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. In other words, due to hedonic adaptation, it’s impossible to ever permanently feel rich!
We all know that making a top 1% income means you are technically rich. But I’ve noticed on my path to financial freedom there were several times when I felt incredibly rich and money wasn’t the dominant reason. Maybe you can share some of the times you felt rich as well.
When Do You Finally Feel Rich?
Looking back, here are some examples when I finally felt rich. Each moment of richness felt a little different and lasted for different lengths of time. I think these type of moments will make you feel rich as well.
1) When you visit a lower-cost country.
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 or having 4X more does!
In addition to the increased purchasing power aspect, it felt particularly moving to visit my old house. It was overgrown with weeds. All the rich memories came rushing back of me skateboarding in my driveway and inviting friends over for fun.
It also felt good to realize I didn’t fall through the cracks. Back in middle school, 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.
Unfortunately, within a couple weeks after returning to the United States, I no longer felt richer than normal. I can completely understand the lure of being a digital nomad in a place like Malaysia, Thailand, or Vietnam. In a different life, being a digital nomad is exactly what I would have been.
2) When you finally hit your passive income target.
It took 17 years to achieve my passive income target of $200,000. When I finally got there, I felt rich. There was little fear of running out of money anymore. Growing up in developing countries and experiencing many boom bust cycles working in finance always makes me a little paranoid about losing everything.
Passive income feels like free money because you’re not doing much to earn it. In a way, you almost feel guilty, even though you spent a tremendous amount of time building your passive income portfolio.
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. Once it can, you will feel rich.
Another reason why you will feel rich once your passive income is high enough is because you can finally freely speak your mind. You don’t have to suppress your true opinions about anything. You’re less concerned about displeasing somebody. You’re also not afraid to lose your job any longer.
Curiously, once we had our son in 2017, $200,000 no longer felt like enough. With the cost of health care, housing, and college education rising far quicker than inflation, I felt like I needed to generate more passive income. There has to be some type of biological trigger that switches on once people have a child.
With two children, our passive income target is now $300,000. We’ll make it work on less. However, if I want to feel rich, I require at least a 20% buffer over our expenses.
3) When a new income stream comes out of nowhere.
None of us are maximizing our income potential. If we could make a maximum of $100 a month, I think most of us are really make only an average of $30 a month. 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 all cancer already.
One of my issues for years was not caring about revenue maximization on Financial Samurai. I already had enough passive income. Therefore, I wasn’t constantly hustling to find new business deals. When some of my peers would hire a team of writers to write affiliate posts, I was busy focusing on writing about fun topics that made little-to-no money.
But in 2018, I decided to become more entrepreneurial because I received poor feedback on a post I spent a lot of time on. I figured, if people didn’t really care after reaching my 10-year anniversary, then I might as well start being selfish for myself. Besides, I had a baby boy to take care of. We also planned to have another child, who came at the end of 2019. Hooray!
Today, I feel rich whenever a new income opportunity appears on Financial Samurai when I’m not looking. I’m trying my best to be more entrepreneurial until we reach herd immunity. But I’ve gone from running through the finish line to walking. For example, I’ve been so busy doing other things that I forgot to send a large invoice to a vendor for over a month. The vendor had to remind me to send an invoice before I could get paid.
4) When you don’t sell assets at suboptimal times.
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 $1.4 – $1.5 million. I refused and took it off the market until mid-2017.
My tenants had given me their 30-day notice. 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 $2.6 million! After much back and forth, I was able to get the prospective buyer up by $140,000. Just by waiting five years and living my life I was able to get much more.
Not selling an asset at a bad time will make you feel richer as time goes on. The reason why is because the compound returns grow even greater. At the same time, selling at an opportune time makes you feel poorer and poorer.
The only way to counteract the bad feeling of selling at an inopportune time is if you reinvested the proceeds in other appreciating assets. For the first 6-12 months, I felt a little melancholy having sold a home I had owned for almost 13 years. I had dreamed of starting a family in the home. But thankfully, the reinvested proceeds provided a positive return, so it worked out.
Holding On To Something You Created
Perhaps more important than not selling an asset you did not build is not selling an asset you did build. I feel rich for not selling Financial Samurai back in 2018. I was very tempted, but I wanted to reach the 10-year mark in 2019 before doing anything drastic. The site has since collected 2.5 years more of revenue and valuations are higher.
In a low interest rate environment, you want to hang onto your income-producing assets for dear life. Any business that can operate unimpeded during a pandemic has also become more valuable. If you sell, you will likely be filled with regret.
Further, Financial Samurai gave me something meaningful to do while I was stuck at home during the pandemic. I’m focused on keeping the site going so my kids can have a repository of thoughts about their dad when they are older.
