When do you "feel" rich?

[bjl584]

Here is an interesting posting I came across.
This couple, by most peoples standards, are wealthy, but they just aren't feeling it.
I could be the HCOL area they are in, or the long stressful work hours they mentioned.
They do mention that they need more passive income.
Some of the responses mention not looking at strictly finances, but to maybe take lower paying jobs to gain time back.
What does everyone think?
When did you start feeling rich? Or are you still chasing that dream?



My wife and I are both in our 30s, and work professional jobs ($700k/year combined). We have a little north of a million dollars in income-generating real estate that we own outright netting $60k/year, around $250k in highly liquid assets (cash/money market) and another $250k in the stock market. We also have a million dollars equity in our home.

Neither my wife or I came from money so having this level of income/assets is not something we take for granted. However, we live in a HCOL area and our expenses are very high and as a result, I really don't feel "rich" by any stretch. We're aggressively trying to save and buy more real estate to get our passive income up, but at what point did you start feeling "rich"?

I think part of the problem is that we both work crazy hours, so it feels like we don't really have the freedom to do what we want. Once our passive income is high enough to be able to not work, that's when I think I'd start feeling rich. Until then, just feels like we're grinding out a middle class existence.

[ua_guy]

We were having this discussion with a CFP. The theoretical couple above are in a class of people who still receive their primary income through wages and who have to work full time to sustain their lifestyle and also turn a commensurate retirement lifestyle into reality. Wage income means they pay the highest taxes. Their full-time, high-paying jobs likely require living HCOL, so they have some of the highest expenses. Despite healthy income and savings, they still stand to lose it all in the event of job loss, health decline, or severe market downturn. It really gives credence to the idea that there really is no middle class anymore, you're either working, or you're wealthy.

[disneysteve]

I'd be very curious to see their spending breakdown. Even in a HCOLA, they're earning 700K from jobs plus 60K from real estate. That's sufficient income to be comfortable most anywhere. The big question is how much are they spending? Do they have 6-figure student loans? Car loans? They work "crazy hours" so are they eating out a lot? They've clearly done well in the sense that they have $2 million in real estate equity plus 500K in savings as well.

The other question is what does it mean to "feel rich"? I have no idea. My wife and I have a $4.3 million portfolio plus own our home outright so maybe a $4.8 million NW when you throw in cars and stuff. Do we feel rich? Not in the least. We still watch our spending fairly closely. We're still careful with what we do with our money, just the same as when we had half as much or less. Admittedly we aren't nearly as frugal as we were 30 years ago when we were broke but we're still very much aware of what we are spending. So no, I do not feel rich.

[LivingAlmostLarge]

I'd be very curious to see their spending breakdown. Even in a HCOLA, they're earning 700K from jobs plus 60K from real estate. That's sufficient income to be comfortable most anywhere. The big question is how much are they spending? Do they have 6-figure student loans? Car loans? They work "crazy hours" so are they eating out a lot? They've clearly done well in the sense that they have $2 million in real estate equity plus 500K in savings as well.

The other question is what does it mean to "feel rich"? I have no idea. My wife and I have a $4.3 million portfolio plus own our home outright so maybe a $4.8 million NW when you throw in cars and stuff. Do we feel rich? Not in the least. We still watch our spending fairly closely. We're still careful with what we do with our money, just the same as when we had half as much or less. Admittedly we aren't nearly as frugal as we were 30 years ago when we were broke but we're still very much aware of what we are spending. So no, I do not feel rich.

The issue is that they are likely living very modestly trying to save like crazy and not spending. BTDT. They live on less than 50% i bet, if not 30%. They are trying to catch up but it's really hard. 40% vanishes to taxes, then you save your stock comp and and live on cash and that's less than a 1/3 of your actual compensation. So you don't feel rich. You are compared to the average person but you are still working like crazy.

I would say I really started feeling wealthier in the last 2 years. We were still making lower than previously but our portfolio really started compounding and adding up. We exponentially all the years of saving just started growing. It was like $500k or $1m in less than a year without effort. The compounding of our assets is what pushed me into feeling rich.

I know that's what makes my husband not feel rich. He doesn't feel rich. he still works, no matter what the number on the paycheck says. And the number says he makes a lot now. But he's the same guy working same job a month ago, a year ago. But the portfolio is compounding. I can definitely pinpoint it easier looking at our college savings. When we started it was $2k/year was a stretch. But we put it away. Suddenly that $2k/year is $88k now 16 years later and heading into $100k. WOW. on $2k/year. Just add a zero on that and you can see how suddenly the compounding becomes boulder rolling down the hill gaining steam

[kork13]

"Wealthy" is a number. "Rich" is a state of mind. The two may often never overlap in a person's life.

I've been in similar-ish circumstances as the OP's couple -- at one point DW & I were earning over $300k, both grew up in optimistically middle-class (teacher's) families, HCOLA, 1x paid-off rental, and just about $1M in assets, and generous expenses only amounting to ~$100k (including taxes). We easily saved over 50% of our gross, and had so much excess that we didn't even have to think about if we could afford our purchases, because nothing we would reasonably buy or spend was going to be outside our reach. For us, that feeling of basically not needing to care about how we spent money, along with the knowledge that we were budding millionaires... That felt like "rich" to us.

