If you want to get rich, you might as well aim to get really rich. Being so-so rich, or mass affluent, where your household earns multiple six figures and has a single-digit million net worth, is not bad. But you'll likely still suffer from continued angst and anxiety, especially if you're a parent.
It's only after you get really rich, where you have a top 0.1% net worth of over $38 million, that you finally start to live the good life. Because once you're really rich, people will start accepting you more for your money rather than for who you really are! (sarcasm)
Let me illustrate the importance of getting really rich with an elite college admissions chart from an Opportunity Insights study. In this case, “elite college” is defined as the eight Ivy League colleges plus MIT, Stanford, Chicago, and Duke.
The Importance Of Getting Really Rich For College Admissions And Life
If you want your children to have a 2.2X higher chance of getting into an elite college, then it's important to get really rich. Look how the NYT chart surges once a household crosses the top 1% income threshold. Kinda nuts!
College Admissions Rate By Household Income
Intuitively, we know the super-rich (and powerful) can provide greater advantages for their children than the rest of us. With their ability to easily donate $10 – $100 million to help buy their children's way into college, college admissions officers are hard-pressed not to admit the children of the top 0.1%.
Academic and Nonacademic Ratings By Household Income
Here are two more charts that show Academic ratings by income (x-axis) and Teacher ratings, Guidance Counselor ratings, and Nonacademic ratings by income.
Just as the Personal Score rating system by race was blatantly biased, these charts show how biased elite colleges are when considering rich kid applications. The surges at the end of the bottom chart are astounding!
Being Part Of The Mass Affluent May Be The Worst Class
The dip in the admissions rate for households starting in the 65th percentile up thru the 95rd percentile demonstrates why you don't want to be part of the mass affluent.
If you are part of the mass affluent, defined in this case as making between $100,000 – $310,000, your children have the toughest time getting into elite colleges.
Even though you're making a healthy income, you're not rich enough to legally donate millions to help your kids get into college. You may struggle to pay for $5,000 SAT prep classes or $16,000 a year for travel soccer. You're also burdened by high living costs.
As I've written in the past, $300,000 is a middle-class income for a family living in a coastal city nowadays. Most of the budget goes toward housing because the best-paying jobs tend to be in the most expensive cities.
Maxing out a 401(k) or two might be the best most $300,000 household income families can do to save for retirement. As a result, the mass affluent class may feel constrained from a lifetime of work and the need to play social status games.
Minimum Income And Wealth Threshold To Be Considered Rich For Elite Colleges
If you or your children want to be viewed more favorably by elite colleges, then shoot to make and accumulate AT LEAST the following:
- $600,000 household income
- $13 million household net worth
A $600,000 household income is the start of a top 1% income. $13 million is the net worth is the start of a 1% net worth. It also so happens to be close to the estate tax threshold of $12.92 million per person.
Ideally, you have both a top 1% income and a top 1% net worth. If not, you should try to have at least one. From the college's perspective, having a top 1% income may be more attractive because tax returns are more readily accessible for review. By comparison, obfuscating one's net worth is easier to do.
As a Financial Samurai who prefers to minimize income taxes and generate more passive investment income, you'd rather have a $13+ million household net worth and a low income. But this is easier to do only after decades of working, saving, and investing.
According to the Opportunity Insights study, about 9% of the students come from the top 1% of the income distribution and didn't get in because of their academic qualifications.
What Happens Once You Get Really Rich
We know that elite colleges have an overrepresentation of kids from rich households. This is the reputation elite colleges have purposefully crafted for themselves. It's also part of the reason why public colleges are now rising up the rankings. The public wants a fairer representation of society.
Although the tide might be turning against being part of the elite, there are some obvious benefits once you get to the top 1% or higher. Here are some of the things you get besides a 2.2X increase in college admissions for your kids.
- People are nicer to you when they shouldn't be
- You get introduced to other rich and powerful people, e.g. government officials
- You get invited to more fundraisers and galas
- Your kids jump the line for hard-to-get sports and music lessons
- You or your kids can make more mistakes or even do bad things without getting punished
- People give you more benefit of the doubt
These are some pretty good benefits, right? I would think most people would like getting the benefits of the really rich.