5) When something comes true after trying for so long.
The longer you spend working on something, the richer you will feel once you succeed.
This rich feeling is why you don’t want to just give your children everything. It’s better to make them earn their success. Please don’t envy the person who inherits everything. Feel bad for them instead.
Here are some good examples that take a long time to achieve, but once you do, you will feel rich:
- Studying for the MCAT, LSAT, Bar Exam, CFA, and passing.
- Writing a book for years and finally getting it published
- Working on building a relationship with a client for a year and the client finally agrees to do business
- Coaching your players for three years and finally winning a championship
- Dating for eight years and finally finding the one
- Trying to have children for years and finally giving birth to your first child
- Practicing for hours after school and finally making the team
- Diligently saving and investing for years until you finally come up with a down payment for a house without any help from your parents
Delaying gratification and demonstrating grit go hand-in-hand.
6) When You’re Surrounded By Loved Ones
Friends and family are everything. Having friends to joke around with brings so much joy. Having family that supports you in your endeavors feels priceless. We recognize this importance now more than ever before.
As a father of two young children, I feel incredibly rich. It took years to conceive our son. Then to have a daughter a couple years later felt like a miracle as older parents. Every morning I wake up excited to give my children a hug.
I wish someone told me in my 20s and early 30s that having children would provide so much love. If I had been told, I would have tried to have children at least five years sooner and not been so focused on trying to achieve financial independence.
If we could not have children, then we would spend more time nurturing friendships and adopt. Great relationships mean so much more than having a lot of money.
7) When You Become A Time Billionaire
A time billionaire is someone who has full mastery of his or her time. There’s no greater feeling of wealth than being able to do whatever you want, whenever you want.
Even after my income plummeted by 80% once I left my day job in 2012, I felt richer. Sure, the unknown was a little scary. But I was excited to have taken the leap of faith while I was still relatively young.
Being able to sit in the park and read a book on a Wednesday afternoon is nice. Being able to conquer your FOMO that you should be out there hustling for more money is truly rich.
Once you experience being a time billionaire, you will no longer be willing to grind as hard at work or at building a business or climbing up the corporate ladder. Some would saying being a time billionaire is even more valuable than being a financial billionaire.
8) When You Wake Up Each Morning Without Any Ailments
One of the biggest epiphanies I had after leaving work was that I had internalized all my chronic pain. I just lived through my TMJ, teeth grinding, allergies, sciatica, plantar fasciitis, lower back pain, and tennis elbow for over a decade. Then, about a year after I retired from finance, practically all my chronic pain went away!
Some of us work in such stressful occupations that we forget what living a pain-free life feels like. I remember seeing my first gray hairs at 33. The dam had finally broke, I had thought to myself. But 10 years later, the gray hairs went back into hibernation and have stayed there, probably because I’m less stressed on average each day. The health benefits of early retirement are priceless.
Unfortunately, I’ve noticed more and more random physical issues that are nagging me as I’ve gotten older. If it’s not a sore lower back, it’s a rickety shoulder, or an itchy ear.
Most of these problems have to do with me playing sports too often. Now I wonder whether being unathletic is better for living longer and having a more comfortable life. At the extreme, you hear about major health problems to NFL players.
Cherish your health and your youth folks. You not only want to have full control over your time. You want to have full control over your time while you are healthy. This means travel and explore while you can. Have the time of your life in your 20s and 30s. Health issues will inevitably pop up as you get older.
9) When You Learn Something Meaningful For Free
I love the internet because you can learn practically anything you want for free. You just have to focus your time reading and watching sites that are most helpful.
And because I love learning things for free on the internet, it’s only right to share on Financial Samurai what I’ve learned along my journey as well.
It feels good to help people on personal finance matters without a paywall. Money consistently ranks as a top 1 or 2 stressor in people’s lives. If I can help strangers solve difficult problems or give readers the courage to act, it feels really satisfying.
2020 was a difficult year for millions of people. 2021 so far isn’t much easier. During the darkest times, it felt good to regularly publish posts and write more nuanced newsletters to help folks through. I thought about creating a paid newsletter, but I think it’s awesome to learn something for free. That makes me feel rich and I hope it makes you feel rich too.
10) When You Buy Something At An Opportune Time
Now that over a year has passed since the start of the pandemic, I feel rich because things have recovered so much. Let’s never forget how dicey things were between March – June 2020! It wasn’t just our investments taking a dive, but our day-to-day lives as well. To be able to sit here today with so many asset classes at record-highs is a miracle.
Further, many of us were able to buy some stocks near the bottom. After writing, How To Predict A Stock Market Bottom Like Nostradamus on March 18, 2020, I decided to invest around $250,000 in various stocks and indices. Although I didn’t hold onto all of my investments until today, I still made some money.
