How To Live Like The Top One Percent Without Being Rich

How to live the top one percent lifestyle without being in the top one percent

We've discussed what it takes to be in the top 1% in net worth by age. Let's discuss how to live like the top one percent without being rich.

Unfortunately, the very definition of top 1% means that 99% of us won't get there. But once we have a goal, we do infinitely better with our finances even if we don't achieve our goals. Further, developing consistent motivation throughout our lives is a big part of Financial Samurai.

Living in a first world country is like going to Disney Land. We've got free water, clean air, a functioning government, an abundance of food to make us obese, Social Security and subsidized healthcare if we need it. 

With our massive head-start compared to billions of other people in the world, we have every opportunity to surge farther ahead. Yet we are constantly surrounded by people who take things for granted.

This post is about how to replicate a top one percent lifestyle while not being in the top one percent. Who doesn't love a short cut, especially if it can lead to a better lifestyle?

Earning And Spending Like The Top One Percent

The first step to figuring out how to replicate a top one percenter is to figure out how much the top one percenter saves on average. Lucky for you, I already wrote this post: The Average Savings Rate By Income.

Savings Rates By Income - How To Live Like The Top One Percent Without Being Rich

The top 1% save around 38% of their income.

From the IRS, we know that the top 1% earns at least $470,000 a year overall as of 2021. This means that a $470,000 income earner lives off roughly $291,400 ($470,000 X 62%) of gross income since he saves 38%. Note, a top 1% income in 2023 is now $650,000+!

Or, if we assume the $470,000 income earner pays a 30% effective tax rate, then we can also calculate that the top one percenter lives off of $203,980 a year ($470,000 X 0.7 X 0.62).

If you take a look at the top income scales across industries, $291,400 in gross income is much more achievable than $470,000 in gross income per year.

If you are married, then you can look at $291,400 in gross income as total household income where each spouse makes about $145,700. Suddenly, these figures seem much more attainable don't they? The IRS numbers are based off of tax filings.

Related: The Average Net Worth For The Above Average Married Couple

Main point: To replicate the lifestyle of the typical top one percent income earner, all you've got to do is make around $291,400 in total household income and spend 100% of your household income.

Let's Get Real About The Top One Percent

Because he has no safety net, the person spending 100% of his $235,600 gross income is probably going to start stressing out. He'll probably also run out of energy and enthusiasm at some point in his career. It's hard to imagine things will turn out OK if people spend 100% of their paychecks each month.

OK, maybe we'll cut $235,600 gross income earners some slack and have them contribute $18,000 a year to their 401k. They'll still have $217,600 in gross income to spend. After 10 years, they'll likely have over $250,000 in their 401k thanks to returns and company match.

At a $380,000 top one percent income, I know I can easily save 70% of my gross income and live off the remaining $114,000 gross a year here in San Francisco. As a result, I can argue that someone who makes ~$114,000 a year can also replicate the lifestyle of a frugal 1% income-earner.

Main point: Unlike what the mass media wants you to believe, most wealthy people don't blow all their money and end up broke. It's the people who aren't wealthy who buy things they can't afford to impress people they don't like.

For some reason, there are people who don't work hard, didn't study hard, don't spend time understanding how to invest, have a scarcity mentality, and don't start side hustles who believe they deserve to live a top tier lifestyle. Nuts!

2) Investing Like The Top One Percent

The second step to living like the top one percent is to invest like the top one percent. It's important to make your wealth last for as long as possible. You don't want to be the fool who blows his entire fortune well before he's dead.

The biggest difference between the top one percent investor and the average investor is the average investor has a net worth way too concentrated in his primary residence. It's estimated that roughly 80% of the median homeowner's net worth is tied up in a primary residence. Small wonder the median homeowner gets crushed during every financial downturn.

The top one percent investor is happy with 5% annual net worth returns. Before Bernie Madoff's ponzi scheme was found out, he collected over $50B in assets from the wealthiest individuals and institutions because he guaranteed 10% a year. Meanwhile, the average investor thinks they're Warren Buffet reincarnate and takes excess risk to try and make hero-like returns.

Just look at the asset allocation of massive university endowments. No one asset class takes up much more than 25%.

Stanford University Endowment Asset Allocation 2015 - 2016 - How To Live Like The Top One Percent Without Being Rich
Stanford University Endowment Asset Allocation. Only the middle class go all-in on one asset class.

Main point: Stop trying to hit home runs with your money. Aim for singles and doubles, accompanied with aggressive savings. Your net worth should be diverse. Once you get to your number, protect it at all cost.

3) Work Like The One Percent

The top 1% consist of largely working professionals who pay a massive amount of taxes because most of their income is W2 income. Most of them work way more than 40 hours a week; think banking, law, consulting and medicine. 70+ hours a week in these fields is the norm.

Many one percenters must spend extra time in school to get a graduate degree or higher. More time in school means later start times to earn income and likely more student debt.

Here's a chart of a $500,000 top one percent income household. You can see how quickly money goes due to taxes, kids and expensive city living.

Top one percent household income expenses

The income cutoff for the top 0.1% is around $1,000,000. The top 0.1% can consist of those in the top 1% who last long enough to get into the top 10% of their respective professions. The top 0.1% are also the small business owners, celebrities and professional athletes.

Main point: Getting to the top one percent doesn't just happen. There are sacrifices that need to be made. Once you get to the top one percent, life can be more stressful due to demanding work and lifestyle inflation. Money does not cure misery.

There's Not Much Difference In Lifestyle

To the right of the Members Only sign are the rich members of Waialae CC. To the left or regular folks. Beaches are public. Life is the same!
To the right of the Members Only sign are the rich members of Waialae Country Club. To the left are regular folks. Beaches are free for everyone in Hawaii. Life is the same.

The lifestyle difference between the top one percent and the middle class lifestyle is small. It's only when you reach the top 0.1% that you can really start experiencing a lifestyle difference like flying in private planes, paying cash for $10 million dollar homes, eating 12 oz Kobe beef steaks until you puke and driving $200,000+ cars.

If you're making $380,000+ in San Francisco or Manhattan and want to buy a modest $1,500,000 home, you're going to need $300,000 down and a $1,200,000 mortgage. You've got to work and save diligently for a downpayment if the Bank of Mom and Dad isn't open and then work harder after purchase to ensure you won't get kicked to the curb due to your massive mortgage!

At $8,000 an hour on NetJets, there's no way a $380,000+ salary can afford flying private more than once a year. Meanwhile, private school tuition often costs in excess of $40,000 a year, or $70,000 in required gross income. There really isn't much difference between a public school education and a private school education. I attended both for years and I've seen both types of graduates do well.

At my tennis club, whether you are a billionaire, a recent college graduate or a sexy personal finance blogger, we spend the same two hours whacking balls and grabbing a $3 drink at the bar upstairs. Sure, the billionaire might go back to a $25 million mansion, but we still get to breathe the same crisp air, enjoy moderate 68 degree weather and go back to comfortable beds as well.

Despite a widening wealth gap, the socio-economic gap is narrowing. We have less inequality and more free access to information. Smartphones are 100X more powerful and 99% cheaper than mobile phones from 20 years ago. Free access to Google Docs means nobody has to spend $500 for Microsoft Office software ever again. Fintech companies make managing your net worth free and easy. What more do we really need?

Don't Envy The Rich

We can really only envy the rich who did nothing to get rich – you know, the trust fund kids or those who married into wealth. But even then, can we really blame them for being born or finding love? I don't. They are lucky, just like many of us are lucky.

