If you missed it, there has been a firestorm online recently surrounding a law professor who tried to make the case that despite a combined income of $250,000 a year his family was struggling to get by. The barrage of responses forced him to take his blog offline but you can read about it here.
By far the most insightful thing I’ve read about the entire debate is that there is a difference between being rich and feeling rich. Making $250,000 is undoubtedly rich in a country where the median family income is around $50,000. However, that doesn’t mean you feel rich depending on what you think feeling rich feels like.
For lack of a better definition, I’m going to arbitrarily define “feeling rich” as consisting of the following:
- Being able to buy anything you want.
- Not needing to work for a sizable period of time without changing your lifestyle.
- Possession of some expensive assets (house, car, etc).
Based on that definition, if you live in a neighborhood of people who all earn $500,000 a year, I have no doubt that at $250,000 you would not feel rich. You would very quickly convince yourself that you can’t buy anything you want because your definition of what you could want would change to what the people around you have. You wouldn’t be able to stop working for a sizable period of time and live their lifestyle. And you most definitely would not own anything as expensive as what they have.
All of that is a fancy way of saying that feeling rich is relative to those people around you. If you took that same professor and put him in a neighborhood of people earning minimum wage, I guarantee you that he would feel rich pretty quickly.
It is also true that everyone has a different idea of what being rich will feel like if/when they get there. Not all of it is defined by your surroundings since personal taste and personal interests definitely influence what you desire. Some people want to own yachts and castles while others really just want to live in a cabin in the woods.
All I really care about is how lucky I am not to feel poor. If you’re not sure how that feels, read this.