Found A New Home
During the stock market meltdown, I also did an analysis on how real estate gets impacted by a decline in stocks at various levels of decline. My conclusion was to buy real estate when the S&P 500 was down between 15% – 20% for various reasons I highlighted in the post.
As fate would have it, one of my favorite homes came to market in early-April 2020, when the S&P 500 was down 15% – 17%! My son and I had walked by the home over 50 times during our neighborhood walks. Every time we walked by, he would always run up and marvel at the double wide garage door. He’d also get a kick out of playing with the springy hose that hung off the fence.
The lockdowns had just started in April and I couldn’t believe they had decided to list the house then. Public open houses were shut down and many prospective homebuyers were too nervous or unmotivated to arrange private showings. One thing led to another and I managed to get a deal. Maybe I’ll write about the specifics one day.
Buying a more comfortable home during the summer of 2020 makes me feel rich. As a father, my #1 responsibility is to take care of my family and provide them the best life possible. With no more preschool for 12+ months, the extra space made a huge difference in my son’s well-being and for all of ours as well. Just seeing my son run around in his new play area makes me feel so happy to have taken the investment risk.
If I were to try and buy the home today, it would be difficult because demand is so much greater. People are wealthier and more emboldened due to the vaccine rollout. Meanwhile, mortgage rates are still lower than they were before the start of the pandemic.
When it comes to buying a house, I feel rich for providing for my family, not because it may have appreciate.
Feeling Lucky Makes You Feel Rich
The common theme to feeling rich is when you start feeling lucky. We can all work very hard to try and get rich. However, I truly believe luck is the main reason why some people are able to amass more wealth than others. They either were lucky to meet the right people, have the right parents, or be in the right place at the right time.
Spend some time going through your lucky breaks. The more you are aware of your luck, the richer you will feel. Luck makes you feel rich because it makes you feel like you got something for free. That or luck makes you feel like you got something you didn’t fully deserve.
A couple of my other lucky breaks include:
- Getting into The College of William & Mary and meeting my wife my senior year. If I had attended the University of Virginia or had been one year older, I never would have met her.
- Getting handed the phone by my VP. On the line was a recruiter who ended up getting me a job at a competitor three months before I was to be laid off. That phone call brought me to San Francisco in 2001.
Of course, I’ve also had plenty of bad luck and failures along the way. However, by focusing on the lucky breaks, I feel richer.
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 grandchildren.
- If you were diagnosed with a terminal disease and are still living past your due date.
- If you found the love of your life early.
- 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 who now lives an A-lifestyle.
- When your investments return more than your income.
- When you have children.
- When your children achieve something you did not expect.
- When you come out of a global pandemic richer and with your health intact.
If you focus only on an absolute dollar amount, you’ll never truly feel rich. The reason is because there is always someone with more money than you. I have friends who are worth over $100 million who keep grinding because some of their old peers are now worth over $1 billion. Can you imagine?
Therefore, if you can focus on your lucky breaks and the good fortune you are currently experiencing, you will feel like the richest person in the world.
Feeling Rich, Staying Rich
One of the best ways to feel rich and stay rich is to track your net worth with Personal Capital. I’ve been using Personal Capital’s free financial tools to optimize my wealth since 2012. It’s the best free money management tool on the web. Just link up all your financial accounts to measure your cash flow, x-ray your portfolio for excessive fees, calculate your retirement income, and more.
Get you finances right the first time around. There’s no rewind button in life. Once you do, you can focus on the other things that truly matter in your life.
Personal Capital’s Free Retirement Planner
Invest In Real Estate To Feel Rich
I’ve got to say, I feel rich investing in real estate. It feels great to own a tangible asset you can see and touch. Real estate is a core asset class that has proven to build long-term wealth for Americans. Real estate is a tangible asset that provides utility and a steady stream of income.
Given interest rates have come way down, the value of rental income has gone way up. It now takes a lot more capital to generate the same amount of risk-adjusted income. Yet, real estate prices have not reflected this reality yet, hence the opportunity.
Take a look at my two favorite real estate crowdfunding platforms:
Fundrise: A way for all investors to diversify into real estate through private eFunds and eREITs. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. During times of volatility, Fundrise investments tend to outperform.
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.
Both platforms are free to sign up and explore.
I’ve personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000.
Related posts:
How To Feel Rich Even If You Can’t Technically Get Rich
What Income Level Is Considered Rich
Readers, when do you feel rich? What is the one common thing that ties feeling rich together? What are some recent examples that made you feel like the richest person in the world?
Feeling rich is relative. I have a neighbor who runs out and toys to one up others on the street when he hears they buy something. I think it is the feeling that you bought that but I bought something a little more expensive that makes some people feel rich.