Some of my best memories are from when I was a poor exchange student living in Beijing. I slept on on a one-inch thin mattress in 90 degree heat while a fan automatically rotated to my side every eight seconds enabling both my roomie and me to breathe.

We students pooled our resources to buy food and cook on portable gas burners in our dorm hallways. After lunch, we'd take turns using the shared squat toilet stalls. So much fun! I'm way wealthier than I was back then, but am just as happy. Think back to when you didn't have much and compare your happiness level today.

Based on the way I've set up my business, I make a very middle class salary for San Francisco. I don't mind because I don't work nearly as hard as I used to. Further, I've leveraged the internet to maximize my freedom. The more freedom you have, the LESS money you'll want or need.

Get Into The Top One Percent With Real Estate

Real estate is my favorite way to create wealth because it is a tangible asset that is less volatile, provides utility, and generates income. If you want to become a top one percent, real estate is a tried and true method.

In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.

Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio. 

Invest Like The Rich In Private Growth Companies

Finally, the rich tend to own businesses or invest in private growth businesses. Therefore, consider investing like the rich.

Check out the Innovation Fund, which invests in the following five sectors:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. You can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.

Related post: How To Feel Rich Even If You Can't get Rich

109 thoughts on “How To Live Like The Top One Percent Without Being Rich”

  1. Amazing article of which I completely agree after watching my Parents spend all their money living like rockstars to impress others died broke.

    I went the other polar opposite of them as I began my working career and saved and invested 50-70% or more of my income from the beginning till now when I’m successful with a 1% salary. Now I can retire at 50 years old and live like a rockstar the rest of my life worry free on residual income.

    Read the books & blogs
    Stay disciplined
    Set goals
    Ignore the naysayers

    Be clever how you spend so you don’t pay full price but enjoy 1st class and coach prices.

    Make your own way in life and follow your dreams to live well.

    Warning: Guard your wealth in the end when the broke relatives that squandered their money try to spend your money. Healthy boundaries are critical.

    Wonderful and accurate article.

  2. Sam,

    Always enjoy the articles, but you’ve oversimplified taxes in this example by making the marginal rate the effective rate. This has a significant effect on net income as the effective rate is probably closer to 25% in this scenario. Effective tax rates are glossed over or misunderstood by many.

  3. Correct income tax on $464,000 for married filing jointly for 2016 is more like $129,546, not $185,600.

    Having trouble feeling sorry for how hard the rich have it when we just found a median family’s worth of income – $56,054 – in the cookie jar. Especially since that’s after tax money and a median family has to live on that amount less taxes…

    And that sample budget you give for the poor, downtrodden rich, who can barely make ends meet is excessive beyond words.

    Anyone who is wealthy in this country has no leg to stand on to complain about taxes.

    1. Did you forget about the 6.85% NY State tax + 3.88% NYCity tax + 6.65% FICA tax up to the first $118,000?

      If you do indeed make $500,000, I’d love to know your tax minimization strategies. Moving to a no income tax state and starting a business are two. The more the merrier. Thx.

      1. We’re not at the $500k range, just the $180k range and climbing.

        We’re saving/investing over 50% of our gross income.

        That’s why I say someone making $500,000 or more has no reason to be whining about taxes. They’ve got plenty of money to live a great life.

        Aside from 401ks and index investing, we’re putting money into rental real estate. We buy the properties that are undervalued because they need work, do a fair bit of the work ourselves, and then watch our net worth go up big time when the repairs are done. (Plus our income goes up from rents.) Our net worth went up about 125% of our gross income last year just from savings and real estate – and that’s not counting any stock value appreciation.

        1. Ah, OK. I don’t think many people are whining who are making $500K+. The chart is there to highlight how the money can be spent quite quickly living in an expensive city with family.

          It’s easy to just dismiss other people w/out walking in their shoes, that they should do this and that. Hopefully more people can see the various ways.

          Read: Scraping By On $500,000 A Year if you want to get heated.

  4. “Despite a widening wealth gap, the socio-economic gap is narrowing.” This is the powerful statement that too many Americans don’t realize. Politicians play us like fiddles, making us envious of the “idle rich” (or, on the other side, the “idle poor”) while seeking power for themselves. Like another commenter said, reading The Millionaire Next Door was a wake-up call for me. And look at how much the 1% save! I also appreciate the perspective from the commenter making $80k. Thanks for continuing to inspire!

    1. Correct. I hope the people realize that politicians are mainly out there for themselves. Nobody becomes a politician without tremendous ego as their job is to market themselves.

      1. Michael Sandel (a Harvard prof) actually thinks the opposite is true: that financial inequality matters more, now, than it did 50 years ago because so many more aspects of society are for sale/ subject to financial considerations.
        For example….

        -Our society is more economically segregated than it was 50 years ago. (See . Economic segregation + school systems funded by property taxes means that the quality of education one’s children receives is highly influenced by economic status. (For the money-education connection, see also this interactive graph:

        -Court fees have risen dramatically (esp. at the local level) , which means one’s experience of the justice system varies tremendously with income. (See

        -A person’s ability to have a family is also now more subject to economic
        considerations (think increased hospital, adoption, and childcare costs as well as the advent of various assisted reproduction techniques and even surrogacy agreements only available to those who can pay).

        -Marriage is increasingly a luxury that the poor can’t afford because it means losing things like health care (I would argue that this last issue mostly due to public policies with perverse incentives, but it’s still pretty significant that whether or not one grows up with a father is highly influenced by how much money one’s parents were making when one was conceived).

        So, while the gap between rich and poor may be considerably narrower on the smart phone / digital entertainment scale than it was 50 years ago, the gap is wider when it comes to several of the most important aspects of life: family and family stability, education, and the justice system.

        1. Claire,

          That’s a pretty negative outlook you have there. I’m not quite getting your point on marriage and court fees. There’s lots of subsidy for healthcare now under ACA. Education is free now due to the internet. If you want to integrate, anybody is free to meet up with other people, go salsa dancing, attend a Japanese food festival, or a Jazz street festival etc.

          Do you feel you are struggling? I’d love to learn more about your background to get a better idea of where you are coming from. The lower income lifestyle in places like India and Cambodia are truly difficult to watch in comparison to in the US.


          1. I consider myself middle class; I do not consider myself struggling, and I have a great life although retirement and the possibility of job loss or a major health problem scare me (and my husband and I are both huge savers). I am in my 30’s and live in a small town in the South, grew up middle-class in a medium-sized city in the South, and have previously lived (as an adult) in both New England and the Midwest. I have also previously lived on a small income, but always above the poverty line. I would agree that being poor in the US is way better than being in the middle quintile in Cambodia. I wasn’t trying to argue that they are anything close to equivalent.

            However, I also think it is obvious from the data that one’s economic class has a HUGE impact on one’s life prospects in this country when it comes to education, family organization, healthcare, and the justice system. And these are things I care about way more than smartphones and Netflix.

            Let me ask you this: do you honestly think that K-12 schools where the median family income is, say $120,000, tend to be equivalent in quality to schools where the median family income is $40,000? Because the data that I posted contradicts that. Also, if the internet has made quality education free, then anyone who pays for education is a sucker…but again, the data indicates that paying for education, in general, pays off (although it is certainly possible to overpay). I teach college at a university where the students are above average nationally, and even so very few of my students would be successful trying to get the equivalent of a college education from MOOCS even if credentials weren’t an issue. They need individual support. And that’s not just my impression: the data indicates that MOOCs are not the key to leveling the education field anymore than libraries or free books are–the vast majority of people who start MOOCs never finish, and the people who are most successful in MOOCs already have college degrees.

