There’s a saying that goes something like this: To feel rich, take whatever you earn and triple it. Once you get there, triple it again, and again, and again. In other words, due to hedonic adaptation, it’s impossible to ever feel rich!
But I’ve noticed on my path to financial freedom that there were several times when I felt incredibly rich. The Dow reaching 20,000 wasn’t one of them by the way. Perhaps you can share when you finally felt rich as well.
When I Finally Felt Rich
1) When I went back to Malaysia. I used to live in Malaysia from 5th grade to 8th grade in the early 1990s. At the time, the exchange rate was ~2.3 Ringgit to 1 USD. When I finally paid a visit more than 20 years later, the Ringgit had depreciated to 3.7:1. One Ringgit bought the equivalent of $1 worth of stuff in the States. Therefore, I suddenly had almost 4X the amount of purchasing power during my week-long stay. So perhaps making 3X more doesn’t really make you feel rich, but making 4X more does!
In addition to the increased purchasing power aspect, it felt particularly moving to visit my old house and to realize I didn’t fall through the cracks. I was an undisciplined kid who got into way too much trouble. If I was my own father, I’d have considered sending myself to military school.
2) When I finally hit my passive income target. It took 17 years to achieve my passive income target, but when I finally got there, I felt rich because there was no more fear of running out of money anymore. Growing up in developing countries and experiencing many boom bust cycles working in finance always keeps me a little paranoid about losing everything.
Passive income feels like free money because you’re not doing much to earn it. You almost feel guilty collecting a rent check or dividend payment, which is why I have no problems paying a management fee or going to a rental property to fix a problem.
The amount of passive income generated is less important than whether or not it can cover all of your living expenses plus a nice cushion. In my case, that cushion allows me to save at least 30% of my passive income because I’m a savings addict. Every dollar you after achieving your passive income target feels like you’re playing with the houses money.
Related: Financial Samurai Passive Income Update For 2018-2019
3) When a new income stream comes out of nowhere. I firmly believe none of us are maximizing our income potential. I’m going to guess that if we could make a maximum of $100 a month, most of us are really making only between $10 – $30. It’s kind of like how none of us utilize more than 20% of our brains. If we did, perhaps we’d find a cure for cancer.
During one business offsites, my team worked on how we could optimize our existing platform. We discovered that roughly 30% of our posts had zero advertising partnerships. They were just making money through these generic click and banner ads that don’t pay much. As a result, we decided to reach out to a couple new companies we liked to see if we could strike a deal. We did, and a new revenue stream was created from existing inventory.
One of my biggest problems running a website is not caring 100% about maximum revenue generation because I already have my passive income. I’m not constantly hustling to find new business deals or writing about lucrative credit card offers. If something doesn’t interest me, I just don’t write about it no matter how much money is involved because everything already feels like gravy. The best entrepreneur or financial independence seeker is someone who has everything to prove and nothing to lose. Therefore, if you’re in the early stages of your journey, cherish your motivation!
Related: The First Million Might Be The Easiest
4) When you didn’t sell something that ended up being worth a lot more. Back in 2012, I listed my San Francisco single family house for $1,700,000. I didn’t get any official offers, only whispers from a couple real estate agents saying their clients were willing to pay closer to $1.5 – $1.6M. I refused and took it off the market until I had an opportunity to re-list the home again in May 2017. My tenants had given me their 30 day notice and I figured I might as well test the market for both rent and sale again. My hope was to get at least $2,300,000 or $8,800/month, the same rent as my previous tenant.
Instead of getting $8,800/month, the best I could get was $7,500/month, a big 15% decline. At the same time, my realtor found a prospective buyer off market who offered $2,600,000! After much back and forth, I was able to get them up to $2,740,000, a full $1,040,000 more than I would have sold it for just five years ago. He had to take out a $2,000,000 mortgage plus another $300,000 bridge loan to buy my house.
If I had sold my house in 2012, I would have forever kicked myself for selling at the wrong time. What’s more, I was able to leverage up and buy another single family home in the Golden Gate Heights district of San Francisco, which was named by Redfin as the #2 hottest real estate market in the entire country for 2H2017. Prices have risen by ~40% since 2012, meaning I was able to double benefit from the real estate boom and finally cash out on one while still having a primary residence.
Was going to sell in 2012! But thankfully sold in 2017 instead.
Related: Why I Sold My Rental Home: Had To Live For Today
Common Underlying Theme To Feeling Rich
Why do some billionaires cheat and steal? If you’re worth $1.5 billion, like Galleon hedge fund manager Raj Rajaratnam was before he went to jail for insider trading, it’s illogical to risk going to jail and losing everything for a mere couple million dollars in illicit profits.
Why is it that even if you’re financially independent, it’s still so hard to resist a free lunch? It doesn’t make sense to stuff your face at the buffet line when you know overeating will cause you to die early. Further, you can easily afford the rubber chicken sandwich any time.
The common theme to feeling rich is when you feel like you’re GETTING SOMETHING FOR NOTHING – that feeling like you’re winning.
Taaras Resort at Pulau Redang, Malaysia was the bomb.
In Malaysia, I was getting something for nothing due to a strong USD. All I did was fly to Kuala Lumpur to see my childhood friends. I didn’t work hard to be able to afford 4X as much as a local Malaysian. Being American made me rich by global standards.
When I achieved my passive income target after 17 years, it finally felt like I was living for free because my passive income covered all my living expenses by 160%+. I don’t actively recall all the sacrifice required to amass such a financial nut. All I experience is the present. Not remembering the pain of hard work is exactly why you should work hard now.
When a new business opportunity arose in 2016 after some thinking on a floaty in the ocean, it felt amazing because I couldn’t forecast its rise. Brainstorming in Hawaii about how to optimize my existing platform and having lunch with management from a new corporate partnership for a couple hours doesn’t feel like enough sacrifice to suddenly generate an extra five figures a month. If I wrote another 200 posts, then I’d feel worthy. But I haven’t.
It’s true that if you focus on an absolute dollar amount, you’ll never truly feel rich. What’s also interesting is that even after leaving Corporate America in 2012 to experience absolute freedom, I didn’t feel rich. I felt more nervous excitement about the future than feeling like I had finally made it.
