The average saving rate by income increases the more you make. That’s logical since living expenses like housing and food tend to more relatively more fixed.

However, the average saving rate doesn’t always increase with more income due to a lack of discipline. We all know people who spend way too much and live paycheck-to-paycheck despite huge salaries.

Before the global pandemic began, Americans as a whole didn’t save a lot of money. Up until May 2020, the average saving rate was only around 7%. At least 7% was better than the average saving rate of only 2.4% in 2006.

In other words, it takes the average American 13 – 45 years to save just one year’s worth of living expenses. That is a disaster if you want to achieve financial independence sooner, rather than later.

When you’re 60-something years old and only have several years worth of living expenses to buttress your declining Social Security checks, life isn’t going to be very leisurely. You’ll probably be mad at the government for lying to you and mad at yourself for not saving more when you still had a chance.

Sometimes we all need a redo in life. About once every couple of years, a Financial Samurai post goes a little nuts on the internet. Recently, Twitter got a hold of “Scraping By On $500,000 A Year: Why High Income Earners Can’t Escape The Rat Race” and consumed it like a rabid dog shaking a rag doll.

I first started noticing Twitter activity one Friday morning. Overnight, it seemed, about 500 new tweets of the post had appeared. By Monday, the tweet count had risen to a whopping 40,000+! What the heck was going on?!

Apparently, the internet found the $500,000 a year couple’s budget so absurd it started poking fun at the post. Some say my chart has even reached meme status. Well pinch my nuts! I get to check off another bucket list item before I croak.

The budget I originally posted is actually a real life couple’s budget shared with me to share with you. Their budget has been corroborated by hundreds of other couples and individuals making similar incomes while living in an expensive city like NYC, SF, London, Paris, LA, and Hong Kong. Financial Samurai already gets over 1 million organic pageviews a month, so it’s easy to gather feedback. Just check the comments on the post to see for yourself.

Some points I wanted to make from the post:

1) It’s not what you make, it’s what you keep.

Without discipline, it’s easy to spend everything you earn. Lifestyle inflation is the biggest culprit for why folks never feel like they have enough. It’s not just the cars and houses that people compete on, it’s also the schools parents want their children to attend.

Hopefully, the post encourages everyone to take a hard look at their own finances or if they haven’t already done so, create and monitor their own budget. “If you can’t manage it, you can’t improve it.” – Peter Drucker.

2) High income comes with high costs.

Yes, it’d be nice to earn big bucks living in the heartland of America, where I’m bullish, but in the heartland, those high income jobs are harder to come by. If one shouldn’t spend any more than 3X – 5X their gross income on a home, how much does one have to make in order to afford the $1.2M median home price in SF or NYC?  

Answer: $240,000 – $400,000 AFTER coming up with a $240,000 downpayment. Unfortunately federal income taxes adjust based on income amounts and not on the costs for living.

3) Think about geo-arbitrage.

Technology and the internet are allowing people to untether themselves from an office. Find companies that allow you to work remotely in a lower cost area. You might not get to relocate to Bali, Indonesia, but there are plenty of fantastic cities that are much cheaper than NYC, SF, LA, Boston, and Washington DC.

I’ve interviewed several CEOs in SF and they all say that given SF’s tight labor market and high cost of living, they are hiring more remote workers. Better yet, have your own internet-based business. Take advantage of the best technological shift in history. Then again, not everybody wants to relocate. I don’t many Asian-Americans are clamoring to relocate to Atlanta after the shootings at the massage parlor.

4) Save and invest often over the long run.

There’s great value in maxing out your 401k and building home equity over time, even if you have very little left over. According to the Bureau of Labor Statistics, only about 55% of the American workforce has access to a 401(k) and only about 38% of the total workforce participate. Doing some low level math, that means roughly 31% of those who have access to a 401(k) are not participating.

I strongly believe that over time, home equity is one of the major reasons for a widening wealth gap between home owners and renters. Find a place you know you’ll be for the next 10 years and try and get neutral real estate by owning your own place. Of course, be responsible with your purchase.

5) Ask what it’s all for at the end of the day. 