            More generally, everything that I wrote is supported by data: people who grow up in poverty are less likely to get married than people who are middle class or wealthy, and hasn’t changed that. The issue isn’t meeting other people–poor people meet just as many people as rich and middle class people do (just not the same people)–the issue is that getting married could very easily cost your child his medicaid eligibility or some other needed benefit. I understand the reason for these policies, but the unintended consequence is lots of children growing up without fathers. I cannot tell you how grateful I am to have grown up in a stable family; this is something I wish for everyone, rich or poor. It is also something I wouldn’t trade for millions of dollars. But I cannot ignore the fact that low income doesn’t just result from unstable families; it contributes to them.

            Here’s the point about court fees: if you have cash and do something stupid that leaves you subject to a court fee (or are suspected of doing something that leaves you subject to a court fee–they’re not just for those who have been proven guilty); it’s no big deal–you pay the fee and move on. But if you don’t have the money, you could easily be jailed, lose your job, and/or find yourself in a near endless cycle of fees for not paying fees. That is a huge disparity in consequences for the same offense.

            (As another issue, states that did not expand medicaid with the ACA have subsidies for the middle class but have done nothing to help poor adults afford health insurance. I could say lots of other things about the ACA, but I don’t want to get sidetracked, here)

            1. Ok, so let’s say what you say is true, and I agree with you that life is much more difficult now than before, what are some solutions?

              I think it’s important we all offer up as many solutions as possible to help improve society instead of only pointing out that there are problems. It’s like a cameraman who is filming a starving child. I hope the cameraman to turn off the camera instead and nurture the child back to health!

            2. Good question on solutions!

              The court fee issue has some of the easiest solutions: don’t charge people for things it’s the state’s duty to provide. If the state wants to lock people up, it should be the state’s duty to pay for the due process to which all accused persons are entitled before they get locked up. If the state won’t pay for that, I question how important it is to lock up the person in the first place.
              Fines for things that shouldn’t merit jail but still merit some sort of punishment are tougher. The first thing I would say is that the biggest reason these fines have increased over the past couple of decades is that local governments see fines as a nice potential source of revenue. I don’t know if you saw anything about the justice department’s investigation into Ferguson, but the conclusion of that investigation is that black people were routinely targeted for fines in order to increase the public coffers. (Examples: police officers had competitions to see who could issue the most tickets on a given traffic stop; the town purposefully made paying off tickets difficult so that they could issue more fees for non/late payment). So, I would say that decisions about which offences to penalize, whether to penalize with a fine or some other non-jail penalty (e.g., community service, restriction on some privilege) and how high to set any fines that are deemed appropriate should be made independent of revenue potential considerations. Simple non-payment of fines should not in any case be a jail-worthy offence. (It could just be that the fine stays with you–not incurring additional fees–until you pay it off, and they could do something like the ACA thing where the state can withhold part of your income tax refund to collect outstanding fines).

              My real dream when it comes to the disproportionate effect of sudden $200, immediate expenses would be the creation of non-profit “banks” that take the place of payday loan type places: a place where poor people can go to get a quick $400 when their car breaks down or they have to make bail or whatever, where the repayment structure (unlike at payday loan places) would be intended to enable repayment and where the interest rate would be zero or close to zero (sort of like microloans, but for the U.S.).

              When it comes to the education and family stability issues, I have fewer policy solutions–I think values need to change. For education, we need people to stop buying houses based on the socioeconomic status of the area of town/ neighborhood. Socioeconomic diversity is the most effective known way to close the achievement gap (poor kids at diverse schools do way better than poor kids at poor schools, but rich kids at diverse schools do almost as well as rich kids at rich schools).

              For family stability, I suppose the specific child medicaid issue could be addressed if healthcare for kids were like public schooling–available to all kids, rich and poor, at no charge. It’s not like people are going to have more kids in order to get free health care for those kids, anymore than they currently have more kids in order to get free education for those kids.

              I think there’s a bigger problem than the medicaid one, though, and that is a values issue of how potential children are currently viewed within the context of sexual, non-married/ non-committed relationships. I think having sex has to be tied with the expectation of both partners committing themselves to any child who might result and to one another as (at the very least) lifelong co-parents. If you can’t make that commitment, choose to express your temporary desire to connect with one another in other ways that don’t lead to children.

              Right now, unplanned children in non-committed relationships are seen as the woman’s responsibility and choice (except when it comes to child support). Example: my OBGYN’s office has pamphlets trying to encourage single women to tell the father about the baby, include the father’s name on the birth certificate, and allow the father to be involved in the baby’s life. The fact that these sorts of messages are needed is deeply troubling. (Yes, I get that you should cut you and your child off from a person who is abusive, and I am NOT suggesting that abused women or men should stay with their abusers “for the sake of the child”.) Every child deserves two loving parents involved in their life, and this is something that both men and women need to recognize…and they need to recognize it before they engage in the sort of act that produces children. End of social commentary!

        2. I think that Harvard’s theory is bunk.

          I think the reason people believe and care that the divide is larger is three fold.

          1) Real Median Incomes are down in the last 10 years and are basically back to 1989 levels. However, the top 10% have done phenomenally well since 1989 inflation adjusted. Globalism and to some degree the rise of tech has created winners (mostly in the top 5-10%) and losers (middle 50%). This is also why Donald Trump (and to a lesser degree Bernie Sanders) did so well in the primaries and why I think he wins in November. GDP has expanded massively since 1989 but all of it and then some is going upstream.

          2) 24/7/365 news + reality shows. People before just went about their own lives in the 50s, 60s and maybe watched 30 or 60 minutes of news a day, most of which is local. Today we have news on our phones, 2000 channels on TV, on our tablets, on our computers – pretty much everywhere we look is news and glamour. When you are told constantly of issues, pundits and politicians yelling about the 1% and shows that glorify the rich and lavish lifestyles, its easy to start to feel resentful. The best proof I have of this is that since 1990, gun crime is down per capita nearly 60%. But when people were polled, 75% of the population believed gun crime was higher. When all you see (news) is gun crime and politicians tell you its the most important issue now more than ever, you begin to believe it – even though statistically we are at the lowest violent crime rates in the history of the US even though gun ownership is at all time records and the # of guns has nearly tripled since 1990.

          3) People believe that the wealthy (say over $1 million in assets) were born rich. However, based on the research done by the Millionaire next door author, 85% of millionaires are first generation wealthy and more than 50% never received a single gift of any amount from their parents. But the perception today is that they just are silver spoon-fed on gold plates from cradle to grave. Put another way, people believe class mobility is non-existant when that isn’t true at all. Take me – my grandfather was a HS drop out. My dad was HS only grad. My father in the 1980s was right around the lower 25% income line. Today at 34 years old, I make over $250k/yr paying for my own college and MBA entirely without any assistance. I should have a NW of around $3 million at 45 and $5 mil at 50 if all goes to plan (My father is going to retire at 65 with around $250k after saving for the last 40 years)

          Personally, I think fewer people are getting married for 2 reasons 1) much easier to get some outside of marriage 2) a lot of men are opting out due to all the laws that were setup 100 years ago that today drastically favor women when it comes to divorce. 2 of my good buddies – both slightly above median HH income on their own salary – are this way.