The key to constantly feeling rich is to constantly feel like you’re winning. If you can combine being content with what you already have with the occassional good deal, I dare say you’ll feel rich for the rest of your life!
Some Other Examples Of When You Might Feel Rich
* If you walked away from a car accident unscathed.
* If you find a $100 bill on the ground with nobody else in sight.
* If both of your parents live to hold their grand children.
* If you were diagnosed with a terminal disease and are still living past your due date.
* If you found the love of your life before all your friends.
* If your job is something you’d happily do for free.
* If you’re making a difference in other people’s lives and also getting paid.
* If you were a C student and now live an A lifestyle.
* When your investments make more for you than all your income combined.
* Seeing the JOY on my kids facing when they beat a rival 5-2 after last year’s 3-4 defeat was priceless. For those who don’t know, I’m now coaching a high school tennis team.
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When you are in Thailand and each meal costs $1.5 USD and you realize you can eat like a king and not go broke.
Happy Chinese new year Sam!
This. I think comparative wealth makes you feel rich.
Unless you are comparatively richer than your contemporaries you’ll never feel rich.
As an example of this one of my clients is work ~$100 million, and yet he always says he is “not a big player” and “not a tycoon” even though he owns the 40 story building I meet him in! The reason? He only associates with other ultra high net worths in his city, many of whom are worth multiple times what he is.
On the opposite end of the spectrum moving to a poorer country and living way below your means is a guaranteed way to feel wealthy.
I agree with this. It’s often more about who you typically rub elbows with than what you make. I tend to feel rich when I go to visit relatives because I massively out earn them. Yet the bulk of my friends out earn me and around them I know I’m nowhere near their level of wealth so I’m not content and certainly don’t feel rich.
At this current moment Sam, I’m the “richest” I’ve ever been. I noticed a shift in my mindset and feelings once I was able to pay off all non-mortgage debt and build an emergency fund of 10k. This was a few months back.
Now, I don’t worry much about my finances. Yes, I still need to ensure I’m practicing management of my money, but I’m also able to go out and live in the world to the fullest. Last night in particular, I attended a Woman’s March event at a brewery. Listening and discussing on social topics was awesome; it was even better because if I decide to donate $ to the cause, I know it wouldn’t be very tough.
I’m still struggling with figuring out how to navigate situations where personal finance comes up in conversations. I’m very pleased with how people are “waking up” due to the new presidency. That said, let’s also hope people start waking up about their finances and we can start having those discussions as well!
Great Comment. Having a rich mindset is key.
I feel rich when I can decide to buy something without worrying if I’ll have enough money for it or not. I think that’s really a direct result of budgeting and not only the amount of money one has.
I also felt rich a while ago when I was having some car trouble and talking about what to do with my wife in front of some other folks. We discussed the whole thing calmly and decided to take the car to the shop and rent a car for a few days. At the end of the 5-minute conversation I had already reserved a rental car over the phone. The onlookers had been watching in amazement the whole time and literally laughed out loud at the end of the phone call. I found out they were amazed because a broken down car would have upset them and because renting a car out of the blue would have been a strain on their finances. Not for us though. Good times.
I agree with this. To an extent, if you don’t worry about money, you’re rich.
It kind of reminds me of a little anecdote that I read in The Snowball: Warren Buffet and the Business of Life. Warren would always frame his money in terms of what it *would* be worth twenty years down the line (or so).
Instead of telling his wife, “I don’t want to spend $45 on a new dress for you,” he’d say, “I don’t want to spend $10k on a new dress for you” (guesstimating, but you get the point).
One time, when they were having one of these arguments and his net worth was in the hundred millions, she said, “If you were REALLY rich, you would go and buy that car right now.” I’m inclined to agree with her, and I don’t think we should praise people who are overly cheap. That’s not to say he should’ve bought the car, but the essence of the message is the same. People who obsess over money all the time, to the point that they don’t make purchases that they COULD make — they’re not rich. Warren Buffett is one of the richest men in the world, but he STILL has money problems. He STILL loses money, sometimes hundreds of millions, and it affects his daily life in the same way that it affects the daily lives of the wealthy: not at all.
That’s a darn good question.
And honestly I’ve never felt rich, despite having no debt and being financially independent. This is probably because to this very day I still live the way I’ve always lived: minimalistic and way below my means. I still use coupons and hunt for bargains. Technically my income is very Low but my net worth is very High. By my calculations I fall into the top 4 or 5 percent by net worth.
I’ve never felt rich.
Maybe because I never splurged on exotic items or services. I never hired a maid or servant to do things for me. I’ve never driven a luxury car. More to the point, my old house is extremely basic and looks nothing at all like all of my new neighbors in their sprawling McMansions and McCastles studded with spotlights (some on 24/7!). I’m also the only guy in this section of the neighborhood who actually does his own yard work rather than hiring crews of clowns to come by Every Week to put on a yard show.
These people, I am sure, look Down upon me as some poor dude because I don’t act, nor want to act, like one of these pretentious kings.
I don’t feel rich. Probably never will. I do know that I don’t have to worry about payments or money (or at least as far as not having Enough to make payments). I probably Would feel rich if I had some insight into my neighbors’ financial situations… Are they living paycheck to paycheck to maintain the Image of luxury?
Sounds like an easy solution for you to feel rich then!
1) Splurge on something
2) Ring your neighbors’ doorbell and ask them to show you all their financial details.
But I’m curious, why do your neighbors bug you so?
I think you feel rich when you realise you no longer need to think about money.
When you no longer need to think about how you’ll afford to pay for something.
At that point you realise you have more than “enough”. And it feels good!
When do you think this realization will occur?
There’s always the one more year syndrome to make more money.
I get that feeling when I’m earning well in excess of my spending (i.e., 2x or 3x more). And when I have enough money saved that I’m not thinking about every little thing I spend money on.
It’s when you don’t feel the need to worry so much about what something costs. You know that anything you buy won’t derail your financial situation.
And as long as you keep your spending low and you’re not buying high dollar stuff, it’s easy to keep that feeling.
I find having that feeling offsets the desire to go out and spend money on things you don’t really need.
For me, a lot of it has to do with perspective. When I’m reading a lot of PF blogs its easy for me to not feel rich because my net worth number is substantially lower than that of many of the bloggers I follow, but then when I have conversations with people in my daily life, it certainly makes me feel rich.