One Area Of Caution If You Want People To Know You're Rich
Let's say you're all for affirmative action for the really rich. You support the quest by elite colleges to keep things exclusive. No problem. We all like to feel special.
Just be careful coming across as really rich WITHOUT doing anything to deserve your riches.
We respect rich entrepreneurs because they are the ones who created something from nothing. But society doesn't respect trust fund kids who own nice homes, drive fancy cars, and have great jobs thanks to their parents.
Let's say you went to Stanford, worked at a fintech startup, cashed out at age 32 with $2 million before tax, and become a VC, good for you! But if you then turn around and buy a $10 million house in San Francisco. Big mistake! You've just revealed yourself as a rich kid who had a lot of parental help.
People may also start to question whether your parents also helped buy your way into college. Did you get your fintech job through connections too?
Best To Keep Your Riches More Low Key
If you're not OK with people questioning whether you got to where you are based on merit, then it's important to live more congruently within your stand-alone income.
I'm not even talking about stealth wealth here. Instead, I'm talking about not living so far beyond your income that it's obvious you have tremendous financial help from your parents as an adult.
To ward off disdain, one solution is to create a “trust fund job.” You can then tell people you are a Founder and CEO of some random company. It sounds good, even though all it is is an LLC you registered online with no profits.
In conclusion, we must accept that elite colleges prefer rich kids from rich families. Colleges depend on these families to pay full tuition and donate lots of money to keep the system going.
Being so-so rich, or middle-class rich, is not good enough if you want extra benefits. If you plan to get rich, you might as well go for glory! This way, you can own the longest yacht in the marina and let your kids have the easiest life possible.
Reader Questions And Suggestions
Do you think it's not good enough to be mass affluent or middle-class rich? Is getting stuck in the 90% – 95% income percentile a tough place to be? What are some ways you plan to get really rich?
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I knew this article would generate a lot of great comments.
With 2 kids looking at college and very close to retiring (mass affluent level) I do hope they go to a great state school. Maybe it is because I had to work so hard to get to this point it is hard to imagine paying $85K+/yr/kid. The bigger issue is how your kids stay motivated when they finally understand you have a level of wealth and yet still choose to maintain a reasonable lifestyle.
Perhaps the decision to live a reasonable lifestyle despite the greater wealth is all the motivation they need to appreciate what they have and work hard.
I’m doing manual labor each summer with my kids from age 5-18. I hope by 18, these experiences will help shape them for the better.
Long time reader of the site as well, but this article kind of missed the boat for me. It felt very Grant Cardone-ish, and I don’t mean that as a compliment. This is a mindset problem. At $600K+ income, even w/o being a deci-millionaire, one should still be very happy at how far they’ve come and how good they have things in life. I was able to achieve these things w/o an “elite” university. I hope you go back to your other style of writing where you talk about how to build passive income and leverage ones salary wisely.
PS: If you’re unhappy at $10M, you’ll be unhappy at $50M. Someone will always have a bigger house, yacht, plane, etc.
Congrats. You probably missed the sarcasm in this post, even if I wrote the word sarcasm in parenthesis.
I’m trying to point out how unjust the system is. But to also accept things for the way they are and motivate folks to build enormous wealth I’d they want to.
Top 1% (NW) is actually not that hard to achieve if you dedicate yourself to work you enjoy and don’t do stupid things, (like having 3 kids before you are ready or marrying the wrong person).
Getting “Rich” was the easiest thing I ever did, it just happen to take 20yrs to do it. But here is the rub…..being rich vs REALLY RICH, are worlds apart. Here are some of the things you are NOT doing with $10,000,000: flying private (owing any jet, ever), owning large yachts, owning huge houses, or doing any of the other “baller” things that you thought “millionaires do” when you were a kid. You will spend most of your time simply trying to keep your $10MM, and wondering what’s it like to have $50MM. I was probably happiest at $2MM net worth…..everything over that reminds me that I will never ever be REALLY RICH, because there is nothing a $10MM lifestyle buys that is any different from a $2MM lifestyle….not if you plan on having any money for the long run. I’m 48 now, pulled the retiremnt rip cord at 44. I figured that if I’m never getting to fly private money, then I’m done working, Premium Economy and the occasional 1st class will just have to do. First world problems indeed.