            1. Yup – fortunately for me, my wife isn’t working so being married reduces our taxes compared to not married and filing separately but that isn’t true for large portions of the population (and I wished my wife was working – could retire earlier!)

          1. In response to #3…. (85% of millionaires are first generation wealthy and more than 50% never received a single gift of any amount from their parents). Don’t believe the rhetoric designed to gain your vote. It’s simply using jealousy, full of false accusations, it pits American against American and gives a sense that you can’t make it without their help. Instead stop doing the same thing that has not worked in the past.

            I’m one of those first generation and I HATE the rhetoric out there since for me I know it’s a lie. I grew up in a lower income family and kept trying to move up. I found that it’s very hard to build wealth while working “for W2 income” because of our progressive tax code. After 2 failed business I finally started and run a successful business and as my profit increase I was shocked at how much I pay in taxes as a small business owner. It’s disheartening and felt like a kick in the pants. Thankfully I didn’t try to live like I was rich and instead focused on building wealth (move to the B & I side of the cash flow quadrant.

            I am a HENRY… High Income Not Rich Yet and instead of spending like I am rich I focused on building wealth and also tried to get my siblings pointed in the right direction and also pay care givers to take care of my elderly mom. Unfortunately my siblings keep wanting to do the same thing that wasn’t working for them in the first place. I can only help so much.

  5. Vikram Singh

    You nailed the profile of 1 percent… great job.. awesome article.
    Everyone thinks that 1 percent have way better lives than the middle class. I started poor 14 years back, worked hard to move up to middle class and finally in 1 percent now. I don’t see much difference in my lifestyle between middle class and 1 percent. Actually it’s getting increasingly difficult to maintain work life balance. I was more happy making lesser money.

    I’m from India and will like to say that America has done a great job with income and lifestyle equality. People who were born in US do not appreciate that… you will have to visit India or another third world country to appreciate what you have here. Though the income equality in US is getting worse, but it will still remain better than most countries in the world.

    1. Wow, that’s good to know. There is still that consummate American myth of pulling yourself up by your bootstraps. So no matter where you come from or how you talk, if you “make it”, you are accepted/admired. There is no caste or royalty.

  6. The crazy thing is, most Americans are living in the 1% compared to the rest of the world. I hope that as we continue to lessen the lifestyle gap, our work ethics don’t decline. Hopefully as Americans we continue to use our freedom for noble pursuits rather than laziness…that’s why I like your sight. HONORABLE personal finance.

    1. Oh and btw, like the look of the site. I know it has been redesigned for a while now, but I love the upgraded look, especially the logo!

  7. Wow, reading this, while living in an developing nation is hard not to feel jealous.
    I will most likely never be in the 1% world-wide. And that’s ok, I chose my family over money and my country over getting rich.
    I don’t really envy people who got money because they were born at the right time and in the right family/place/country. But I don’t really respect them either. To me, they are in no way better than the students I met in China that had to go through an incredibly hard exam to get into their university. There were 1000 applicants for every spot. They were the 0.1%.

  8. Ha, I thought you were doing the breakdown of our household when you charted down those numbers! Yes, our effective tax rate is 40% (sometimes slightly above), and there is ridiculously nominal child care tax subsidy by the government to help promote 2 career households in anyway. But expenses can be lowered significantly for this example household that you pain. Lower mortgage, less frivolous apending on socializing or vacations, and public schools, can all lead to aggressive savings.

    And why not! I agree entirely with you that above a basic sustenance level necessary for happiness, any additional amount is not contributing towards your happiness. I think the happiness expert Kahnamen puts this number between 60-90k per year per household income in the U.S. Once your basic needs are taken care of, “happiness lies within”.

    Personally, as a member of a happy family, I don’t care if we live in a large single family home or a small town home as long as it’s a cozy dwelling and we are together and healthy. Cars serve the purpose of going from point A to B, and money is a tool to spend on meaningful and fun activities.

    1. I don’t believe 60-90K per year is the maximum household income for where happiness no longer increases. Hint: how much did Kahnamen ever make a year? Researchers and academics tend to cap out around $100K a year. They are biased.

      I believe the income figure for an individual is closer to $200,000 a year and $250,000 – $300,000 per couple with or without kids. This is based off experience and close documentation of making $3.65/hour to way over $300,000 a year. See: The Ideal Income For Maximum Happiness.

      Thank you for paying a 40% effective tax rate. Fight on!

  9. Mitch Mitchell

    Good going with this post. I hadn’t quite thought about it this way yet I had some of the beliefs in my head. It started some years ago when I started seeing so many wealthy people selling their homes and planes and starting to travel coach, which didn’t initially make sense because… well, they’re rich. Then I realized that their being rich didn’t make them better money managers and if we handle ours better we could potentially live like they do… with just a few less perks.

  10. I think many of us who live in SF, NYC, LA, and other expensive cities around the world live in this bubble where we think our city lives are the best. We can’t imagine people living in other places living as good of a life b/c we’ve become food, entertainment, and transportation snobs. We’re used to all the amenities.

    But every time I visit a new city or visit places that are much less expensive, I’m reminded there’s A LOT of great places to live and be happy.

    1. Fiscally Free

      I’m definitely a big fan of all the amenities here in LA, but I’m most partial to the perfect weather.
      My current challenge is finding the location with the lowest cost of living and the best weather.

  11. Classic FS post with lots of actionable advice. To add to the notion of not envying the rich too much it’s also clear that we get used to the environment that we’re in. Whether it’s the poor exchange student life you mentioned or living in a mansion in the Hamptons, life becomes routine and things that seemed special the first few times are just normal now.

    People really need to follow the investing advice. Too many are house rich and everything else poor.

    1. I don’t understand WHY there is so much envy. Is it because the mass media made up of envious journalists are pushing this message on the rest of us? I understand journalism is a tough career, and pay is not great. But come up mass media, be more balanced in your reporting.

      We shouldn’t be envious b/c the standard of living has risen for most people over the past … forever. Thank goodness for indoor plumbing and wifi!

  12. Ten Bucks a Week

    I think you got it right that we are lucky to be American. Everyone starts somewhere and gets to make the most of it.

    Haha, I am currently on that one inch mattress. You are pretty clever you probably thought up back to back squatting, just kidding. Student living isn’t so bad.

  13. Great blog and comments.

    When I was poor (hand to mouth poor growing up), I was miserable probably because my parents were miserable. Now that I’m working and saving and I have some breathing room, my quality of life has improved and so has my happiness. So yes, money has changed my life and happiness.

    I do want to own a house someday, a nice big house with at least 2 bedrooms, a tv room, a lounge and a reading room :) and a decent sized yard. I know it sounds lavish but when you have a shoebox room and zero extra space in a house filled with your parents clutter, all you daydream about is rolling on the floor of your own house, not having to share space with anyone. :D

    I know it may sound strange but I long for neatly organised crockery/cutlery cupboards and a well organised fridge/freezer/grocery cupboard. *sigh*

  14. Hey Sam-

    Although I agree there is a major major difference between the top 1% and .01%, I also think there is a major difference between “middle class” and the top 1%. A family of 4 living off of 60-90k a year is going to spend most of their money, have very discretionary spending money, and save very little. A family of 4 living off of 500K can have a completely different lifestyle (eat out way more, not stress about buying clothes etc, save 100k a year, drive nice cars etc). I personally think the difference between 250K and 500K is a game changer in terms of saving for the future and lifestyle (assuming you live in a relatively expensive city).