Thanks for this post, Sam. I feel richest when I am hugging my 7 year old!
I’ll work hard to achieve FI and hope to reverse my white/gray hairs like you!
Stress def plays a factor in having white hair. In the past year, my stress skyrocketed and I spurted out 20 white strands.
I feel very fortunate and rich in life. Worked very hard and for many years. Spouse never worked. Spent as much time with family as i could. Of course long hours and travel meant less than i would have liked. Travelled the world. Helped build my company into a large successful one. Built a net worth 10x what i would have imagined. About ready to call it quits. It’s been a great journey. Grateful to be an American. Peace to all.
I feel rich because I’m retiring from my current job at 59 years old, and building a new house in Arizona. My wife is younger and will work for a few more years, so healthcare will be covered. I’m also taking out a 30 year mortgage at 2.75%. I could pay the remaining balance, but I feel I can earn better than 2.75% investing those funds. From a cash flow perspective , my wife and I both have pensions and SS. I probably will only have to take about 2-3% annually from retirement accounts. But, what really makes me feel rich is that I have two grandchildren and that I’m able to contribute a significant amount for their future college costs. I’m also much closer to them by living in Arizona, they live in California, and we’re closer to my daughter, who also lives in Phoenix. Not fretting much about the cost of building a new home-about 600k-is nice. And added fact- my cost is pretty much fixed, and homes in Phoenix are expected to appreciate about 16% this year. I’ll take that any day of the week, and twice on Sunday! Really enjoy your articles Sam!
Great post, Sam. I’ve been recently practicing being more grateful for what I have and where I live.
When I first moved to CA, boy did I feel poor. I still feel poor here, but I’m grateful. I wouldn’t want to live anywhere else (yet).
I feel rich when I go back to where I grew up. The median household income in my hometown hovers around $40k annually. Quite humbling as I’ve gotten older – in a good way.
This is another very well thought out article. For the most part, I look at US wealth/income data, my peers, my friends, my middle class mindset expectations, and even Financial Samurai, and I assess how rich I am. However, most people’s sense of feeling rich is far more emotional and complex, and you’ve covered a lot of ground.
I believe there is a difference between feeling financially secure vs. feeling rich. Despite growing up middle class, I’ve always felt financially secure (well-paid with good job prospects since college graduation). It’s been a steady march upward in income and wealth.
However, I did not feel rich until I was laid off in my early 40s. With my severance and modest options pay out, I could not work for 6 to 18 months. With my wife’s employment, I could not work indefinitely and still maintain our frugal but upper middle class lifestyle. It was a wonderful feeling of calm and optimism as I saw my other colleagues in panic, desperate to find any employment, many taking demotions and pay cuts.
I took the semi-retirement path devoting 10 to 20 hours each week to real estate investing. If I felt rich with X in net worth when I was laid off, then I certainly am ecstatic having achieved 4X net worth over 8 years working far fewer hours than I ever have in my adult life.
That has not been the case for my wife who who shares a very similar background with me. She has had a hard time with feeling financially secure or rich regardless of the numbers. With 4X of wealth, intellectually, she can no longer dispute whether we are rich. However, she still doesn’t feel rich, and now I understand this is a problem that more money cannot solve. I want her to feel comfortable with retiring and feeling rich and/or financially secure. A steady paycheck makes her feel financially secure. Short of winning a large lottery, I’m not sure how she will ever feel rich.
She is closer in mindset to retiring now, but I think that is more a function of age rather than money. As we approach 50, there are simply more people in our social network retiring or thinking about it. However, 8 years ago, it was mostly me reading some delusional guy’s blog who believed he was some sort of Financial Samurai. Think about this conversation. “Hey honey, this guy on the Internet thinks it’s possible for us to retire in our early 40s, maybe even in our 30s.”
Making it to the highest marginal tax bracket and realizing that the Federal Married Filing Jointly bracket amounts are not 2x that of the Single person, which is quite discriminatory. It makes you feel rich and poor at the same time.
Your newsletter cracked me up, Sam. Made me think of the movie Moneyball. Maybe give it a watch before you draft your next team. Hahaha! Also, I listened to an interesting podcast this morning by the brilliant Dr. Andrew Huberman. He talked about anticipation and its effect on dopamine. Maybe it’s the dream, the journey that makes us happy, and not necessarily the result.
Great perspective, Kristie, regarding the “journey that makes us happy.” I’d like to modify it to the journey that brings us joy. Joy is more of a state of mind vs. happiness. To be happy, you need to do something. If you don’t do what’s required, you’ll not be happy. Joy is more of a constant, sort of like the journey. In Maslow’s Hierarchy of Needs, Self Actualization is unattainable, but we’re always striving for it. It’s the striving for Self Actualization that gives us purpose and joy.