I have friends in their 50s and 6os who lament that they will never be able to retire. I have friends who have trouble getting by if they miss a day of work and have a short paycheck. At one of my kids’ birthday parties a little girl asked me if we were rich, because we had a big yard and a bunch of cool toys. When I have conversations like these I certainly feel rich, with my net worth of roughly 3X annual expenses and 6 months of cash in an emergency fund. (Not to mention a fridge full of food, electricity, heat, running water, and a roof over my head, which worldwide and by historical standards are certainly measurements of being rich)
I hear you on feeling poor when you read about folks posting their incomes and net worth figures. One can’t help but feel envious or bad about themselves if we earn less. Hence, a good solution is to never check and to unsubscribe from those sites.
I feel bad highlighting personal income/net worth related stuff as well. On the one hand, it’s important I use real numbers since it’s my life that I’m tracking. On the other hand, I take care not to highlight too often (once or twice a year max), and just write about more relevant stuff.
To feel rich, all you got to do is see how LITTLE you can get in real estate here in SF with what you can buy where you live.
Very true saying. Thousandaires want to be millionaires. Millionaires want to be billionaires. Billionaires want to be the richest billionaire out there. In my experiences, your point of focusing on a dollar amount and never feeling rich is very true. Throughout my career, I’ve always thought if I could get to a certain salary level, I’d be content. That has never been the case. I have always wanted more, just like the millionaire wants to be a billionaire.
In my life, I’ve felt rich when I was accomplishing something. When I broke 80 on the golf course for the first time, I felt rich. When I fixed the control panel on our dishwasher without any previous knowledge or experience, I felt rich. In my job I feel rich because I work in a true meritocracy. Although, since I haven’t yet reached financial independence, this same job drives me more to reach FI since I know meritocratic companies are few and far between and a couldn’t go back to working for one that isn’t.
Well said. I felt the exact same thing when I broke 80 one day as well! It was like a miracle, hitting almost all the greens in regulation, having no blowups beyond a par, and sinking a couple birdies. Like everything just clicked. It was fun to no longer have to use a foot wedge when nobody was looking either! hahaha.
I do agree with you that people tend to feel more rich when they think they are getting a great deal. I don’t think the happy feeling knowing you got a good deal ever goes away. I’ll never forget being 16 years old and being embarrassed by my grandfather. After a round of golf we went to the golf pro shop and he started haggling over the price of some $40 golf shoes. This is the same Grandpa who gets a new Lincoln and Lexus every two years and who spends most of the winter down in Destin, FL. My grandmother never worked as an adult and my grandfather retired at 55 with a seven figure net worth along with a very good pension.
I agree with several of your examples about feeling rich. Another couple examples that come to mind are volunteering/sharing your knowledge/time with others and when traveling outside of the U.S. (especially the Caribbean and parts of Asia). It is pretty humbling to see some of the very small run down buildings people live in but they seem to be just as happy and proud of themselves as anyone I know.
Yes indeed. Nobody can ever resist getting a good deal. It becomes very apparent with the older generation, including my parents who are very frugal, but have lifetime pensions after working a lifetime for the foreign service.
Just going to Hong Kong, a developed city country, Americans will realize how much space we have for so much less. How blessed we are.
I will actually be in Hong Kong this week for the first time! My wife and I are getting ready to kick off a round the world trip with a few stops throughout Asia.
Let me know how cramped it goes! The side stall food is great. Go do some real property tours and be amazed at how cheap America truly is!
Happiness , the feeling of luck, financial well being, and everything else are judged by our brains by what came before or what is around us. That’s the way we are wired. A constant high would leave us unhappy because then everything would seem low. As such the key is to structure what you have in a non linear way to ensure you still have highs and lows. This could be a splurge setup for a time of year, or a varying of how much you can spend from year to year. I’ve felt wealthy many times in my life based on this concept. When traveling to a third world country, hearing my coworkers talk about debt, or the sad state of the average persons finances. However I’ve also had plenty of man I’m poor moments reading the Forbes 400, dealing with large sums of money at work, and working with some executives at work.
That’s a good point. I just realized a pattern in my car purchasing.
I went from a $80,000 MB G500 to a second hand Honda Civic. Then I bought a BMW M3. Several years later, I sold it and bought a $3,500, ancient car. After 2.5 years with my Honda Fit, I’m ready to splurge again!
Feeling rich has always been such a fleeting feeling in my experience. I always have a humbling moment shortly after.
– Hitting the six figure income mark right at my 25th Birthday. Was absolutely fantastic feeling … and then I soon realized how arbitrary that mark is and that it means little.
– Inheritance. Having something so terrible befall you and to end up with some sort of door prize is just macabre. I will be giving my money all away prior to my death for this reason.
– Talking with average American coworkers helps. Hearing about 0% into 401k’s and ESPP’s makes me shake my head to the point of dizziness. Then I read articles about Zuck and the guy that accidentally made Flappy Bird and I remember how behind I am!
I try to trick myself to believe I will feel “rich” or at least more financially secure, at each $100,000 level I save up. Kinda like regaining health in a video game haha.
Great Article FS
Nice video game analogy at the end. Once you make enough passively to survive + a buffer, making money can absolutely become like playing a video game. It becomes just a fun challenge to see what different ways you can earn, and how much you can earn. With your earnings, you’re just looking to invest it even more in order to take care of your loved ones and then help other people.
It’s really fun to just do things because you want to.
While the DOW hitting 20K is just a number, I’ve been putting away >50% of our family’s income for a few years now. Its nice to see a measurable uptick in net worth as the market rises, which shows me the power of my index investing strategy. Knowing I’m doing the right thing makes me feel rich.
Agree.
This is a really interesting read. I definitely agree that there can be a disconnect in being rich and actually “feeling” rich. I had never thought of the common theme of Getting Something For Nothing. Thanks for the insight! It makes complete sense.
Great article Sam. Thanks for sharing your perspective. I agree that not focusing on a dollar amount is probably wise. For me, I finally felt rich when I started earning online income. I am still working on scaling it but it’s an amazing feeling to have that automated earning power. It’s also fun (and makes me feel rich) to compare that type of passive income vs. investment income. For example even a meagre $100/month from Adsense is equivalent to $40,000 in savings yielding 3%.