    1. $90k / year in the south or midwest outside of cities like Chicago will go pretty far as long as you don’t go crazy with your home. A family of 4 would only have a tax rate of around 10% effective federal at that income, assume another 10% for fica + state so $72k after taxes. You can get a 4bd, 2.5 ba 2k sq ft home for around 200k–let’s say 220k to be safe. Putting 20% down and getting 30 yr fixed at 3.25%, puts your P&I + property tax (2.5k/yr) + insurance ($800/yr) at $1041/mo or a bit over 12k/yr.

      Remove another ~$10k/yr lets say for food and clothes (could be a lot less), $5k for all other necessities including electricity, plus $5k/yr for cars/insurance/gas puts you with around $40k left to save or play money. That should put you fairly comfortable, assuming you aren’t drowning in debt. If you save $20k of that $40k and get match of say another $4k/yr, that’d be saving $24k/yr out of $90k with $20k to spend on anything you want (vacations, boat, more stuff, more savings, etc). That should let you get pretty close to the upper middle class lifestyle – say top 5-10% of incomes – but again depends on if you have debt or not and how much home/car you actually buy.

      1. I live in Kentucky. My husband and I make close to but not quite that 90k and are very good savers (25% of our income, right now, not including employer match), which helps tremendously on both federal and state taxes.

        With one child (not 2 as in your example), we expect to have an effective federal rate of around 13%. Effective state is a little more than 3% (and will only go up if we have more children and are able to save less). Social security and medicare is another 7.65%. Local is 2.9% (and we live and earn our income in small towns). Local is like social security and medicare in that there are NO deductions or exemptions (even my contributions to health insurance are subject to local).

        So, effective income and payroll taxes work out to just under 27% of gross, not 20%. Your combined property tax + insurance estimate is right on the money, though, as is $220k for a very nice house of that size purchased a few years ago.

        Here’s the thing, though, my husband and I have a much cheaper (and less nice home), spend less on our cars and food+clothes than your estimate, have no debt, but definitely do not have $20k left over after savings.

        Out-of-pocket costs for health insurance and expenses plus childcare alone are $11k (this is with just one child and very good health benefits). Pretty much everything else either goes to our church or to a fund to cover big inevitable expenses like new roof or new-to-us car when our current ones (avg age 14 years; avg mileage 150k) bite the dust. The only way we will be able to afford a second child is to cut back on our aggressive savings or make more (either option is fine with us). We are obviously NOT living paycheck to paycheck, but we also do not live an upper-middle class lifestyle, nor is such a lifestyle available to us at our present incomes as working parents.

        1. The example I gave was basically mine a few years ago, except I backed out student loan debt, 2 carib trips/yr, and an infiniti lease payment when I thought I needed a luxury car to go with up rising corporate ladder. With 25% not counting employer match, I assume your savings rate is probably actually 28-30%. I definitely count employer match as savings! They (company) certainly budget for positions including the expense and it counts when you withdraw it in retirement. I always include the match (or lack thereof) when I look at job offers.

          Yeah, that’s a lot for healthcare and childcare. Mine has averaged around $2.5-$4k/yr the last 5-6 years although I don’t have childcare costs. Childcare can definitely add up if you need it – my scenario does work better with one spouse at $90k and the other as stay at home OR one of the two spouses work from home. Interesting to hear you have a local income tax. That isn’t very common in the south or in smaller cities in general. Do you have sales and property tax as well?

          With two kids, your fed taxes would probably drop to ~8-10% from 13% with another deduction and expanded child tax credit. Probably wouldn’t be enough to offset the extra childcare though.

          While you probably don’t feel upper middle class, a lot of the folks who are in the 150-200k range of income pay upwards of 18-20% federal tax +SS/med + higher state effective tax rate, have significant student loans still from post-secondary education to get to that income, feel pressured to buy a larger house and/or cars they don’t need, pay for private school for their kids, and don’t end with savings much at all – certainly not at the 25% you all are – many don’t even max their 401k match portion, much less the full $18k/yr (I had access to this at my last job – couldn’t believe it how frequent that was). I’ve found families of 3 or more don’t feel upper middle class till they hit around $250k/yr, or even more in the super metros of the country. One of the VPS as my last job making $400k/yr gross didn’t consider himself upper middle class (in NC)! $90k/yr would put you in the top 25% of households and adjusted for the cost of living (low in KY)/tax burden (maybe not as much with your local tax) is probably in the top 10-15%. Adjust further for lack of “extra debt” and you are probably pretty close to top 5-10% of incomes adjusted for cost of living.

          I’m fortunately in a position now I can save 40-50% of my gross income and still splurge a fair amount since I got my MBA. I was only saving around 9-10% + 3% match when I was at the $90k level 4 years ago. I’ve basically maintained that lifestyle, although still paying off 2 student loans over the next 3 years which will free up $10k/yr more to save.

          1. Yep, we have sales tax of 6% (groceries are exempt) and property tax of a little over 1%. The town where we live, the next town over, and the nearest actual city all have local income taxes of between 2.5 and 3% once you count both county and city. Everyone takes a cut. It was a huge surprise to me as I moved here from Massachusetts, where there is no city or county income tax. I took a big pay cut to move here (for personal reasons; no regrets) yet the dollar amount that I owed in state+county+city income taxes actually went up. One good thing: once we bought our home, our state income taxes went down as KY honors a ton of federal deductions, including mortgage interest and property tax.

            I get that we are saving a ton as a percentage of our income, but looking at (1) the dollar amount we save, (2) the road our house is on, (3) the fact that our cars have a combined bluebook value of less than $5,000, and (4) the fact that we don’t do pretty much anything extravagant, it is hard to feel like we are “living like the top 10%.”

            I should say, though, that we are VERY thankful not to have debt or money worries (so long as neither of us loses our job or encounters some crazy health issue), and we absolutely love our house even though some of its characteristics wouldn’t make for a high resale price.

    2. It depends where you live. A lot of these 1% level jobs are in very expensive cities. If you can make the 1% level income while living in the Midwest, the South, or an Emerging Market, then you can absolutely live like a King.

      $380,000 is definitely a great income. But you will still have to work a lot and stretch to buy a median priced home in SF. $1.5M doesn’t get you that much in SF, Manhattan, or London.

  15. Yup. My significant other and I earn total around 300k a year and I feel more frugal than ever. Taxes and housing brought us back to reality in the Bay Area. If I hit the next tax bracket, I’ll lose on money AND time (because that means I’ve been promoted, and expected to work longer hours)

    All the things media try to sell you, avoid it! The luxurious lifestyle a certain credit card company kept trying to sell me is all bogus. Especially when I have to pay $450 annual fee.

    Investing and generating passive income at a lower tax rate is one of my major goals.

    1. Such irony about a promotion and pay raise isn’t it? I wanted to get to Managing Director just so I could say I did it. But, I only wanted to be the MD of one, MYSELF! haha.

  16. One way to be a one percenter is to leave the developed world. I lived in Western Ukraine for a bit and discovered that virtually anyone with >$100,000 in assets qualifies as a 1%’er. Dinner out is about $2, shots about 10 cents, hostel about $5. Basically first time in my life that I had to limit myself not bc of money but because of plenty and eating/drinking too much.