Finally…..Who cares what schools your kids go to? Pick a decent state school with name recognition and move on. It makes little actual difference, I know winners and losers from Ivy schools and winners and losers from state schools. My 2 cents.
Thanks for sharing!
Why do you think you are not happy with $10 million versus $2 million? You should be able to fly private every time you want instead of just premium economy?
I think most people who have a $10 million net worth and above would rather send their kids to private school and try to send their kids to the best private universities. Do you have children? If so, how do you think you were able to maintain your attitude I preferring public school?
If there’s one thing, many rich parents are willing to spend money on, it’s as much education for their children as possible. And private schools know this.
Sam,
Long time reader, I always enjoy and recommend your site. The title of this article def resonated with me….If You Want To Get Rich, Make Sure To Get Really Rich, just not exactly for the reasons you went on to outline. It is apparently common (from what I have read) for people in the $2-10MM range to feel less satisfied than those with $14MM+. Maybe I shouldn’t have used the word “happiest” (at $2MM)…..maybe satisfied would be a more accurate emotion. I think this is because people in the 2-10MM range figure out that the “millionaire ideas” they have in their heads are false. Nobody lives like Branson or Kim K with $5MM in the bank. It is actually Billionaires being marketed as Millionaires that warp peoples’ reality. For me, the 2nd million confirmed that the 1st MM was not an accident, or just dumb luck, and that I was actually onto something valuable to others and repeatable….as a small business owner, I could directly put work in and get money out. The more I worked, the more money I made, the less I worked, the less I made….call it proof of concept, call it validation, call it pride/satisfaction. I learned with time & experience how to balance life and work after the 2nd MM rolled in. I also learned that the amount of work I would have to put in to actually get to $14MM+ was wayyyyy more than I was willing to do. After 2MM, wealth was just a number, nothing changed, I genuinely don’t feel more secure now (except against inflation, maybe), but primary res, beach house, any cars we want, the material stuff, didn’t change at all. All you can do is buy a different primary, a different beach house, but it’s not like at $3MM, I moved into a $5+MM home, and went Ferrari shopping that day. People who do that, are not rich and never will be. Can I take a private flight? Can I buy any exotic car? Sure….but I was/am still young….and as you know….those Monte Carlo simulations get pretty wide 30-40-50yrs out. Inflation is an ever present risk, and my wife’s family seems to have the very long life gene….so we take it slow. If I was 65+yo today, I would absolutely fly private, and drive a $350,000+ car, but we will never own the plane, and now, I am ok with that. It’s all just more stuff to maintain and future garbage, no matter how shiny it is today. It is all impermanent.
No kids here, we don’t enjoy children, we have all the friends and nieces and nephews anyone needs, and we are always glad/relieved when the kids are gone, lol. However, that does not mean I do not understand and empathize with a parent’s 100% natural desire to give “The Best” to their kids. Where I differ is in my opinion of “The Best”. I have worked directly with (and at one point for) grads from Harvard, Dartmouth, Chicago MBAs, Tulane, Rice, and a dozen state schools everyone has heard of (Texas, Bama, Florida, Iowa, Arizona, etc…). The only observational difference that I have found in any of them, was expectations, and stress. The higher end the name brand school, the more stress on the student, the parents, the whole family, and pressure from others/society at large. I have found no material difference in the end results come the ages 30 or 40. So why wear the stress at all? I have multiple friends who pay/have paid $20-$50k/yr/kid for K-12 education, and after being promised Ivy the whole way, ALL of their kids got into State Schools (or Miami or Tulane). I also know a young woman accepted to Harvard, who had a public k-12 education, who’s parents claim they simply could not afford to send her (against my advice, I believe that IF you get in, awesome, you should absolutely go, but the world will not end if you don’t). Personally, I would never even apply. If you absolutely must go Ivy….go to a State School for 1yr, actually get straight A’s and then transfer…..a way easier path, and if you can’t get all A’s at State or Tech….that’s a clue. Intelligence and work ethic are both inherited and nurtured. There is no magical professor at Yale, dressed in a white robe, covered in ivy, that is going to flip the switch in an 18yo brain and turn them into a winner, the cards are already dealt at that point. It’s all advertising and legacy/nepotism garbage, and from what I have seen, it absolutely does not guarantee results. Doctors and Lawyers seem to be among the worst financial managers I have ever seen. School teachers and engineers are among the best. Turns out Thomas Stanley knew exactly what he was talking about, right?