Yes indeed! If only more people would realize this and leverage the internet. You don’t need to make a fortune. But if you can build your brand online AND make a few shekels here and there, it’s worth a lot more than you think in this low interest rate environment!
Related: Ranking The Best Passive Income Streams
I wouldn’t disagree with your theory, however I would say my own definition of feeling rich is when you finally accomplish something you’ve worked so hard for. I sway to the side of working hard and earning what you deserve.
I’ve thought about this subject for quite some time. I’ve been testing whether I feel rich/content at each major milestone. The first was income. I had a goal at work to break $100k per year, then $200k, then $300k, etc…Income didn’t make me feel rich. The second milestone was breaking the $1M mark in net worth. Didn’t feel rich then either. The third milestone was being debt free. I paid off all my debt including mortgage. That also didn’t make me feel rich, but it did make me feel very content. After examining my thoughts during these phases, I realized I would only feel rich when I had enough passive income coming in to cover the lifestyle I desire. I also realized that rich wasn’t what I was chasing, it’s absolute freedom. Free money as you describe it would make me feel rich because I could continue to make money beyond the free kind, and use it to improve my sphere of influence (including family, friends, etc…). Thanks for getting the brain cells popping this morning!
Max,
I can relate as I’m in the same shoes. You are steeling my thunder, grrrr. Only I only make low 6 figures, and am saving my ass off to build passive income to support my needs. Completely debt free and a few ways of saving butt of and my alarm clock years are behind me
Yes, once your passive income covers your desired lifestyle + a little more for saving (due to habit), you will feel golden. I’m pretty certain of this because each incremental dollar you make beyond your passive income is like playing with the houses money = gravy!
Hence, have fun on that passive income journey. Having a motive makes it fun!
Sam,
You’re so right about the relative wealth measure. I worked in Qatar for a year and while I was there, was able to snag all kinds of deals. We used to get $100 custom-tailored suits down at the local shops. We’d pay at least $400 for the same here in the U.S. The haircuts were $3.50 and they were thrilled to get a $5. Keep the change! I pay $20 here in the states.
Your posts on geo-arbitrage fit right along with this one. Living in a high cost of living city, then retiring in a low one. Or, working online and living in a low cost area. Either way, you’re geo-arbitraging your way to optimize your finances and living standards.
I’m really interested in people who work in one state, then retire to another state because of lower taxes or a lower cost of living. Readers – please let me know if anyone has done this. I’d be interested to hear the results and methodology.
Matt
Geo-arbitrage is a no-brainer if it can be done. I want to geo-arbitrage and one day buy that $5M home in Hawaii that costs close to $20M here! I should do it, but I don’t have the money yet :)
There are plenty of lifestyle bloggers who are geo-arbitraging. Some include Amber from EpicSelf.com, Cody from ThrillingHeroics.com, and Johnny from JohnnyFD.com. Pretty fun to follow along.
I keep trying to do the same thing (at least in my mind), but I’m finding it difficult to leave SF for more than a month. Too much opportunity right here!
Sam
I felt rich when the returns from my portfolio first exceeded my annual salary. Nice to make “more from your money” than you “make from your work”!
I started feeling rich just a few years ago. However, it was rich in the emotional sense as opposed to actual net worth. At least a couple times a week I sit back and feel grateful for all I have. I have a good life, a wonderful family, I have found the love of my life, a wonderful job and the perfect place to live. That’s what makes me feel rich.
I haven’t got to the point when I feel rich financially yet – perhaps when my net worth reached $1M and I’ve got enough passive income flowing in to quit my day job and focus on my blog! Or I’ll just want more…we’ll see.
“I firmly believe none of us are maximizing our income potential.” I love this because it is so true. There are times when I’m sitting and watching the third episode of Game of Thrones on Saturday knowing I could be doing something more productive!
Hah! Don’t tell me what’s going on in the latest season. I’m just waiting for DVD and then binging.
I can’t watch TV for long anymore… or if I do, I’m doing some blog maintenance work b/c I feel bad consuming instead of producing. It’s kind of an addiction to always be producing now. Habit I guess.
Related: If You Produce Nothing, How Can You Expect To Make Any Money?
I felt rich when I held my son for the first time. After undergoing IVF, a luxury not many in this world have, it was a blessing to finally hold him.
Wonderful! Was the IVF cost out of pocket or covered by insurance? Do you have a post about this experience? I’d love to read it.
Related: How Much Does IVF And Eastern Medicine Cost?
I’ll start to feel rich when my Debt Demolition project is completed – personally, I think having time to pursue your goals and interests will make me feel rich in ways money never could.
I have never felt financially rich and it is funny you posted this because my Wife and I were discussing this last night while reviewing this years W-2’s. We have doubled our income since we started dating 5 years ago and eliminated a pile of student loan debt but don’t necessarily feel any different. We came to the conclusion that we would probably never feel rich regardless of how much we had. We feel extremely blessed and happy but it is difficult to imagine ever not wanting more. Kind of like in running, once you finally run a 20 minute 5K you instantly set your sights on 19 minutes.
However, I did not consider what it might feel like if we were making our current income in a passive manner. I tend to agree that it would almost seem unfair. I’m still not sure if I would feel rich but it certainly seems possible and worth finding out.
Progress is my one word definition of happiness.
But yeah, after about 6 months of hitting my long-time passive income goal, I finally started to feel rich. Every single dollar earned beyond that became funny money. I think I’ll feel richer if I pay off all my mortgages though.
Enjoy your journey!
Very good points. I remember many moments in life where i felt very very rich.
I can vividly remember the first moment of feeling rich at the age of 16 when I got my first job. All of a sudden, I am no longer dependent on my parents to provide me with the things I want in life (mostly video games at that age).
I remember the first internship I had, being paid $19/hr as an engineering intern. Felt very rich at 20 years old because realistically I was no longer dependent on my parents or anyone else to pay for my life.
I recall the first professional job after college where I was traveling for work 100% of the time, my living expenses was completely paid for. The salary in itself was nothing to rave about, but I didnt have to spend any of my own money! I was able to pay off all of my high interest student loans within a couple of years! That definitely felt rich even though the company provided lifestyle was nothing glamorous or luxurious.
