How Much Money Do I Need to be Rich?

Pretty much everyone wants to be rich—not purely for the sake of money, but for the fragile promise of happiness that comes with being a total baller. But, what does it mean to be rich today? How much money do you really need to be considered rich?

The answer might just surprise you. See, it’s all a matter of relativity. We often think of Musk, Bezos, and Zuck as our benchmarks for wealth. That’s like comparing your golf game to Viktor Hovland of Norway, who won the FedEx Cup and $18M a few weeks ago.

Things are tougher for us financially than they were just a few, short years ago. We are continually assured that the economy is doing great, and yet everything is much more expensive today—simple things like gas, bread, eggs, and milk. 61% of Americans are living paycheck to paycheck. American credit card debt just crossed $1 trillion.

According to Bank of America, 401k hardship withdrawals are up 36% compared to the third quarter of 2022. Just three years ago, the average 30-year mortgage rate was 2.98%. The median existing home price in the US was $294,000. Today, the 30-year mortgage rate is 6.78%, and the median home price is $410,000. Gas is back above $4.00 in most parts ofthe country.

Meanwhile, the brand new Cadillac Escalade IQ all-electric SUV is $130,000. That data point is kind of irrelevant. I’m not even sure why I mentioned it. Can I take that sentence back?

These are enormous red flags that all is not well in the economy. (Blink twice if you’re feeling the pinch.)

Before you cry yourself to sleep, here’s a spoiler alert: you are already rich, crazy rich. In fact, nearly 60% of Millennials already feel rich. But, only 40% of Boomers feel wealthy. I guess it’s a matter of defining “wealthy”. But, hold that thought for 90 seconds.

We’ve all heard that getting everything you want in life doesn’t guarantee that you’ll enjoy a lifetime of happiness and bliss. I wrote about that in a piece called Why Fear & Faith Are Permanent Emotions. If you didn’t read it, you should. Don’t make me come to your house.

Getting everything you want in life is how people end up in rehab, wondering how many grandkids they have. Money can’t buy or restore relationships. Money can’t bring back friends, loved ones, or pets from heaven. Money can’t cure Cancer. Just ask Steve Jobs how that turned out.

Another thing money can’t buy is access to the Wit & Wisdom podcast on Spotify, Apple iTunes, iHeart Radio, or any other major podcast platforms. It’s free, forever. See what I did there?

So, let’s play a little game together, okay? I want you to take a minute and figure out how much money you think you would need to be rich. (Let’s just agree that being richer than 90% of Americans would be enough.) Think of a number. We’ll wait…

(Author’s Note: This might seem silly, but trust me. You’re gonna need that number for the big finish in a few minutes. Stay focused, my friend. You can do it. I believe in you.)

Before you share your number, let’s do a little research. The international poverty line is the threshold that determines whether someone is living in poverty. That line is based on the value of goods and services needed to sustain one healthy adult. Today, it sits at a paltry $2.15 a day, or about the cost of a tall black coffee at Starbucks, without any of that flavored syrup. According to Worldvision.org, 9.2% of the world’s population lives on less than $2.15 a day. Crazy, huh?

Okay, I think it’s a safe bet that neither of us lives in Addis Ababa, Ethiopia. In America, Canada and most of Europe our pets sleep in better conditions than many people in other countries.

So, how does that $2.15 compare to the United States and Europe? The 2023 Federal Poverty Level in the United States is $39.95 a day. Around 10-12% of Americans live on that or less. While that’s a subsistence level of income, it still far surpasses the income and quality of life in less developed countries. In comparison, around 52% of the Ethiopian population uses a dry pit as a toilet. The remainder use bucket toilets, open pit toilets, or simply relieve themselves outside. Can you imagine if someone from Ethiopia visited a restroom at the Buc-ee’s convenience store? The men’s room has 35 urinals and another 20 stalls.

In America, most of the poor have access to clean water and modern sanitation. In the US, 76% of people below the poverty line have access to a smartphone. Around 59% have access to a laptop or desktop computer.

I’m not discounting our growing poor and homeless problem. Just visit San Francisco or New York, and you’re quickly reminded that access to affordable housing, drug and alcohol treatment, and quality mental health care is sparse. Still, most people in Ethiopia have never even heard of a Smartphone, a laptop computer, or a Buc-ee’s—or even a toilet, for that matter.

With all those toilets and the comparative wealth in the United States, we should all be pretty darn happy, but we aren’t. According to the World Happiness Report, the United States ranked 15th in 2023. For the sixth year in a row, Finland ranked as the happiest country on earth. It’s followed by Denmark, Iceland, Israel, and the Netherlands. European countries including Sweden, Norway, Switzerland, and Luxembourg dominate the rest of the top 10. In the words of Ricky Bobby, “If you’re not first, you’re last.”

So, let’s go back to the whiteboard exercise before class ends. How much money did you think you need to be richer than 90% of Americans?

Was it $1M, $5M, or even $10M?

It surprised me to learn that the top 10% of wealthy Americans only have a net worth of$854,900 each. I guessed closer to $5M. The top 50% have amassed an average of $522,210. Those are still big numbers for most of us. The point here is that whether you compare yourself to people without toilets or to your fellow countrymen, you are a lot richer than you think.

Just take the average Boomer. In order to feel wealthy they need $692,000. The average Millennial thinks $531,000 is rich, yet the Millennials feel richer than the Boomers. Perhaps the Millennials have yet to contemplate how much money it takes to educate their children and not end up in a trailer park eating Ramen noodles in their retirement years. To be sure, life only seems to get more expensive as we age.

Alrighty, we’ve learned a lot here today about what it means to be rich. First, you probably feel like you are going backward because everything has become much more expensive. I feel you. Second, regardless of your net worth, you will always want more stuff, especially if you’re an American. Third, you are already filthy rich by nearly any world standard. Stop complaining. Fourth, if you’re going to be poor, the United States is probably the best place on earth to do it. At least we have toilets. Lastly, the top 10% of rich people don’t have nearly as much money as you think.

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