Bottom line, my friend Sam said, “If there’s one thing, many rich parents are willing to spend money on, it’s as much education for their children as possible. AND PRIVATE SCHOOLS KNOW THIS.” ;)
“ proof of concept” is indeed, very rewarding, as you realize your first million or second wasn’t a fluke.
How old are you? With $10M and no kids under 40, I’d spend like the wind! I’m pretty sure you won’t be able to spend it all especially as your investments grow and cash flow keeps rolling in.
I’m not sure living in a $5M house with 1-2 people would be satisfying though. Too many empty rooms would feel like a waste IMHO.
So sorry for you.
Why the college focus? With 2 children getting at least 6 million each per your minimum, that’s a risk free $300k yearly based off a 5% bond. With that safety net, could perpetually start businesses until one succeeds.
Because there’s more to life than just money. This is the latest data to come out of the study about how the super rich get even more advantages than some realize.
I understand as a BYPRODUCT, but what is your opinion as an ENDPRODUCT? Harvard’s acceptance rate is 4%. Same for MIT. So pushing from $3 million to $13 million just to increase your child’s chance to around 10%? Still 90% failure rate.
I completely agree with this statement, and it is what I have said about the college admissions scandals where people were paying tons of money to get their kids into these schools that wouldn’t otherwise qualify. It isn’t just about getting the kids into the school, but about what they are actually going to be able to do once they are out. My practical mind just doesn’t comprehend.
My daughters attend a well respected business university. We are part of the mass affluent class. My daughter is an automotive aftermarket management major and surrounded by elite car dealership kids. She has learned how to network. The company she has an internship with has had some students that were fired from her university because they were lazy or didn’t even show up for work. My daughter tells her that she does not have privilege and works hard. She comes from blue collar parents. I think that we need to focus on determination of any of the college students to be successful.
Sounds good. Good luck to your daughter in finding what she wants to do.
I feel business school is a little different from undergraduate school because b-school is even more of a business without a lot of scholarships.
“ elite car dealership kids” never heard of this before! Thx
Every community in the country has a family of elite car dealership kids. It is the result of a depression era law that granted franchises to local car dealerships, basically legal government granted monopolies that made sure that you had to buy cars from dealers instead of buying them direct from the manufacturers. It is funny to see these rich kids in ads for the family dealership and knowing that you have a golden ticket to wealth from birth can breed a sense of entitlement and laziness in these car dealership kids.
Not all of the families of course are lazy like this, but it is common in area where I live. Many of these families have multiple dealerships in the same community so regardless of what brand of car you want you have to buy from the car dealer family.
Fascinating stuff! Had no idea. One of my favorite hobbies on the way home from work. What is the stop by another mini car dealerships and sit in the new models and inhale the new car smell. So fun!
holy smokes that chart is crazy! Man that’s disappointing to see as a parent, but sadly believable. Colleges and universities are way too competitive to get into for regular folks and moderately wealthy families. I know a very wealthy family that was able to use their surplus wealth to make a huge donation to their kid’s top choice school and they were admitted. No surprise there.
Am I jealous? Maybe a little bit, but not really. I have set expectations low for my kids college admittance. And I know from my role in hiring staff that although the school you go to can help with getting a job, it’s not the end all be all. There’s a ton of colleges out there and even though you might not get into the top schools of your dreams, there are plenty you can and still turn out just fine. But yes, being super rich sure does help ha.