The funny thing is when I was a kid, I imagine how awesome life would be if I can go to to steak houses whenever I want, or go to the movies at night instead of matinee. Now that those little things in life are well within my reach, I feel less financially rich than I have ever have been. But that’s ok because there are a lot of ways to have a fulfilled life beyond just money.
Good points! To be LESS dependent on our parents for money is certain a rich feeling. To take it a step further, to be able to financially provide for your family if needed is an even richer feeling!
Related: How To Get Your Parents To Pay For Everything As An Adult Child
Don’t have kids yet but have been thinking about it for the future. I know there are a few related posts about cost of childcare, education etc. Any posts about the comprehensive cost of raising a child you had written in the past that I might’ve missed? Would be interesting to see your take of cost to provide for a child, and how that plays into being financially independent.
It is easy for me to choose a lifestyle that I can afford and be comfortable with, but I’d imagine it is not so easy to persuade a kid to pursue track and field as a sport vs something more costly such as hockey! Even if I am able to persuade my own kids, morally it feels wrong to encourage hobbies and preferences solely based on financial cost!
I felt rich the first time I could afford to live alone. It was wonderful and lasted for 18 months, before maintenance issues went incredibly south and I had to leave quickly. Now I’m with roommates again for nearly two years and it feels worse than the last time I had roommates. I do believe that they are actually worse roommates than my previous ones I loved, but also that I had adapted to all of that freedom.
I think it depends on how you define rich. To many, to feel rich means that you have enough money to have anything you want. For most people, there is never enough money for that. But if you truly get to a point where your true wants stabilize and you can pay for those forever from your portfolio (and a bit of a cushion for future unknowns), you should feel rich.
The key is to truly get control of your wants to the point where you are really happy with what you have and are currently spending. I feel close to that (and mathematically probably am) but I still have some lingering thoughts on future spending I might want that makes it hard to feel like I’m truly “rich” yet. In other words, I don’t quite have the bit of excess I need to truly feel rich. Soon enough though, the excess should be enough that even my irrational brain has to accept the fact that we have enough.
Great article, Sam! Happy Chinese New Years!
I think for me, I’ll start feeling rich when I don’t have to worry about how much money I need or how much I can spend, but that’s pretty far away and probably dependent on my lifestyle, which will hopefully be a simplistic and non-materialistic one.
I think you’re way ahead of most people on maximizing your earning and passive income potential. Great job! I feel like I’m at the 20% point. Life is comfortable now and the inertia is hard to overcome.
I don’t know when I’ll feel rich. A few years ago, I thought it would be when we have $5 million, but I doubt it now. We’ll probably still feel the same. Definitely felt richer when we were in Thailand, though. The environment makes a huge difference. When other people around you are poorer, you feel a bit richer.
So true about the environment.
Regarding maximizing earnings potential, I think I’m at ~20%. Seriously, I see so much upside it’s crazy. But I’ve been reserved because it feels greedy to want so much more, and I like Stealth Wealth. This is something I will really have to think about this summer once my final severance check gets paid 5 years after I left my job.
So many different ways:
1. When my investment asset to debt ratio exceeded 10 to 1 and my only debt is a mortgage with a fixed 2.75 rate.
2. When we felt that the $ saved for our daughters college education (I don’t include these in my investment assets Total) represented a fair contribution from us and allows them an opportunity to be debt free after college. It will be their call.
3. When I could leave my job and not worry about starving.
4. When my wife, who owns her own CPA firm (run out of our house) started to complain about the tax bill from my passive income!
5. When we could give to charity and not worry.
6. When we help other people for no economic gain.
7. Watching our daughters as teenagers now develop into responsible adults.
8. Taking care of a pet and not worry about the additional cost involved.
9. Not being jealous of others net worth.
10. Learning new ways to make extra income!
Thanks for sharing all these points! I wonder a lot about kids nowadays, and whether there’s no greater pride than the pride we have in our kids becoming responsible, kind citizens. What do you and others with kids think about this?
Happy Chinese New Year, Sam! I’m sure you’re having fun reading through everyone’s different ideas of feeling rich. I think it’s a bit different for everyone.
I don’t know that getting something for nothing makes me feel rich. It certainly makes me happy in the moment, but not necessarily rich. :)
For me, feeling rich is a multi-dimensional experience. I have to feel a sense of overabundance, coupled with good health, and a knowing that I’m making a difference.
Ah, so the question for you is: Do you feel rich? And if so, why or why not? You’re the only person I know who goes to Tony Robbins events and writes about it. So I’m wondering whether it was your need for more to go to his event and spend the big bucks, or whether you know feel richer post his event?
So, yeah, I felt rich prior to attending the Tony Robbin’s events, but afterwards, I definitely felt even richer. Attending gave me even more awareness and a deeper appreciation of what I have monetarily and spiritually. I learned some ways to manage my physiological states and related frame of mind to keep myself in a “rich” state more often… gratitude being the key to feeling truly rich. I think that’s why we feel “richer” in a country or environment that has less resources than our own. It places a frame of reference for us to compare (if even unconsciously). On the flip side, there are multi-millionaires who feel poor because they travel to their billionaire friend’s island and see what they don’t have. It’s all relative and a function of our own perspective. And finally, that’s why health is a critical component of feeling rich. How rich would you feel if you had $300M? What if you only had 30 days to live? Wouldn’t that change your perception of being rich even if your NW hadn’t shifted at all?
Indeed. Early retirement is a hedge against an early death.
One goal everyone should try and achieve is feeling OK if they died tomorrow. Because if they feel OK, then they will feel that they accomplished everything they wanted to accomplish.
I feel rich in a lot of ways..in friends..in family..in opportunities. I feel rich when new information reveals itself. I feel rich knowing I have so many resources from great information that I’m able to verify with great mentors. I felt rich when I didn’t have much at all. There was always a hunger to utilize what I had to elevate myself and those around me. But I’m blessed to have never had a mindset of “lack”.
I felt rich earlier this year when I was looking at my net worth and realized since I was intentionally using my home’s assessed value for property taxes rather than it’s likely sale price, I’m probably a member of the 2 comma club.
I don’t think I’ll feel truly rich though until my passive income exceeds my needs. Once I can work because I want to not because I have to…
Your home example is a “something for nothing example” that I write about in this post. It’s like, voila! You’re actually worth more than you realize!