  17. I’m not a top one percenter, but I’m really happy with what I’ve accomplished and live a comfortable lifestyle. I’m earning a lot more now than in my 20s and think I’ve done a good job at keeping my lifestyle inflation under control, which has really helped me build my savings. My lifestyle isn’t vastly different from when I made less except that I have less stress now and tend to travel a lot more. I still wear some of the same clothes and shoes I got 10-15 years ago!

  18. “The lifestyle difference between the top one percent and the middle class lifestyle is small.”

    So true. When we were still working, we used to go on fancy cruise vacations and stay in 5 star resorts. But we were rushing around a lot because we only had a 2 week vacation.

    Now we have all the time in the world to travel. And it’s WAY better. Sure, we don’t stay in fancy hotels or resorts anymore, but we are happier. We’ve met more locals, eaten WAY better local food (cruise food is nice but the same old same old), and got to go to so many “off the beaten track” places we NEVER would’ve discovered while on vacation.

    Do the top 1% really pay the most taxes though? Back when we were working, we were paying 22% in taxes (2 engineering salaries). But wow that we’re investors and no longer employees, we only pay 2.8% tax. Seems like middle class pays the most taxes and top 1% know how to make their money work for them.

    I think Robert Kiyosaki said it best: “poor people buy things. middle-class buy houses. rich people buy assets”.

    I have been all 3 through my life (growing up I was poor, when I was working I was middle-class, and by stumbling into Financial Independence, I somehow became rich.) And even though, like you said, I don’t have enough to fly in private jets or eat Kobe beef all day, I’ve MAXIMIZED my happiness. With all the freedom in the world and the ability to do what I love, I have zero regrets. ZERO. And I didn’t need to become a billionaire to get it.

      1. FIRECracker

        Is that because the 1% has a lot of wealth, so even if their tax rate is low, that amount is a bigger portion of the overall pie? But if you look at just the rate, they are paying a lower tax rate than the 99% (because investment and business income is taxed more favorably than employment income)

    1. Freedom really trumps money. I strongly believe everybody who finally leaves a life they don’t absolutely want to live will realize this.

      Robert Kiyosaki……………… I agree w/ his overall message about buying assets, but that guy has become way too commercial for my taste.

      1. FIRECracker

        Yup, Robert Kiyosaki’s gotten shady with all the fake “get rich” courses. Which is too bad because I really liked his “Cash Flow Quadrant” book. Have you read that one? It’s about how everyone falls into the “Employee, Self-employed, Investor, or Business” category. In the first two, you work for money, in the last 2 money works for you.

        Employees and self-employed people (like dentist, lawyers, dentists, etc) aren’t rich because they can’t scale their time to work for them. If they stop working, the money stops coming in. Investors and Business people buy assets that pay them in their sleep. Even if they stop working, the money continues coming in. You are in the B and I quadrants since you’ve managed to create blogging and real-estate income that keeps making money even when you’re sleeping.

          1. FIRECracker

            Yes, I remember that post. One of my favourites on this blog ;) *sigh* Techies are looking very poor compared to Bankers and Doctors. Oh well, I’m still glad I went into tech ’cause I would’ve made a TERRIBLE doctor. “You call that DYING?! Pathetic! I’ll show you DYING!”

        1. When I was younger I knew there had to be a better way so I read a lot, even tried 2 businesses (that failed) then I read Robert Kiyosaki’s Rich Dad, Poor Dad and then read Cash Flow Quadrant. These two books changed how I viewed the world of money resulting in changing my life for the better. I now own a successful business and instead of invest. Who knows, before I may have spent like no tomorrow if I didnt have a change in mindset. He said something on the lines of…

          The Poor: Spend every penny they get (survival),

          The Middle Class: As they become more successful the buy liabilities (things that take money out of their pocket) and get caught in the rat race.

          The Rich: Buy assets that put money in their pocket (produce wealth and cash flow).

          He also said that E (employee) and S (self employed) side of the quadrant work for “income”. W2 income, highest taxed. (My comment… This is why it’s harder for a E or S to build wealth. We have a 72,000 progressive tax code so as someone progresses up the “income” ladder the government wants a bigger piece of the higher portion of their income when it’s most important to keep your money during the accumulation phase.)

          The B (business owner) and I (investor) quadrant already own assets and don’t depend on “W2 income” like employees. (My comment: This is why I don’t buy into the “tax the rich” … raise taxes on income that is sold to the people. It’s always way better to reduce expenditures but government wont do that so if the best way to increase government revenue is more people paying into the coffers.)

          Ether way the gist is to own assets (business, investments) that put money in your pocket instead of working for W2 income (progressive taxation).

        2. I knew there had to be a better way so I read as much as possible on finance. Cash Flow Quadrant was my favorite because it really put a lot together for me. It should be mandatory reading. It’s not magic because to put it into effect requires planning and action but mindset is very important.

          Which leads me to saying this (How To Live Like The Top One Percent Without Being Rich) is an excellent article, another get your mindset in line article.

  19. New commenter here-excellent work. I’ll share my story.

    I joined the Army at 18, got out at 23. Took a job as a busboy while attending community college on the GI Bill. Worked my way up to bartender. Ate leftovers at the restaurant to save money, joined the National Guard for tuition exemption.

    Graduated to a $13/hr job. Moved to California, with my experience, got a $35/hr job.

    Got laid off, cold-called the manager at a competing shop, and made my standard offer-

    “Hire me for a week without pay, and at the end of that week, you WILL hire me WITH pay.”

    Got hired that same day. Management change, new ones were pricks, and I was about to quit. A co-worker suggested an unrelated Dept. across the hall. I said “Why not?” Walked over, asked for the manager, made the same one-week offer, and got in, despite having no experience. Now, 9 years later, I work 3 days a week (M-T-W) plus call those same nights. Will gross about 260k this year.

    So it’s been a 20 year ride. Am I happier, though? I’m proud of how far I’ve come, but no- being a young, carefree, student bartender, with boundless opportunities for romance and fun- I was very poor, and very happy. My happiness has NOT increased with wealth. I just have more stuff, and more responsibilities (family, home, profession) to go with it.

    Love the side hustle angle., By the way. The wheels are turning…

    1. “Hire me for a week without pay, and at the end of that week, you WILL hire me WITH pay.” – Great line! Shows enthusiasm and initiative! How can an employer refuse?

      Thanks for sharing your story about happiness and wealth over time.

      1. FIRECracker

        I agree with Financial Samurai. That is some serious hustle, Gerard! I wish you could talk to some of whiners I’ve met who say “my salary sucks, I’m never going to become Financially Independent, all you people with high salaries just got lucky blahblahblah…”

        So refreshing to hear about people who never complain and just work their asses off. Next time someone complains, I’m going to quote you: “Hire me for a week without pay, and at the end of that week, you WILL hire me WITH pay.” THAT’S how you get a 260K salary. Ooh-Rah!

  20. I used to live off 800$ a month while going to college. Now that’s my normal credit card bill every month (food, gas, bills, etc…) seems like things went downhill since then. I wonder if they would go even more downhill if I reached the coveted one percent? Probably.

  21. I possess neither a top 1% net worth nor income, but I’m pretty darn happy. For me, happiness and progress are intertwined. As long as I am improving and have purpose in my life, I am very content.

    That said, my wife and I have slowly crept up from median income level to north of six figures. I’ll be honest – it is quite different, and I’m much less concerned about money than I was when we were newly-weds several years ago. Overall, our lifestyle hasn’t changed much. We’re still fairly frugal, don’t drive luxury vehicles (a paid for 2008 Honda Accord and a nearly-paid-for 2013 Hyundai Sonata are both nice vehicles, but hardly luxurious), haven’t spent more than $1,500 on vacations in any given year, and follow a tight budget.