True, the good thing is that the breadth of top colleges has expanded over time.
I saw a headline today that said “Steve Jobs Son Gets $200 Million For His New Investment Firm.” And to no surprise, the son went to Stanford, where Steve Jobs donated over $50 million to the university.
It is what it is folks!
You really can’t blame those universities for doing that. If I were running a University I would totally do the same thing, absolutely, I would not give it a second thought. Those rich folks are an asset to the entire university and student body. Those charts are amazing! Great job! Thank you for posting so interesting!
Hello Sam,
Yes, I do think it’s good enough to be in the Mass Affluent (net worth in the 2 – 10 million range). There’s no problem being in the Mass Affluent and STAYING in the Mass Affluent. The problem arises when someone in the Mass Affluent wants to live the lifestyle of people in the top 1%. That’s when you’ll experience disappointment. I’m from the camp where you think that a person can attend a k-12 public school, attend a public university and still attain wealth (after all, I did). Why is society trying to make everyone believe that the only way you can be successful is to graduate from an all-exclusive, elite college? I DISAGREE!!
Also, the “advantage list” of the really rich that you have listed is, indeed, pretty cool….except for getting invited to fundraisers. I don’t see the advantage of getting invited to an event where I’m asked to pay $300.00 a plate per person, and THEN they hit me up for money.
Absolutely Alvin! This post is trying to highlight the absurdity of it all, how elite colleges are virtue signaling about supporting socioeconomic diversity, yet are giving preferential treatment to the super rich.
Hint, “Because once you’re really rich, people will start accepting you more for your money rather than for who you really are!”
But I’m also trying to point out why so many households with a $2 million-$10 million net worth still feel so much angst and anxiety in society. It’s because they see the top 0.1% gain so much of the spoils.
Fantastic article, and superb comments as well. Much of it resonates deeply with me.
Both as parents and as members of the mass affluent, my wife and I worry about just one thing: will our children find as much comfort and happiness in their lifetimes as we have?
My wife and I both worked hard to get into big name schools, and while it has had some impact on the course of our lives, it’s really hard to quantify. In fact, I’d attribute much more of the wealth and happiness in my own life to being in the right place at the right time, and being of the proper frame of mind to make a good decision.
I picked the right woman to be my life partner. I’ve chosen the right companies to work for during my engineering career, and it’s paid off, many more times than moving up the career ladder. It might be worth writing an article for techies about the importance of choosing companies with good ideas, business plans and financials (or maybe an addendum to https://www.financialsamurai.com/bankers-techies-and-doctors-youll-never-get-rich-working-for-someone-else/).
I generally agree with JN’s assessment that there are winners and losers from all schools in an era of bull markets and lax monetary policy like we’ve seen for the last couple of decades. But I’ve also lived through enough economic downturns to know that in a bad market, every extra credential may help.
I have friends who graduated with software engineering degrees when the dotcom bubble burst, and ended up with careers in tech support. And looking at what’s going on in China with youth unemployment, and imagining the collective chagrin of millions is enough to give any parent a headache.
My son likes watching this YouTube channel, and I recently saw this video, which is on topic: https://www.youtube.com/watch?v=3LopI4YeC4I.
Hi Alex,
Thanks for your comment.
“It might be worth writing an article for techies about the importance of choosing companies with good ideas, business plans and financials”
Actually, given you are in tech, having a guest post from you for techies would be great!
I did interview Andre Nader, who worked for Meta for 9 years in this FS podcast episode. Check it out and rate the podcast if you like it. Every review counts and is helpful for growth.
Andre has a tech FIRE newsletter worth subscribing to. See the show notes.
Cheers
Think once you are really rich, call it $20MM+, it’s best to keep that hidden from everyone except your close/immediate family. Too much downside risk from others who may try to take advantage of you/expect things of you, especially in a world that increasingly despises the rich.