You can go two ways.
Normal Human Being:
Employee -> save & invest -> never feel rich enough (freedom yes, unlimited money, no)
Entrepreneur -> build company -> exponential growth -> exponential revenue -> can potentially feel rich however fleeting.
Buddha
Dont need anything to feel “rich” or redefine “rich” to not be about money.
Ah yes. Desire is the cause of suffering.
The Four Noble Truths are:
The Truth of Suffering
The Truth of the Cause of Suffering
The Truth of the End of Suffering
The Truth of the Path leading to the End of Suffering
I absolutely agree that as soon as a goal is reached, another goal is set. I found this to be the case with my eduction. As soon as I got one degree, I wanted to achieve the next step up. I always wanted the bigger better deal. I feel like that is also true with finances – especially since so much is riding on our income and financial nest egg. I am still on my FIRE journey but I can definitely see how reaching the goal won’t satiate the desire to continue building wealth. One thing that has been helping me lately is feeling fortunate for all I have and realizing that money is not everything. In fact, if I didn’t have my health, having all the money in the world wouldn’t make me happy. I keep in mind WHY I go to go work each day to build wealth. I do it to reach financial independence. Why? To secure a stable life for my family and give myself options. Options for what? Options to spend more time with my family. That is the root of my desire to build extreme wealth – to have more time to enjoy the people I love. Full stop. I feel fortunate to have had that realization.
Mrs. Mad Money Monster
Excellent end goal. Be also mindful of the journey. The journey really is way more exciting, especially if you have this strong believe you will reach your financial goals. Then you almost trick yourself into just having a lot of fun in the process, because sooner or later, you will get there!
If I could fly private without any consideration for cost I believe I would feel rich. However my relationship with my wife and daughter make me feel richer than any amount of money in the world ever could. As Charlie Sheen says “WINNING”
Flying private is also my one splurge metric to feeling rich. My buddy flies private everywhere on trips less than 5 years. He essentially uses Net Jets and the cost is ~$7,000 an hour. So if you load up a plane of 6-8, it’s “kinda” worth it! Or if you just go with another very rich couple.
We went down to Palm Springs last year in private. It was niiiiiiice. But him a can of tennis balls to pay him back :)
Sam, you have some great ones on this page. I think financially I felt rich when my passive income was covering my living expenditure. My website is dedicated to dividends and I love seeing dividends come in especially when they grow year after year. Then you know you don’t have to sell your time anymore – a great feeling.
That said, nothing beats a loving family, great health, great friends and small, pleasant surprises. I read another blogger once who said he arranged for small gifts to be sent to him many months in advance. They were so small that he’d forget about them but when they showed up they gave him a big lift as it was such a surprise. Better yet, doing that for other people (especially your spouse) works a treat!
Good advice! Let me see where I can do so. There’s some website called “Good Boyfriend” or something where you can do just that, give regularly monthly gifts and never miss a special occasion.
I don’t feel rich from day to day, but I do fee rich compared to where I came from.
It’s easy to get caught up in the pursuit of wealth building, where one milestone begets yet another milestone.
That’s why I make a point to constantly remind myself of where I came from. Like what I shared on your blog a few years ago:
Guest Post On Financial Samurai
Those humble beginning’s help provide context around where I am today vs. where I came from, which are worlds apart.
I feel rich compared to the way I grew up. Shoot, I feel rich compared to where I was just 2 years ago.
I think if you want to feel rich you need some kind of benchmark of where you were to compare too.
I feel lucky and happy when I receive something for nothing or a good deal. Some of the things on the list have happened to me (most recent car accident) and I’ve felt the same way – lucky and happy.
As for feeling rich with vast sums of money, I think that’s impossible. If you fixate only on numbers, you end up developing a hollowness that’s never filled; the end of the rainbow that’s never found.
This I feel is because money in itself is empty. We don’t/can’t take pleasure in money itself but in the things it can buy. We assign personal worth to what we buy. For some, it’s consumables, for others (I think most of the people on this blog), its financial independence. Consumables deliver joy whereas financial independence gives people the deed to their lives.
I think I will feel rich when I am living life on my terms; when I own my life. I think that the day I don’t fear losing my job and ending up unemployed in a country with an unemployment rate >25% is most likely the day I will feel rich.
I think I’ve seen it once – feeling rich. It’s not a smug, throw-my-money-in-your-face feeling; it’s a happy, quiet confidence to bow out with grace and dignity, knowing they haven’t got the best of you.
“I think I will feel rich when I am living life on my terms; when I own my life. I think that the day I don’t fear losing my job and ending up unemployed in a country with an unemployment rate >25% is most likely the day I will feel rich.”
This is EXACTLY what I was wondering during my last year of work. And I can tell you that work is MUCH MORE PLEASURABLE when you don’t have to work. The office politics, back biting, etc don’t bother you as much when you know you can just see ya later.
I took 7 weeks off my last full year b/c I started to not care. I had all my rollover days and vacation days as an ED, and I took them! It felt so good while my colleagues looked on in envy and dismay :)
I felt very rich last weekend when I gave a woman I volunteer with a ride because she got in an argument with the owner of the car she was borrowing so he told her she couldn’t drive it. She was telling me about her professional plans. They’re on hold right now as she scrapes together $200 to take class and pay for her certification. She’s excited at the prospect of making $29k per year.
I think feeling rich is usually in comparison to those around you.
I expect to feel objectively rich when I pay off my house. There is something about owning completely the roof over your head and the car you drive. After that all you really need is enough money for food. To me my portfolio is just numbers. It’s all just funny money until I turn it into something like a house/car/food. A stock market crash could take a huge chunk of it. So having real, tangible, things that I value make me feel rich.
Nice job helping the woman out! I remember helping a blind woman cross the street in busy downtown by having her hold onto my arm. That felt super rewarding as well.
Unfortunately, I don’t think you’ll feel rich when you pay off your house. You’ll feel satisfied, but not rich. I did so for one property, and have spoken to others who have as well. Weird things like: I got so much sunk in my house and maybe I could have made more investing, starts sinking in.