Great post! They key to a good life is fulfilling your Soul Purpose while improving your finances, health, and relationships. Only then can you reach your full potential. All the money in the world can’t buy you a meaningful life and the more you make, the more you need to feel ‘secure’. After all, wealth can be swept away quickly by bear markets and bad business deals.
I began to feel rich the day I decided that I had enough. For me, that happened to be three years ago. I hadn’t hit an arbitrary number in my bank account (nor a mathematically-derived multiple of any figure). And I was well short of what I had envisioned my net worth being before I felt I had enough. But it hit me that I already had enough, and that I would always have enough, regardless of what the future held.
I had to shift my frame of mind in order to gain a new peace of mind. For two decades, I surrounded myself with books, websites, documentaries, like-minded people, and a relentless ambition focused on financial independence. Even though I knew there was more to happiness than money, I was consciously and subconsciously telling myself that more money would provide more peace of mind (which was my primary motivation), and I was therefore always striving for more.
The problem with that mindset is that there are too many variables you can’t control, and thus arises the desire for more. Not for more materialistic goods, but rather for more peace of mind.
I knew material possessions wouldn’t make me any happier. I sense most of us on this website have reached that conclusion by now. But I had fallen into the trap of thinking financial security would give me the peace of mind I was seeking. And frankly, that was even worse. Because without the money I thought I needed, it wasn’t a new Porsche or Rolex I was missing out on, but rather contentment.
With $100 in the bank, you worry about how you’re going to buy food.
With $1,000 in the bank, you worry about how you’re going to pay rent this month.
With $10,000 in the bank, you worry about how you’re going to put a down payment on a house.
With $100,000 in the bank, you worry that you only have one or two year’s worth of living expenses saved.
With $1,000,000 in the bank, you worry about the stock market crashing, or the real estate market plummeting. You worry your income is decent but your passive income isn’t what you want it to be. You worry that a million dollars isn’t what it used to be.
With $10,000,000 in the bank, you worry about losing your fortune you’ve worked so hard to build. You may lose a million dollars in a single month in the market. The thought terrifies you. Your expenses have grown with your wealth. Your cushion isn’t what you thought it would be when you factor those expenses in. You don’t even feel like you live extravagantly, and yet you feel like you may not have enough if any tides turn.
With $1,000,000,000 in the bank, you worry about your empire. You worry about your competitors. You worry about monopoly lawsuits. You worry about what the media is saying about you. You worry about your reputation. You worry about where you sit on the list of the richest people in the world. You worry about how much you should or shouldn’t leave to your children. You worry if you have any real friends, or if everyone you know is simply looking for a piece of your fortune.
It’s no coincidence that as the money grows in each example, the length of worries grows too. And the reality is, each of these bank account figures can produce the same amount of stress on your body if you allow them to.
When I decided I had “enough” three years ago, I didn’t stop working. I just shifted my perspective to find peace of mind in knowing that I would always have the work ethic and the ability to make money. Practically over night, I suddenly saw money as abundant (certainly the US) and something easy to attain, and not something worth worrying about.
Essentially, I had spent my life up to that point knowing that money couldn’t buy happiness, but assuming it could buy peace of mind. What I learned was that peace of mind was already within me, and that no amount of money in the bank would ever provide me with what I already possessed but simply couldn’t see.
Sorry for the lengthy comment. Just thought it’d be worth it if it could help anyone dealing with a similar struggle.
Wonderful respective!
One of the problems I discovered once I adopted the money is abundance mindset, is that there were so many more opportunities I had more TEMPTATION to try and earn more money. So many low-hanging fruits. You ever feel this way?
Can you share exactly how you found contentment or share some tips on how you found contentment? I found that getting out of a wealthy neighborhood to a more middle-class neighborhood helped. Also, ignoring group chats with people very focused on money has helped.
I want to go to Hawaii partially b/c I want to be surrounded by less intense folks.
Thanks, Sam. I completely understand the temptation for more money when you have a mindset of abundance. One of the greatest challenges I had in my own journey was learning to turn down opportunities to make more money. One day I would be fine with where I was at, and then an opportunity to make X amount of dollars in a single day would present itself.
My mind would immediately think, “well, it’s just 8 hours of work, and that would cover six months of mortgage payments. Or healthcare for my wife and two kids for a year. And with market gains factored in, turning down X dollars now really means turning down Z dollars in the long run. That could mean reaching my financial goals X months sooner. There’s no way I should turn it down. Most people would kill for this opportunity. Make hay while the sun shines, right?”