Would be good to hear your thoughts at some point on what you think the best way is to become “really rich.” Seems that the only way to do so nowadays is entrepreneurship, but that is not always guaranteed. Think there are a lot of ways to make $1-$10MM (IB/PE/HF/blogging/content creation/product sales, etc.) by the time you are 40, but how do you get to that next level of wealth (say $20-$50MM+)? Maybe the only way is through entrepreneurship, which can be hit or miss.
Being an entrepreneur where you earn income and equity is the best way. Do it on the side. But stay in banking, strategy consulting, or big tech long enough (25+ years) and saving and investing aggressively has a good probability of getting you to $20 million.
Related posts:
Dear Bankers, Techies, Doctors, And Lawyers: You’ll Never Get Rich Working For Someone Else
Build Equity In A Business If You Want To Get Rich
Never heard the Banking 25 years for $25mm phrase. It happens…. A lot more than u think
Are you at the $25+ million after 25 years of banking? If so, I’d love to hear more about your journey and what you invested in. thx
Happy to do it privately. Invest across equities, including direct dividend investment direct equities and options , fixed income including private debt and structured credit, munis and treasuries, and LP interests across Various assets classes and of deferred comp in stock of my firm.
Been in banking 20+ years.
I just wish Lori Laughlin could have read this before she went to prison for 2 months for bribing her daughter way into USC. You gotta be like Dr Dre and donate $70M so your name is on a building at USC.
Don’t be mass affluent like Lori. Sigh.
Hah, did Dr. Dre really donate $70 million? If so, that’s impressive!
…Create a “trust fund job.”
I smell a future post coming on this topic….would love to see it. I see this a lot from executives who depart from their corporate jobs (whether voluntary or involuntary). Might be fun to create a trust fund job that is cheeky, like founder and CEO of political waste management, or CEO of Property Tax Management.
It’s a good topic. I’ll write about it.
Here’s the post!
The Secret Creation Of Trust Fund Jobs For Status, Meaning, And Relevance
We are getting richer later in life after our daughter graduated from a good public university 2 years ago. I guess our net worth won’t help her get into a more elite college but at least she will have a nice nest egg to look forward to down the road.
Got that everyone? Shoot to make $600,000 to be happy. lol.
And not just to be happy, but to be liked for your money, not for who you are!
Related: The Secret To Perfect Happiness: Make Over $500,000 A Year
I am currently on a a 3 week cruise of Norway, Iceland, and Scotland. Mostly old people. I don’t think most people care if you are rich or super rich. Actually most people don’t even look at you or talk to you except on the elevator. I just see some people in pretty good shape physically and some pretty messed up. However they all look old. So enjoy your youth because money doesn’t keep you from getting and looking old.
No truer words! I’ve been trying to enjoy my youth for a long time, after beating myself up in banking until age 34.75.
The health benefits of early retirement are priceless! And I feel healthier not being so stressed all the time as a result.
Enjoy the cruise! I hope to take one with my kiddos in a year or two.
You know the funny thing about young people? Once THEY get old themselves, all of a sudden, they don’t view being old as being a bad thing. LOL!
I don’t know if I’d want that really rich/net worth level. I feel you’d have to do something shady, political or downright unjustified to receive that salary (CEO, Wall Street, etc). I’d rather look at myself in the mirror and be respectable. Look at the backlash of Robert Iger with the writer’s strike.
Sorry…just saying.
Nah. Corporate level execs (not even CEO’s) make that much ($600K+ annual income) easily.
Heck, even moderately ambitious mid-level engineers (a level or two below Directors, themselves a level below a VP) can make make $600k in Silicon Valley.
Exceptional sales people as well can attain huge income levels.
Can we count annual portfolio performance (dividends, growth, capital gains, etc.) together with our wages? That would put us across that snarky 600k line despite not doing anything shady. And how do we weight having no car loans or mortgages? Nor any other debt? Do vested pensions count, somehow? I didn’t make six figures from wages until in my fifties, and my wife still does not, quite. Neither are we high-rolling executives or silicon valley engineers, just worked our ways through college and living our lives, with an extra emphasis on family and being happy.