Wealth is a relative term and everyone will have his or her own definition. Some people will never feel that they have enough despite having millions or billions sitting in their bank account. I think having seen what it’s like in developed countries gave you a different perspective on what it means to be rich. It’s not a predefined amount, rather it’s how you feel. I’d love to have our passive income covering 160% of our expenses one day.
Getting something for nothing is a great way to put it. When I negotiated a severance to leave my job I totally felt like I was winning and that made me feel rich. When I was called back to work for that company as a consultant part-time doing easy work I felt like I was winning again.
A funny way that I feel rich is walking down the toy aisle at Target once in a while. I’ll look at Barbies and fun things I used to love like Playdoh that I remember begging for as a kid because I didn’t have any money to buy toys on my own and my parents had restricted incomes. It’s a funny way I feel rich and reminisce because I could easily buy those types of toys now. They seem so “cheap” now as an adult versus as a kid because I have my own income streams.
Double winning baby! Ah, so sweet it was to get much higher pay after they asked you back to consult part-time. More money, less work, no stress. Awesome!
So true about nostalgic toys. Can’t wait for Comic Con to come back so I can’t complete my 1980s He-Man collection for the tub. Haha.
I often feel rich while talking to people my age who are buried in student loans. Just by having busted my butt in college and working my way through without loans I feel like I’m already miles ahead of the average.
I also felt rich last year, which was the first year my stock market gains were greater than my yearly spending. Hopefully that trend continues into the future and requires a lesser % gains each year to achieve as my nest egg grows!
The first time I felt rich was when I was riding a bus from the airport in Hanoi to downtown. Those were conditions I didn’t really expect to see. It makes you very appreciative of what you have.
Check out New Delhi and Agra next!
I like that Sam “C Student and now live an “A” lifestyle”
Abit of luck + Abit of smarts + learn to spot that opportunity then hustle!
I feel wealthy and blessed often- fortunate for having my health, family, an interesting career and the opportunity to help others. When I travel to poorer parts of the world I normally adjust my spending down to that of a local so I don’t feel rich- I do this too when I go to wealthier countries so that helps to minimize the sticker shock.
I realize that I’ll live a comfortable life but still need to work a lot harder to become ‘rich’ – that is always a moving target so in the end having satisfaction with what you have is the key to happiness in life. The journey is more important than the destination so keeping awareness and enjoyment as we go through is the key.
The thing of it is, feeling rich has nothing to do with money.
While I’m not financially independent yet, I’ve recently felt something similar when I went down to Mexico a few weeks ago. I hadn’t even checked the exchange rate until I was already down there (its 20.9 : 1 now). I couldn’t believe it…a few years ago when I went to Cancun I could have sworn the rate was more like 13 or 14!
You’re missing the point being Rich has very little to do with money rich is a state of mind and attitude. money certainly has a place in having the rich State of Mind there’s many studies out there that somewhere around $100,000 and up there is no additional happiness however I will argue and someone who has no reason to offer a compliment tells you your children are the most well-behaved she’s ever seen that’s being rich
Insightful. Any tips on how I can get readers to read the entire article besides just the title? Always looking to improve delivery and communication skills. Thanks!
Perspective certainly is important. We didn’t go on vacations while growing up so anytime I’m on a trip somewhere I feel rich. I’ve actually thought of how fortunate I am while looking out at a beautiful view or going on our annual birthdays ski trip with good friends…which we happen to be on now. My co-birthday buddy made a nice dinner speech last night. He was saying that many years ago he had went on a solo ski trip and while at dinner he looked over at another table and saw what a great time these group of friends were having and thought to himself “Why can’t I have that?” We’ve been doing this annual trip for a few years now. I’d say that we all feel rich from the friendships we have.
LOVE couples retreats! I had one for the first time with a good friend and his gf, and another couple I just met and had A BLAST! Took a jet down to Palm Springs, rented a house, had our meal together, watched the Indian Wells tennis tourney. So fun.
Vacationing with great friends = super happiness. At that must in turn = feeling super rich.
Yes, renting a house together is a must! When it comes to good friends it can only deepen the bond. There are so many opportunities for shenanigans, fun, deep and light-hearted conversations.
Great post! To me, feeling rich is not about having or making money, but feeling secure. The interesting point is making more money probably helps you feel secure, but it doesn’t have to. Rich is a mindset, not a quantitative checklist.
Very nice post. I enjoyed this read. As you, I recently left my job and felt that nervous excitement about my future. I really enjoy your website. BTW, I grew up near Noriega St. so I feel like your are my neighbor.
When a person realizes the most valuable and cherished things in life are free. Money or wealth cannot buy cherished experiences or specific states of mind…
Great post. I believe everyone is unique in “what makes them feel rich”. I’d say financial freedom is the biggest point on feeling rich. Not necessarily retiring, but the ability to do so if you wanted to. That’s why I was motivated to start my own site (www.freedomlifeplanning.com) to help people plan for all their financial goals, not just one.
In the end I’d say meeting your financial goals would be what I consider, being rich.
For me – I’ve felt rich when I can pay for large unexpected expenses (like broken HVACs) without really suffering in any way and free from worry of being able to not pay other bills.
Ha ha, what a coincidence that we both decided to write about Malaysia! So cool that you grew up there!
It’s true that the hedonic treadmill causes our happiness to level out, no matter how much money you make. That’s why one study indicated the ideal income in North America was $70K/year. After that, you don’t get any more happiness, just more stress.
I met this one guy in Cambodia who said “I’m richer than Donald Trump.” In his mind, even though DT has way more money, he has a loving family, a fulfilling life, and he’s able to retire to a country where the cost of living is a tiny fraction what it is back in the UK. He’s the happiest person I’ve ever met and says he doesn’t need anything else in his life.
Once you have everything you need to be happy (friends, family, living a fulfilling life), no additional money will make you feel richer. You are already rich.
The $70K/year study was done by researchers who make ~$70K/year. Totally biased! :)
I think the number tops out at about $200,000 for individuals, $250 – $300,000 for couples, at least here in America. But probably mostly everywhere. Right under the tax assault, and enough to provide for a family of four very comfortably.
When I was a young punk, I worked with an old guy who kept saying, “The moment you do more than is required of you, you are no longer a slave, you are free.” I always gave him the stink eye because I figured he just wanted me to do his work.