    We’re working on increasing our savings rate in order to speed up our FI timetable. I’m sure we look weird to some of our friends and neighbors who routinely drop thousands on new landscaping projects, while in the meantime, I’m sweating in the blazing summer heat tending to my own landscaping and building my own outdoor oasis. But again, to bring this comment full circle, I find happiness in purpose and progress.

  22. Nice article, and lucid numbers. Car Payments: appears they have only one car payment, or that one new and one beater/very-old vehicle (no way in the world you can do $800/month on two luxury car payments, assuming usual downpayment/interests);

    There are some additional savings which need to account for: 1) Principal portion of mortgage, expect about $18K paid towards the home’s principal/equity 2) Typical 5-6% 401K company matches on $250K each salary for hubby and wifey — minimum of $25K 3) Tax savings/returns of, minimum: $25K on Interest+PropertyTax+Charity

    Hidden growth items:
    1) Possible inflation+1 % growth in their 1.5 MM primary home., which is about $35-45K
    2) Typical 6% NAV increase/boost due to “Portfolio/stock/401k etc” assets: $15K

    Their savings are not necessarily showing in Checking-Account as per the cash-flow; expect hidden savings/growth of about: $115,000/year — which we haven’t necessarily shown/accounted for in the above excel sheet.

    If you can sustain this lifestyle for about a decade, and judiciously invest those savings, you was talking additional hidden-savings of about: $1.4 Million at the end of decade; (in addition to about $500,000 in 401k own-contributions).

    This is nearly $2Million in a decade! Assume – if you are able to send kids to college, and pay of car or two, downsize to a empty-nester home., with higher savings rate, and savings $$s, NAV really zoom from that point onward (not even accounting for Salary increases);

    But at times possible life-related events such as: Disability, Single-income, Divorce, risky-habbits (health-risky, and/or — financially risky ones which can put a hole in wallet), un-assumed/under-estimated business/investment risk(s)., could most likely derail/affect this progression though ..


    1. Good points. Yes, there will potentially be decent net worth gains for this $500,000 couple. However, nothing is a guarantee. And if they keep on going with their spending and still get to grow their NW by $2M in a decade, they’ve only accumulated 3-4 years of annual expenses.

      Now if they can accumulate $2M, and then ratchet DOWN their expenses in half or more, then they are looking good.

      I like the model of making big money early, saving as much as possible, and getting out early. Relocate to another party of the world and let your money go farther. And of course, start an online business so you can keep making income wherever.

      1. When I was young my dad and I used to watch Hawaii 5-0, we were the night owls of the family. I remember hearing that the main actor, I can’t remember his name did this. He was making big money while the series ran but he invested it and after the show ended he lived on his investments, dropping out of the acting world. I don’t know if this is true or not but I thought that’s what I would do if I started making good money. And that’s what I did do in the short time I reached the 1% income level.

  23. FinanciaLibre

    I did the 70+ hours/week consulting life for over a decade. And, yes, high income and wealth accrued with the work.

    Was the stress worth the money? Eventually, no.

    Career strain became so consuming that the income no longer mattered. As you point out, Sam, you don’t need very much money to live a very rich life.

    All of which is why and how I retired before turning 35… and now have better life quality than ever before.

    Right on, Sam. Nice work.

  24. I love this: “For some reason, there are people who don’t work hard, didn’t study hard, don’t spend time understanding how to invest, have a scarcity mentality, and don’t start side hustles who believe they deserve to live a top tier lifestyle. Nuts!”

    In my family, there are people that feel those that do all of the stuff above should subsidize those that don’t. It certainly has created tension every now and again.

    1. When you ask them to take more control of their lives, what do they say? Have you sent them examples of folks who started with little and became financially independent? Examples should help motivate.

  25. The Stanford asset allocation plan is interesting. I guess 29% in private equity is hedge funds. The US equity allocation seems low, but there are probably a lot of US equity in the hedge funds too. Maybe I should start investing in hedge funds too. That’s probably the biggest difference in how rich people invest vs regular people.
    I was happy when I was poor too. Life was a little more difficult, but it was a lot more carefree. Just as happy with more money now.

    1. Don’t think it’s hedge funds. More like venture capital and buyouts. Deals only big money has access to.

  26. Going slightly off topic, but in your $500,000 income family example, are they really seeing enough/any tax benefit in contributing the max to their 401k versus just dumping that into the market or some other investment vehicle of their choice?

    1. They should be getting a massive tax benefit from 401k. At 39.6% fed marginal + 8-10% in NY + NYC tax, contributing $18k probably only costs $9k, if that, plus his practice can structure to add even more with matching, which reduces his practices/his taxable income even further.

  27. John C @ Action Economics

    Mrs. C. and I combined are on track to earn $80K this year, which will be our best year yet. This is certainly no 1% salary,but we have built what I feel is a 1% lifestyle. We can save close to 50% of our income, have a nice 5BR house, now on 12 acres, we have 2 cars in the garage, and a decent amount of time off throughout the year.

    You certainly don’t have to have a 1% income to be living a comfortable life. If our income increased 10 fold I think our spending would increase very little.

    1. Awesome you guys are saving almost half your income on $80K a year!

      5BR on 12 acres? Amazing. Where are you located? I’m visiting an open house today for fun in Kahala, Oahu. A 6bed, 6 bath, 5,8888 sqft house and they are asking $4.75M for a 13,500 sqft lot.

      I really don’t think there’s much more you can have that most one percenters who make $380,000+ living in expensive cities.

  28. Stefan - The Millennial Budget

    Hey Sam,

    Being born and raised for my entire pre college life in the small Caribbean island of Trinidad I can relate to many of those 90 degree whether with a rotating fan. My family was never wealthy but I know my parents worked hard and were eventually able to rise in the ranks and get to where they are today. I always remember my mom telling me when I was younger than my dad was working double shifts at the bank and put in way more hours than he was required. This obviously paid off as he has since risen through the ranks due to hard work and can now live life. Having a strong work ethic can bring a lot of success into one’s career and allow a great work life balance later on. Glad you touched on this subject.

    PS. I do not think there is any research on it but I am pretty sure the top 1% in Trinidad earn maybe 300k at MAX per year so this has always been a goal of mine as I do not see myself living in America for the rest of my life.

    1. Nuclear Real Estate

      One of the best “simple” memories for me was when I was 18 traveling with jr. national team for rugby and having an afternoon off from training, and spending it on the beach in Trinidad, just relaxing and eating shark bake from this stand. It was awesome!

      That year I spent a month in South Africa and then 1.5 weeks in Trinidad, it always struck me that it’d be easy to be happy living on a lot less in one of these places where the cost isn’t that high but there is tremendous natural beauty.

  29. “Unlike what the mass media wants you to believe, most wealthy people don’t blow all their money and end up broke.” Learning this after reading The Millionaire Next Door changed my entire perspective on wealth. I also love how you summarized everything at the end. Money is a tool for living a better life, but it’s not the most important thing.

  30. Nice article Sam and a good perspective. While we are not one percenters, we (my wife and I) have definitely reached the point of being very happy and satisfied with what we have. A great family life, great kids and we all have our health.

    At this point, it’s all about increasing the savings rate, diversifying income streams and avoiding lifestyle inflation to lock-in what we’ve got!

