Your income

[disneysteve]

Developing good budgeting skills(especially in a culture that praises spending) is like going on a disgusting diet to lose weight. I'm just afraid people see a bunch of naturally lean people telling people how this disgusting diet is the only way they can lose weight.

Just saying..the excuses of NOT being able to save money is strong. When you make 1.5-2x more than the debt ridden individual looking for advice, it's hard for them to take what you are saying seriously because you are not in their shoes.

I think you have a point, but at the same time, if you want weight loss advice, you don't ask an obese person - you ask a slim person. If you want financial advice, you shouldn't ask someone who is broke and in debt - you should ask someone who is winning with money.

[kork13]

I know it's possible to save nearly 50% of your income -- I've done it almost consistently since I graduated college. But it takes alot of dedication and sacrifice... starting from day one. Most people wouldn't be able to do it, because it's hard to reduce your expenses to that extent once you've been living differently for very long.

I could do it before because I was single and boring. My wife and I manage it now because our goal from the outset was to live so that she'd have the flexibility of not working full-time at some point in the future, so we're saving 100% of her income. With that said, if/when she does stop working full-time, I doubt that we'd be able to keep it up. At that point, I think we'd be doing good to save 20%.

Note that I'm talking all in percentages... There's a reason for that: Dollar figures are very specific measures. As already stated, $2k/mo means something totally different between a $50k/yr family and a $200k/yr family. One of those families will be able to retire quite comfortably in good time. The other would struggle to do so at all. Families need to save in relative proportion to their income... or at least their expenses.

I don't mean to say that $2k/mo is a bad recommendation -- if everyone followed that advice, it would do alot to help alot of people. I'm just saying that specific dollar figures, in any amount, aren't meaningful to the broad population.

[disneysteve]

Note that I'm talking all in percentages... There's a reason for that: Dollar figures are very specific measures. As already stated, $2k/mo means something totally different between a $50k/yr family and a $200k/yr family. One of those families will be able to retire quite comfortably in good time. The other would struggle to do so at all. Families need to save in relative proportion to their income... or at least their expenses.

It's also much easier to save a higher percentage of income on a higher income because a lot of expenses are regressive - they affect lower income people more significantly than higher income people. A gallon of milk or a gallon of gas is the same price no matter how much you earn. It's much easier for the person earning 100K to live on 50K than it is for the person earning 50K to live on 25K.

[Eagle]

I think this is only so useful. Depending on where someone lives for example 50k a year may be middle class. Other places like NY or California 50k a year may be poverty level.

[disneysteve]

Depending on where someone lives for example 50k a year may be middle class. Other places like NY or California 50k a year may be poverty level.

True. Geography does matter. Family size matters, too. There's a big difference between a single guy making 50K and a couple or a family with kids making 50K.

[phantom]

What is interesting about the polls is that no one here currently makes less than 50k, which is a good 45%+ of the American public. Some may even wonder if a bunch of people making over the average median income is fit to counsel people on budgeting since relatability can be a concern to readers.

I fail to see the problem. It's not like the only reason to visit this forum is to get/give budgeting advice, and it's not like people making over 50k can't benefit from budgeting. Personally, I'm here, because despite the fact that I make what I know to be a very good salary relative to most of the US, I think it's important to be careful with my money, and I like to hear what other people who are thinking carefully about their money are doing.

[bigdaddybus]

Developing good budgeting skills(especially in a culture that praises spending) is like going on a disgusting diet to lose weight. I'm just afraid people see a bunch of naturally lean people telling people how this disgusting diet is the only way they can lose weight.

Just saying..the excuses of NOT being able to save money is strong. When you make 1.5-2x more than the debt ridden individual looking for advice, it's hard for them to take what you are saying seriously because you are not in their shoes.

I see where you are coming from. As someone who has experienced household income on the low end and high end of this poll, it was annoying to me to get financial advise from friends/family that were already high earners. In my experiences, its a lot easier for me to save when I make over the median HH income.

[corn18]

I'm living proof that it doesn't matter how much you make, it matters how much you spend. The closest I ever came to bankruptcy was when I was earning well north of the max in this poll. Thanks to SA, I'm saving 42% of my gross income now.

[HundredK]

I'm living proof that it doesn't matter how much you make, it matters how much you spend. The closest I ever came to bankruptcy was when I was earning well north of the max in this poll. Thanks to SA, I'm saving 42% of my gross income now.

You might be my hero!

[LivingAlmostLarge]

I see where you are coming from. As someone who has experienced household income on the low end and high end of this poll, it was annoying to me to get financial advise from friends/family that were already high earners. In my experiences, its a lot easier for me to save when I make over the median HH income.

Bigdaddy I agree completely. When we were making below the $50k bracket I found it annoying to listen financial gurus or pretty much anyone. We weren't spendthrifts and we were trying to save. But everyday I worried that one accident would wipe us out.

Then suddenly our income went up a lot and we could save a ton with barely expanding the lifestyle. Mostly our expenses has gone up because we've moved into bigger homes and it's cost more. Not because we've changed our spending drastically.