He did have a point that rubbed a raw spot on my young ego, though, and it stayed with me all these years. About the only way someone can “require” something of you is if you owe them something that gives them control. And that feels a whole lot like some version of slavery.
So, when will I feel rich? It’s when I won’t have to submit to other people’s demands to live the life I want. That means hitting the passive income goal that covers expenses + risk, and it will be some years before I get there, but I’m on the way and I ain’t stopping! Oh, and I plan to have plenty of fun while I’m at it. I realize that makes the path longer, but I’ve decided dying with the most toys is lame – I want to die with the best stories and friends to remember them. :-)
Wise old guy! EVERYBODY needs to listen to their elders, because our elders have simply gone through what we will go through. It’s a no brainer to listen!
I finally accepted a new job in 2017 after five years of unemployment. And I plan to give more time than is required b/c I WANT to get involved more in the community.
Don’t have too much fun now you hear?!
Hi Sam-
I think if I had about 400K/year in passive income I would feel rich and financially independent/free. It’s enough to really be able to spend without worrying and be fine if it went down for some reason. The problem is how incredibly tough it is to get to that point and living a life that feels like you’re striving for something that is several decades away and possibly unachievable. How much sacrifice is worth it to get to that feeling and if you live extremely frugal for decades to get to that point, is it worth it?
I am relatively young and have a lot more money than most of my peers – but I feel far from rich because I am nowhere even close to 400k/year in passive income.
All you need is $10,000,000 generating 4%, and you’re there!
I felt rich went I went and lived in Honduras. I made 2x what every local teacher made at the school, and 1.25x what most the other teachers made. I paid so much less for everything as well, that I always felt like I had it good. When housing, electric, water, internet, and food costed only 1/4 of what I needed base (not including any extras like going out to eat, me purchasing a motorcycle that I didn’t need) I realized then how good I had it.
It’s not about money. I felt rich when I was driving home from my new cottage on a private lake that I refinanced my almost-paid-off home to buy (after working for years to pay off the mortgage) and on which I have spent WAY too much money fixing it up to become a rental and which probably means that I can’t retire just yet and need to keep working for awhile to pay for it. Yet, I felt incredibly lucky, blessed – and rich – to have two homes that I love, a job that supports my “fix-it-up” hobby and helps me support my family, and time to do the things I want to do IF I keep an eye on my priorities.
I believe we all have “a comfort group”–a socioeconomic group of people where we feel the most comfortable and can easily be ourselves. I don’t think you can easily switch groups and be content.
Mine? Middle to upper middle class — those with savings, modest cars, updated clean houses, who are family oriented and serve community actively. I was previously married to a local real estate tycoon. We hobnobbed with the local rich constantly, and I always felt uneasy. I was raised by a father who escaped Europe with his mother at the age of 9, so any display of extreme wealth seems absurd and self-indulgent. The obvious rich just seem insecure to me.
I started feeling rich when my wife and I hit an income bracket where the government now takes a substantial portion of our income yet people are always demanding that tax laws change so the government can take more.
I am more interested in feeling “wealthy” over rich; where I can sit back and enjoy passive income and all the tax benefits that come with NOT working for a living.
Really? I started feeling LESS rich once I hit that income bracket where taxes started ratcheting higher. As a result, I left my job to make 80% less and it felt AMAZING not to have to pay those taxes anymore. The freedom was priceless.
Related: Going John Galt And Protesting Government Waste
It’s amazing how little things can change your perspective. I tend to feel most rich when I’m enjoying the priceless moments, like a walk on a beautiful snowy day or creating a precious memory with people you love.
I still totally feel trapped in the day to day. I would feel rich if I was able to live without working even if I don’t have enough to ball out. My goal in life’s in freedom and dynamic changes in my life. I’d like to live in different places and have new experiences with someone I get along with. Being truly rich isn’t having the newer BMW or a fancy handbag. Those wear off. Experiences and feelings I think is where it’s at. Perhaps, I’m confusing being rich with being happy but that’s where I think you took this post Sam.
Gotta step outside the SF Bay Area. Go to the woods, fly to an poorer country. You will feel rich! It’s becoming too much of a grind living in SF. It’s like NYC now
But happiness is really doing what you want, when you want.
Getting rich is not easy and maintaining the same is all the more difficult. The best way to accumulate wealth is not to spend on stupid stuff. Don’t invest in casino and lottery tickets because only few people make money out of it. Invest money instead of throwing it away.
Being rich =freedom
A Taxi driver takes off whenever he wants and visits his family in his country of origin for about 3 months every year. =pretty rich.
A hot shot lawyer works crazy hours, wont get more than 2 weeks off a year and that too when the companies allows, and days off are a no no. He does make a handsome chunk of money= Corporate slave.
I started to feel rich when I started paying less attention to what people had around me and reading statistics on world income levels and net worth. To be in the top 1% of median household income in the world you only need to make $35,000 a year. Now I realize that $35,000 a year is not going to provide a luxurious lifestyle but it does give perspective on the 99% that are living off this amount or less in the world and how good we truly have it here in America. Many of us here make 10 times this median income a year and have multi million dollar net worths. We all should feel very rich !!
I think passive income to cover your lifestyle is the true definition of rich to me. The day you are free to not have to work to cover your bills, but to only work for pleasure.
To step outside on your property and feel a great sense of peace. Also to be rich in experiences of travel, family, and friends.
It’s a long road there, but it is possible!
We were approaching financial independence but we didn’t really feel financially rich.
Part of it was because we were still working our day jobs for another 6 to 12 months.
Part of it was because all the money in the 401ks and IRAs was just numbers on a statement we saw once a year. It didn’t seem like “real money”.
We realized we were rich when we decided to buy a cool old house for $100,000 and pump up to another $150,000 into it to fix it up — just because we liked the house and it would be fun.
Our plan was to sell it once it was restored and on the historical registry, but if we didn’t make that $250,000 back it wouldn’t really hurt us financially all that much.
That’s when it registered that we really were rich.
(Of course, we not only plan to make that money back, we’re actively working to make money on the deal. We may be rich and nice enough to save a house that people in our community like, but we’re not crazy!)
I feel rich whenever I look up statistics on the median income and net worth of all persons living in the United States. Living in the SF bay area and working in a field that constantly exposes me to very high net worth individuals causes me to forget that I am better off than 98 percent of the population.