Once we moved away our financial dynamics changed, and that "rich" feeling quickly faded. Our income has dropped almost in half (DW was medically retired), our spending became more deliberate/less freewheeling, and our savings rate went down to our more normal 35%-ish, etc. Even though our wealth continued growing, we no longer felt or acted "rich."

In the same way ... people can act/feel like they're rich even when they're not wealthy ... and wealthy people such as Steve can act/feel like they are not rich.

[disneysteve]

I would say I really started feeling wealthier in the last 2 years. We were still making lower than previously but our portfolio really started compounding and adding up. We exponentially all the years of saving just started growing. It was like $500k or $1m in less than a year without effort. The compounding of our assets is what pushed me into feeling rich.

We're in a similar situation and my outlook has evolved a lot in recent months for the same reason as you. I retired early in 2024. We ended 2024 with our portfolio up by 455K. This year is my first full year of retirement, so no W-2 income at all. YTD our portfolio is up 466K. So in just 2 years, our wealth has grown by over $900,000 despite me no longer working. Along the way, I was also introduced to Nick Maggiulli and his book "The Wealth Ladder". That also shifted by perspective on what we have and what we can spend without concern. As a result of all of that, I have definitely loosened the purse strings and loosened up on spending. I guess you could say I feel more rich than I did a couple of years ago. I know that we have more than enough for the rest of our lives and it's time to start enjoying it a little more.

[kork13]

A bit OT .... but I also recently came across "The Wealth Ladder", and I'm reading the book right now. I definitely agree, it changes the way you look at things. It's going on my list of books to recommend to people.

[myrdale]

"Rich" and "Poor" are states of mind. And thinking you're "Rich" may lead to feeling "Poor" before long if you let your lifestyle creep up with your income.

"Wealthy" and "Broke" are more factual descriptions of your financial position. Broke is a temporary situation that you can change. Wealth is like a garden that you have to tend and grow.

With "that" out of the way, when you look at 95% of the world, you'd feel rich just living at the poverty level in the United States.

Around 40% of households that earn $100k live paycheck to paycheck. How you can feel rich while knowing you are depending on your next check, I don't know.

To me, I feel "rich" when I can afford to buy the things I want without impacting the things I need or interrupting my savings. Additionally I feel "rich" when I compare my monthly budget to my savings and realize I have close to a year's buffer setting there.

[Fishindude77]

I suppose it boils down to what $$ and assets you have -vs- where you live and who you spend time around.
Hang around street bums and you might feel rich with $100 in your pocket. Hang around an offshore marina and you might feel like a bum in your 30' boat.

The important thing is to be happy. Sounds like the couple in struggle are all tied up in the rat race struggle and are not yet happy, despite pretty incredible income.
Another couple mil $ in assets or $200k higher income may still not make them happy if they are running around with the financial elites and trying to compare.

[ua_guy]

To expand on the idea of rich versus wealthy, I will feel "rich" when I am no longer obligated to work. Everything else feels like Golden Handcuffs, or just handcuffs, IMO. To me, that's not really a "rich" feeling, it's an obligation even if the money is good / wealth is building.

[disneysteve]

A bit OT .... but I also recently came across "The Wealth Ladder", and I'm reading the book right now. I definitely agree, it changes the way you look at things. It's going on my list of books to recommend to people.

I really need to read the book. I've listened to a couple of extended interviews with him which nicely summarized everything but I'm sure it's much more detailed and nuanced in the book.

[LivingAlmostLarge]

I suppose it boils down to what $$ and assets you have -vs- where you live and who you spend time around.
Hang around street bums and you might feel rich with $100 in your pocket. Hang around an offshore marina and you might feel like a bum in your 30' boat.

The important thing is to be happy. Sounds like the couple in struggle are all tied up in the rat race struggle and are not yet happy, despite pretty incredible income.
Another couple mil $ in assets or $200k higher income may still not make them happy if they are running around with the financial elites and trying to compare.

This is something I've recently observed. That when you are comparing to those who have less you feel rich. But trying to keep up with those who have more doesn't work.

[srblanco7]

Googled "rich vs wealthy" and the response is below in italics...

The key difference is that "rich" generally describes a high income or abundant material possessions, while "wealthy" refers to long-term financial security and freedom built through accumulated assets that generate income. A rich person might live a lavish lifestyle but still be dependent on their active income, while a wealthy person can sustain their lifestyle without actively working.

OP likely are "rich", but not "wealthy". They are locked into the grind - at least for now.

In a sense, we're walking away from "rich" because we're "wealthy"

[disneysteve]

Googled "rich vs wealthy" and the response is below in italics...

The key difference is that "rich" generally describes a high income or abundant material possessions, while "wealthy" refers to long-term financial security and freedom built through accumulated assets that generate income. A rich person might live a lavish lifestyle but still be dependent on their active income, while a wealthy person can sustain their lifestyle without actively working.

OP likely are "rich", but not "wealthy". They are locked into the grind - at least for now.

In a sense, we're walking away from "rich" because we're "wealthy"

I love this. I'd much rather be wealthy than rich based on this definition, and I think we are.

[LivingAlmostLarge]

i feel very wealthy of late. it's a sense of peace and security that's come over me in the past year and a half. And I would say the last 6 months after the wealth ladder I really let go. Nick Magguli released me by telling me that saving that extra $10 wasn't going to change the needle. I knew it "mentally" but i didn't "know it."