You get the idea. I’ve always sensed we’re alike in many ways. We surround ourselves with that line of thought. It becomes part of our identity. We rationalize the decision over and over. And then we go and make more money, because we can.
But at some point, I realized that there would never be a number in my bank account where I didn’t play the same game with myself. I may SAY that once I have X dollars, I won’t think that way. But then X dollars comes along and—no surprise—same game. I’d just manage to rationalize it in a different way.
So where do you draw the line? When is enough truly enough? Everyone has a different answer. You’ve offered incredible wisdom over the years and provided so much food for thought on this question. I’ve always valued and appreciated your perspective. But three years ago, it simply occurred to me that I already had enough, even if it fell well short of an amount that would account for certain variables.
With the abundance mindset, I genuinely felt that I could make millions of dollars each year (side note: I don’t have millions of dollars). And I still feel that way. Not at all in an arrogant way, but rather simply knowing that money is limitless, that it’s not a zero-sum game, and that there would always be plenty if I ever wanted or needed it.
That mindset change allowed me to feel wealthy in an entirely new way. Yes, I could make a fortune. But did I want to spend the time away from my kids in order to do so? Even if it was just 8 hours setting up a new passive income source? 80 hours? 800 hours? At the end of the day (or end of your life), how much money is that time truly worth?
Everyone has to answer that for themselves. I don’t think there’s a wrong answer. I just knew I had found mine.
Nowadays, we still make more than enough money. 2020 was our biggest year yet, despite the pandemic bringing our primary source of income to a halt. And yet it was also the year I worked the least and worried about finances the least. Funny how life works. I remember watching a Jon Jandai TED talk, and his message was that “life was easy, so why do we make it so hard?”
That message resonated with me.
So, I suppose to answer the question of how I found contentment, the best answer would be that I had it all along. Watch your kids as proof—they already have it. The problem was that I spent the decades that followed making life complicated. Telling myself that I needed more. Rationalizing it with projections. Defending it with variables. Surrounding myself with people and environments that reinforced my thinking. An endless game of chasing the dangling carrot of contentment, when all I actually had to do was stop, reach out, and grab it.
From my extremely-limited perspective, your trip to Taiwan seemed like a taste of genuine contentment. I’d make a conscious effort to remind yourself of that feeling and that time, and what mattered versus what didn’t. I realize you make a substantial income from writing about personal finance, and it’s therefore more challenging to separate yourself from the environment. But the past few years, your writing has included more and more posts like this one. So it seems like we’re on a similar path. I look forward to seeing what the future holds in store for you and your family.
“ Nowadays, we still make more than enough money. ”
Does this mean you left your job three years ago and let go of trading time for money and live off investment income now?
Every time I’ve traveled abroad, I’ve enjoyed being an observer and taking in everything. It’s really such a great outlet for perspective.
I left my primary job three years ago, which was the only consistent W2 income for our family. We still have a business, but it’s growing more passive in its income and we only take clients and projects that we would otherwise take on for free, simply because we love it (photography).
Great perspective Mike. I grew up with a dad that chased that dangling carrot and we never saw much of him growing up because he was working 7 days a week. literally. Of course I benefited financially from his hard work.
I fear I am having those same conversations in my head even if I will never be as hard of a worker as my dad.
You write that “Surrounding myself with people and environments that reinforced my thinking…” My question is: did you shed some of these people or move out of these environments? Or was it purely a change in perspective?
While my friends are all great, super secure and not status seekers or competitive, they (and their lifestyles) do create a reference point or personal expectations on what’s normal.
One of the most dramatic changes we made was moving from a large city to a small mountain town where we’re now surrounded by friends who gauge their success by how much time they’ve spent outside.
Some friends make $15 an hour working as raft or snowmobile guides. Other friends make six figures working from home. But you’d never be able to tell them apart, because their simple lifestyles and limited possessions are identical. Many of them remind me of the fisherman in the Mexican fisherman parable. It’s certainly been inspiring to me.
I think it’s always possible to change your perspective. But I also think that the more you’re able to change your immediate surroundings (whether it’s where you live, who you spend time with, what you do for fun and leisure), the less hard you’ll need to work to change your perspective, because your perspective will begin shifting naturally.
I know Sam mentioned the idea of moving to Hawaii for similar reasons.
I think we’ll always have certain people in our lives that don’t exactly fall in line with that new shift, and I don’t think it’s necessary to shed them all. They have their own virtues and lessons to teach. I just think it’s important to bring some new friends / perspectives into your life as well.
Makes sense, Mike. Thanks for offering your insight.
In fact, I’m actively trying to figure out where to move to for a reboot geo-arbitrage opportunity…between my spouse and myself we have residency options in US, UK, EU and Hong Kong. Love the outdoors, ski, hike, beach…need them all. It’s hard to figure out where if it’s not based on an existing connection or community or due to a job.