But I know it was annoying to be told clip coupons, watch every penny, save more. So I don't bother. Instead someone struggling with little income needs to look at income. It's a lot harder to save 15% of $50k than 15% of $200k because expenses are regressive. I still pay my $60/internet, $100/heat, $300/car insurance, $150/water, $100/cell, etc. But it's a smaller percentage of the higher salary. Then food say I spend $800 versus $400. It's still a smaller percentage of salary than being the $50k category.

[DaveInPgh]

I just think talking in percentages instead of dollar amounts is more meaningful to a broader range of readers.

Well said

[GoodSteward]

Saving 50% of a 50k$ income isn't realistic, especially with a family, except for non-common situations. Such as, if you are a single person living at home making 50k you can do it I worked with someone like this. He wouldn't even deposit a paycheck for months and just go to the bank and put in tens of thousands at a time. Overall, I don't think that it is fair to make someone think if they were good enough with money they could be saving 50% of their low income. For those who are in that income position and reading this site, all that does it make them feel worse. It isn't realistic and I think it was a poor example, especially since it was pushed so much. I've been there before.

It's also much easier to save a higher percentage of income on a higher income because a lot of expenses are regressive - they affect lower income people more significantly than higher income people. A gallon of milk or a gallon of gas is the same price no matter how much you earn. It's much easier for the person earning 100K to live on 50K than it is for the person earning 50K to live on 25K.

This is what I was thinking. You hit a point with income just like a business does with profit. The higher above the monthly break-even point, the more bottom line you get to work with. My dad taught me there is a day of the month where you hit the budget needed for expenses and every day thereafter is all profit. The more days, the more profit. Same for us personally. The more income you make, the sooner you cover your monthly expenses and have more left over to save. That is much easier to do with higher incomes.

[GoodSteward]

I think you have a point, but at the same time, if you want weight loss advice, you don't ask an obese person - you ask a slim person. If you want financial advice, you shouldn't ask someone who is broke and in debt - you should ask someone who is winning with money.

As a chubby person, I always hated this analogy. It simply isn't true. If you have never been fat, you don't know what it takes to get skinny. It takes more than facts to actually lose weight. If you have a high metabolism you don't even understand how someone can get fat if you're immune to gaining weight for the most part. I am 6 ft and weigh 275lb roughly. Growing up I got fat as a kid and stayed that way until after high school. 305 was my highest, and I was down to 225 and in a gym before getting married. Then it slowly went back up. I know a ton about eating right, juicing, low carbs, exercise, etc. I know exactly what it takes to lose weight, I just don't care enough to put the work in all the time.

The same can be true for finances. Just because someone starts out from college making a lot of money doesn't mean they know what it takes to do well. And if you have never been at the bottom financially, regardless of your income, you really don't know what it takes to pull back up. You might can give some numbers and info from a book, but you won't have as much personal insight that actually helps. The most influential information you can share is based on things you can relate with. This is why I address behavioral stuff so much on finances. I've been there with massive debt and low income. It sucks. Sometimes we just need a "you can do it," not a financial teardown or constantly hear "you need to make more money" or "you need to spend less." I drilled myself so hard on those phrases that even now I cringe to have to buy a pair of shoes or pants because at one point it was a luxury. I do agree you need to get advice from someone who is winning with money, but just because they are doing well doesn't mean they know how to help you get out of a mess and do well also. You need to find someone who was also in a mess and pulled out of it.

I mainly just don't like the analogy about skinny people. lol I work with someone who lives off sugar and candy but thinks they know more about health than I do because I'm big and they are not. Dumb.

[sv2007]

Glad to see most of us earns > $100k. I guess the complainers about the impossibility of my example w/ a saving $2k/month (in another thread where I gave an example of how one can easily create $1m in net worth) is just complainers by nature.

The poll result doesn't surprise me as even new college grads are making > $100k; and I'm glad to see that most here are too. At $100k/yr income, a savings of 30% = $30k /yr = $2.5k/mon; which means you'll get $1.2m instead of $1m (as the $2k example from other thread).

Now, many here make more than $200k/yr, so there's really no reason why $1m net worth is unattainable even with very modest saving and less-then-average money management. I'd say, > $3m net worth by retirement is very attainable for these people; and with good money management > $7m by retirement.

[GoodSteward]

Glad to see most of us earns > $100k. I guess the complainers about the impossibility of my example w/ a saving $2k/month (in another thread where I gave an example of how one can easily create $1m in net worth) is just complainers by nature.

The poll result doesn't surprise me as even new college grads are making > $100k; and I'm glad to see that most here are too. At $100k/yr income, a savings of 30% = $30k /yr = $2.5k/mon; which means you'll get $1.2m instead of $1m (as the $2k example from other thread).

Now, many here make more than $200k/yr, so there's really no reason why $1m net worth is unattainable even with very modest saving and less-then-average money management. I'd say, > $3m net worth by retirement is very attainable for these people; and with good money management > $7m by retirement.

You are completely out of touch with reality if you think 2k/m should be possible on a low income for a family. Have you ever even had to live on poverty income before, or at least in the last 20-30 years?

Also, I think college grads making 100k or more a year only applies in your field and a few others. Even lawyers and doctors don't necessarily start out at that. I heard on a Dave Ramsey podcast recently when a new lawyer called in he said he was only making 40k$ a year with the firm he was in until he had experience. Most college grads start out at half of what you think according to a quick google search. If two people get married making then that's another story.