I know plenty of high earning people who are not happy because they are stressed at work and can never spend as much time with the people they love. Not only that, they know the work they’re doing isn’t really helping society so they feel they’re selling their souls. They can’t leave due to an unhealthy desire for prestige, money, and power. Realize there’s a wonderful life beyond just making lots of money. Seek your happiness before you look back on life full of regret.

I realize it’s only human to judge others, even if we’ve never walked in their shoes. However, simply judging others does nothing to improve our own situations. Therefore, let’s do our best to approach things with open minds. With open minds, progress can be made.

Financial Samurai has always been about finding solutions to problems. I’d like to provide an optimized budget for this $500,000 couple. I’ll conclude by highlighting some interesting observations I’ve made about the public’s reaction to my original post as well. 

The Rise of Stealth Wealth is here to stay as long as there’s an ever growing government and widening income inequality. This article provides a stealth wealth compendium of useful phrases to help you get through life easier.

It’s only a matter of time before enormous social unrest wipes the country clean of the wealthy like a tsunami. “Be rich, act poor,” is a mantra to protect our families and our finances.

The people who are ruining it for the rest of us with their “look at me” attitudes all have one thing in common: insecurity.

Psychiatrists point to the need for people to overcompensate in order to prove they are not failures based on educational or socioeconomic “deficiencies.” There’s always a story behind each target-basking person. We should reach out to help, which in turn helps others survive.

I’ve provided specific reasons for why you want to join the Stealth Wealth movement along with 15 suggestions on how to blend in better. Now I’d like to propose some common phrases we can use in every day conversation to help deflect attention away from the curious and envious.

There’s a fine line between being modest, and being obsequiously modest. If people can tell your false modesty, you’re no better off than telling them you are the bomb shit.

Thinking about cooking your own food to save money? I’m here to say that always cooking your own food is a suboptimal use of your time. Instead, use the time you would have spent cooking to make more money instead.

One of the most common pushbacks from my series of income posts ($200,000, $300,000, $500,000, $1,000,000) is that the food budget is too high.

Some readers get apoplectic if a household of three is spending $1,500+ a month or a household of four is spending $2,000+ a month. Yet, look at what the rich and powerful do. California Governor Gavin Newsom was spotted in the middle of the pandemic eating at The French Laundry, which costs about $500 per person.

If you want to get rich, you might as well follow what the rich do.

People Who Are For Cooking Your Own Food

Here are some comments from my household budget posts that show how angry people are about my food expenditure assumptions.

“Who pays $2,100 month for food! That’s so ridiculous. Maybe they’re buying all the avocado toast”

“HOW much are they spending on food in a month?! Oh, just as much as some family’s entire income. Cool.”

“$70 a DAY for food for 4 people????? They’re spending $500 a week on food???? I spend $60 a week for 1 person!!!”

“I’m literally upset if I spend more than 10 bucks a day on food. Spending around 30 is legit luxury.”

“And 70$ a day on food? What kind of spread are they spending on? These kids need to learn what a grilled cheese sandwich tastes like. I’m all for good food, but have these people heard of coupons or Aldi?”

The greatest irony is that over 70% of Americans are considered overweight today. Meanwhile, ~40% of Americans are considered obese. Yet today, 82 percent of the meals Americans eat are prepared at home, according to research from NPD Group Inc.

Cooking Your Own Food Is Unhealthy

Like yo, if 70%+ of Americans are overweight and will likely die earlier than they should as a result, perhaps these food budget complaints have no merit. Perhaps cooking your own food is not only a suboptimal use of time, it is also unhealthy!

Add on the fact that the typical American has less than $100,000 saved for retirement, and maybe we definitely shouldn’t care what other people think when it comes to how much we spend on food.

These articles, which are sometimes syndicated, have been read by millions. Therefore, the feedback is a true reflection of the American public majority who aren’t very healthy.

In this article, I’m going to argue why cooking your own food more than 50% of the time to save money is a suboptimal financial decision. I’m sure I’ll get a lot of complaints, but hear me out. Remember it’s always good to see the other side.