I’m guessing most people probably start off with having a second home, and then eventually transitioning there full time. Sam has family in Hawaii so that totally makes sense. How did you decide on your current town? Did you just take a leap of faith and assumed you’d find your circle there?
I’ve been coming to this high mountain valley since I was born, and ultimately my wife and I decided that out of anywhere in the world, this is where we wanted to be. We didn’t know anyone here but have made great friends since then. Plus it’s only 2.5 hours from family and the closest city, so we can see family a few times each month.
I know it can be hard to narrow down the best place. I see life as being made of chapters, so we moved here knowing this would just be another chapter in our story. We have no intention of leaving at this point, but we’ll see what the future holds. Kauai has always been special to us as well……
First time we (my wife and I )felt financially rich was when we left University for our first jobs
We were so well off that when I was not paid for 6 months!-we lived off her salary-my job gave me a house and car-good times especially when my pay finally arrived.
Next years were child oriented-satisfaction of a different sort-continuous low level pleasure punctuated by many high levels as they hit their targets
Now 75 retired-more money than we need-feel financially rich but the yearly photograph at Christmas of Granny and Grandpa plus 3 kids with their wives and husbands and their eight grandkids is the the outright winner in the feel “rich” stakes
xxd09
Yes! Those Christmas holiday cards are wonderful. We laminate them all to preserve them for as long as possible.
So many relatable points in this post. I have too many to count, so I’ll just pick the first one on traveling to a lower cost country. I have very vivid memories of visiting the Yucatan. I was really moved by what I saw and how humbly the Mayans lived in these small villages. I went on a tour with a really small group and our guide drove us to remote places that only a local would know about.
Seeing how little the families and children had was really eye opening. And yet, even with so little, the children and adults were all so happy, welcoming, gratious, and friendly. Their world was so incredibly different from anything I’d ever seen in person, and it really left a lasting impression on me. Naturally, it also made me feel very rich and fortunate to have so much excess and so many resources in comparison.
I remember when I had a layover at Taiwan. Their high quality airport food prices were like $8 USD equivalent… At an airport?! What is this madness?! I was used to paying $20 for a meal in an American airport and that’s when I started to feel rich.
Geographic arbitrage is a real thing.
When I feel the richest it never has anything to do with my finances. It’s usually when I recover money on behalf of one of my low income clients and I know it will have a profound impact on their lives even if they may not realize it. I feel Even richer when the client does realize it and truly appreciates the efforts I made. I think lots of my peers need to reprioritize their lives and what’s important.
The following recent accomplishments made me feel richer than I ever have:
1. I was able to withdraw $400,000 from our savings last year and pay off 2 mortgages. One on our vacation home worth $750,000 and the other a commercial real estate building worth 1.5M. This saved us roughly 20k a year in mortgage interest.
2. We paid off our primary home mortgage a couple years ago with a market value of 850k.
3. Have about 20k a month in passive income.
4. Lastly, having almost 3M in a 403(b)
Crazy on some levels I don’t really feel rich. I still shop at Marshall’s, TJMaxx and Costco & drive a 2017 vehicle. We only eat out once a week and I’m not sure my spouse and I would have enough income to maintain our lifestyle if we were to retire right now. Although, we would probably be okay, we would be giving up over 300k in work income.
I worry about losing passive commercial real estate income due to COVID related business closures in our area. My spouse has serious health issues and long term care can be very costly.
Right now, we’ll just keep riding the wave and see where it takes us.
I think commercial real estate will make a strong comeback. The real estate will just get repurposed differently. Keep the faith!
And, my wife’s favorite store is still Target :)
This article really hit home hard today. Wife and I decided to come into our office at 1pm on Saturday because we both have work to do. I read this as I ate my lunch. I’ve been a longer time reader 10 plus years now, rare commenter. I think I found your site when I was in grad school in 2010 or so.
I’ve always enjoyed your out look on everything. It was an insightful way to look at the world. Meet my wife about 5 years ago, she had a good career in health care administration, actually just completed her masters a few months ago. Either way prior to 2019, I had amassed about 1MM nest egg between various real estate interments and huge retirement accounts, which I thought was good having never had more than a low six figure income some years and being 31. My undergrad is in finance and a masters in accounting. In 2019, I decided to focus all my attention on my construction company and treat it like a full time job verse juggling between various other ideas/ventures. 2019 was the first year we earned 7 figures and 2020 was unreal and in 2021 my company will produce 30-40mm in revenue.
