer clothes, etc.
I mean that really isn’t the issue. If they actually do that they are doing exactly what trickle down economics says.
The issue is that in reality people don’t so that - they save a lot of that extra cash for a cushy retirement, and then work less.
Honestly, I suspect limited returns come as you fill in a checklist.
Are you and your family clothed, fed and relatively safe?
Are you working only one job per person?
Is your family healthy and/or getting adequate healthcare?
Is your family at least getting an entire high school education under their belt?
Do you have safe and marginally convenient transportation?
Do you at least have enough money for occasional entertainment outside the house
Do you have a second bathroom?
Do you have at least a small line of credit?
Do you have a retirement? Will you be able to retire?
You don’t need all that, but once you cross that line, having more money around for things doesn’t make you happier.
Having more money would let me retire earlier, which would make me happier.
But I’m lucky and already have all my other needs met.
I think I could be creative enough to make myself happier.
Give me a lavish bunker on a small island with a hill looking over the ocean in the edge of the Caribbean latitude, let me take most of the people I care about. Food, gadgets, internet, maybe a helicopter or a small plane to come back to the mainland for concerts. Enough money to pay for protection.
But I don’t think that fits linearly into the scale of money versus happiness.
for most rich people those aren’t goals. the are forgone assumptions.
rich people care about going to elite expensive institutions, working for elite companies, and having designer level lifestyle in clothes, housing, and consumer goods. they love to go on about how they value ‘experiences’ while they drop 30K on some week long spiritual retreat in Bali, or some $10K weekend spa weekend in Palm springs.
the 100K people who feel poor feel poor because they thought they could afford a designer lifestyle. and all they are getting is a basic middle-class lifestyle
I think 75k was where commute time started mattering more than income
I think that the idea was that there is a special point where you feel secure and nothing beyond that makes any difference. But that $75k number sounds familiar. It’s probably more like $120k today.
Also, people’s goals change and “secure” means something different.
When I was making half as much as I am now, I felt fairly secure. I could pay my rent, I had no credit card debt, and I had a few months’ worth of savings. Money was not a day-to-day worry. Most of my peers were in debt and/or living paycheck-to-paycheck so I felt like I was living large.
Now I am objectively more secure but I feel less secure because I am thinking about retirement, childcare, college funds, and elder care. I have nowhere near enough savings to retire in the foreseeable future. I honestly don’t know if I’ll ever get there.
Keep your head up bro, you’ll make it. Sounds like you’re already putting in the effort and thinking about the hard stuff and the costs involved, which is more than most ever do. Lotta folks just spend and spend and put their heads in the sand when the future comes up.
Bingo. People typically spend more and more as they make more… making themselves financially insecure in perpetuity.
When I was making 30K a year I was spending only about 20K in expenses. Now that I make 150K a year I’m spending more like 120K. According to most of my peers I am ‘struggling’ because I’m not driving a brand new BMW 5 series and living a 2 million dollar house. So much of people’s fiancially problems is just them overspending to impress other people. I drive a 10 year old Honda. It works great. I also chose to get rescue animals rather than designer purebred animals. I shop at a cheap grocery store, not the luxury ones. and I live in a ‘boring’ area where rents/mortgages are cheaper.
it’s almost as if security is never actually produced by hoarding more and more resources for your personal nuclear family. Odd.
I have a very modest setup and as of last year it required eighty something thousand per year to be in the black. Basically 90k if I was to be handle even the slightest of externalities. Im afraid to renew the math for prices this year and don’t even know yet for healthcare which I have to figure out by end of month.