    Once you realize that you’re happy with where you are, everything else is so much easier!

  31. My favorite time in my life was living in a group house with women I loved. I was surrounded by good people. We lived in a very walkable neighborhood. The house itself was gorgeous and affordable as a renter.

    Now I live in a group house with women I do not love. The lack of community and cleanliness is so sad. Hopefully finding my own place next year will help me increase community.

  32. I’m not yet in the 1% net worth and I’m not sure I ever will. According to your chart, I’m 5 year behind at 35 and when I reach 40, even with aggressive savings, I’ll still be 5 years behind. It’s hard to catch up with compound interest!
    Your picture of Hawaii’s beach is exactly how I feel now : living like a 1% without the 1%. Being high middle class is like 80% of the benefits of the 1%. But the remaining 20% are so much harder to get.
    Sam also, how do you calculate the tax rate of the rich couple? If they make 500k$, their marginal tax rate will be 40% but I’d think their effective tax rate should be in the 25-30%. Am I missing something?

    1. Unfortunately this couple lives in New York or California. State tax is about 8 to 10%. Then there is New York City tax. Then there is net investment income tax. Then there is FICA tax.

      40% is just an estimate effective tax rate. It’s also an easier number for multiplication.

  33. We are finding “the more freedom you have, the LESS money you’ll want or need” to be really true. At first we thought we might spend more doing things with all of our time. We may when travel but when we are home, we are actually spending much less. We go for walks and we have time to plan our “store runs” so we don’t buy stupid stuff because we are in a hurry. We even let people go ahead of us in the grocery store most days..! And others still don’t understand why we are protecting our “number” so much. We are diversified, so we’ll stick to those singles and sleep well each night!

  34. Apathy Ends

    Working 70 hours a week at a high stressed job sounds like a nightmare – one of the main reasons I kept coming back to your site was because you ditched that life and found a way to be successful on your own terms. It’s a powerful message!

    1. It was difficult, but when 70 hours a week and all the stress is all one knows, it’s not that bad.

      It’s kinda like folks living on the East Coast. If they’ve never been to the West Coast, East Coast living is just fine! :P

      I discovered San Francisco in 1998 after living in Virginia for 8 years and knew I had to come out here at some point. I’m glad I finally did in 2001.

  35. Hey Sam,

    Your last paragraph was very emotional. It reminds me the time in the UK when I was 22 and I was walking to work 4 times per day (split shift job) for 1.5 Km. and never take the bus to save 1 Pound Sterling (4 Pounds per day).

    However, it was the best time of my life because I had my friends, we share things, enjoy any small moment even if we were poor.

    Anyway, I think you can enjoy this lifestyle when young, with a family would be stressful to bear it.

    1. There are different joys with family. I really think it’s how we choose to see the world.

      Crazy how good life was when we were poor! This right there should tell folks money doesn’t do much except hopefully alleviate the worry about money. But even then, money can get in the way. I sold a stock yesterday that is up 10% today. Annoying! If I didn’t have any money, I wouldn’t be annoyed at all.

  36. Mystery---Man

    All things are relative, you know…

    My lifestyle is unique in America simply because I’m a non-conformist, mega-cheapskate, retro-loner, neoluddite, part-time misanthrope, who believes in voluntary simplicity and living well below one’s means for the sake of efficiency, low-stress, and environmental reasons. And I’m financially independent (probably because I Save-Save-Save and can’t escape from such a lifestyle!).

    I’m anti-materialistic, am immune to this disease called Affluenza, and truly despise the narcissist showoff neighbors who waste-waste-Waste in their gaudy McMansions-from-hell who are always screaming (at least metaphorically) “look at me! I’m Bigger and Better than You!”

    Consequently I’m greatly misunderstood, prejudged, and discriminated against (despite having a High networth nobody sees and nobody would believe if they could see it). They think I’m a bum or a “working class vermin” to be purged from “their” town, probably thinking I’m dangerous and out to rob them or something, too…

    But to get back to the subject matter, I don’t want the 1% lifestyle even though I probably could have it. Honestly, I don’t golf and I prefer my old, ancient video games to country clubs. I don’t travel much anymore and airplane travel is getting nasty so it no longer interests me. Good “quality” food also is of no importance as I prefer “basic” food intake like pizza, chicken, and classic American fast food cuisine.

    Yeah, maybe there really is something seriously wrong with me…

    1. Hey, if you’re happy, that’s all that matters! Nobody can tell you how to spend your money.

      I prefer a little more camaraderie myself, which is why I enjoy consulting part-time, publishing posts, and helping people out with my private consulting practice.

      1. Thank you for these quality responses! Great insight!

        I have a few questions:

        1. How can i leverage my income using the internet?

        2. What steps can I take to become an independent consultant?

        3. Do you have any ideas on how I could work from home?

        4. How can one package information to gain profit?

  37. The Green Swan

    I’m definitely on the side of working like the 1% and hoping to get to a very comfortable level (actually at the 1%, I’m not sure). I think my idea of living like the 1% is more about living comfortably and not working my tail off. Does that count?

  38. Matt @ Distilled Dollar

    Excellent reminder to keep things in perspective. Your picture is worth 1000 words when you showed 1% vs 99% on the same beach.

    I’m happy to say we have a savings rate akin to the top 1% but we fall short of the income/spend level.

    As for lifestyle, I’ll always recall a Warren Buffett speech from ~15 years ago where he explained his lifestyle to that of a college kid is similar: same restaurants, same newspapers, same television…the only difference he said was he flies private vs others flying commercially. That always stuck with me because he didn’t have a lavish house or fancy cars – which is the stereotypical image for a billionaire.

    Plenty of great points made in this article – but one overarching theme is that wealth or a high income will not alter your happiness. Money tends to only magnify our current problems, so if you’re unhappy now, it will likely only be worse when you have money and learn that money doesn’t bring happiness.

    1. I’m typing here back home in a house that was built 30 years ago. I’ve been coming to this house ever since and it has not been remodeled much at all except for some new windows, wifi, and a new TV. The furniture is pretty much the same, as are the bathrooms and kitchen. It’s still a great house that brings me happiness. It reminds me there’s no need to build a luxury master bathroom or anything else fancy b/c happiness is where the heart is.

  39. If you are in a profession where you can make 1500-2000 a day but have to work(intense/high pressure) atleast 12-14 hrs a day, how many days would you work in a month?

    1. At my stage? Maybe 1 – 2 days a month for $2,000 a day.

      If we’re talking about between the ages of 22 – 34, then I would gladly work 20 days a month and take weekends off to make $2,000 a day, or roughly $480,000 a year. I’d then save 70% – 80% of the income for 13 years, start a personal finance site 2.5 years before I engineer my layoff for a severance package, and be free.


      1. I just turned 34 and have been working 22-24 days a month for an year now. I wish I had this job when I was in my 20’s.

        In my field, we end up being poor for the first half of our life and then are blamed for earning too much in the 2nd half.

            1. I became an MD when I turned 40. Sure was painful paying off all those loans, and living like a student until I was 50. But working out well, and let’s not forget the non-monetary side of employment; in this case, intellectual stimulation and service to others. Well worth it.

      2. Thanks, that’s some great advice for someone like me I’m 25 years old..working in finance and the salary is ok…. however the one thing I wish I had was freedom not having to go into the city everyday…..

        I’m gonna check out the post about engineering my own layoff LOL

Leave a Comment

Your email address will not be published. Required fields are marked *