The last few months has been surreal to us. The asset base it has enabled us to build has set us for the rest of our lives which is great. But on the other side it stresses me to the extreme and honestly my wife is afraid of my health sometimes. I wonder sometimes if it is all worth it. I think if I can hold it together for a few more years, we can retire and live very comfortable lives in our Midwest city or honestly probably pretty much anywhere we want to move. We could retire now but would need to scale back our lifestyle slightly, we have developed a couple of expensive tastes, our 50k food budget makes me sick. I’m continuing the down the path our building my company having a blast while doing it but I know a time will come where I look back and wonder if its all worth it and if I am truly rich.
Amazing! What business are you guys in to see such a massive surge in revenue this year?
Perhaps you will agree that having at least $10 million is the ideal amount for retirement then!
One time I feel rich is when I go to the store and buy something. Then I go home and my wife asks me how much it was. My reply is “I don’t know, I didn’t look” Not having to worry about what I buy at the grocery store is an amazing feeling.
I really liked “ If both of your parents live to hold their grandchildren.” My mother (52 y/o) died this year and never got to meet her grandkids born within the year of her passing. I never realized how important & special making that milestone would be – and how much more enriched peoples’ lives are to have that.
I do feel blessed in other ways though! Was definitely one of those mediocre-students in college who is really making it out on top now.
Great article Sam!
I would say I first felt “rich” at the end of this year for the following three reasons:
1) Our household net worth hit $3.95M, at ages 50 (Me) and 45 (Spousal Unit).
2) 2020 net worth grew by $765K this year, compared to W2 income of $460K
3) LWR (Lifetime Wealth Ratio) hit 82.5%, and continues to grow.
My wife and I have a buy and hold strategy, live within our means, but still enjoy everything life has to offer.
Happy New Year!
SM, CPA
The point of reaching financial independence is not to acquire a lot of money. It’s to acquire as much time as you possibly can so you can enjoy life and do things you want to do. I would much rather be a time billionaire with a medium amount of money than a money billionaire with a medium amount of time. The potential is endless what you can do with your time.
Would someone review my asset allocation. Background 26 years old turning 27 in a couple months. Household family income $170,000 (Wife and my combined income).
Cash – $62,000
Taxable stock account – $5,000
401k, IRA – $101,000
Real Estate (Primary residence and 4 rental properties) – $2,000,000.
Real Estate debt – $1,200,000.
Is it okay to keep buying investment real estate or do I need to allocate more capital to stocks? I buy about $30,000 of stocks each year. I’m always a tad worried about liquidity with such a large amount of real estate debt; however, the tenants pay the mortgages and it produces a small amount of cash flow. What are your thoughts?????
You’re 27 with those assets…you are doing very well. My thoughts are you keep doing what you’re doing mate
Having 7X your income in debt is a lot. I’d get that ratio down to 5X by boosting income to $240,000 or paying down debt to $800,000.
And let us know how you were able to put down $400,000 in various properties by 26!
I’ve always believed there’s more money out there than people know. And yours is another example of this belief. Cheers
I am 70. I live in the least expensive home I have owned. I own the least expensive car I have ever owned.
Many days I make $40,000.00 in the market. This is great fun. I have learned I don’t need to spend money to be happy.
I am sure I am older than most of your readers. I can tell you having money is great fun. My sister cried with joy when she saw my check in her Christmas card. I can also tell you money is a poor substitute for youth. Go have fun. Buy presents for your family. Give your family wonderful memories. When you are 70, you will be grateful you did these things.
I use the money I make for my grandchildren. Yes, making $40,000.00 a day is fun. But what is more fun is spending it on family and making their lives easier.
If you want money for an expensive house and car, you are missing the boat.
Have fun and when you can afford it invest the rest in other people..
Great! Keep on giving! Your previous comments indicate a downward trajectory in happiness. Hope you’ve recovered and can continue to spread the wealth.
Sam, did your gray hairs turn back black?
In 2017, I was working in a stressful job and grew a few white hairs at age 28. However, after quitting, those same white hairs turned back black. The roots started to grow black while the bottom parts were white.
Fast forward 2020, work + Covid + life stresses gave me a few more white hairs. Hoping these white hairs will turn back black again.
They haven’t come back still! So perhaps I’m not as stressed as I think I am. Or maybe grey hairs isn’t a good measure of stress :)
But I clearly remember sprouting some grey hairs at 33 and now nothing at 43. It’ll be interesting to see how long it lasts!
First, to anyone who says being rich isn’t about having a lot of money – sorry but yes that’s exactly what it means. Only a rich person would try to convince the rest of us that having a lot of money is actually not that big of a deal. It IS a big deal and having a lot of money is better than not having a lot – otherwise the rich would be giving it away and they aren’t! Take it from someone who grew up in the lower middle class and worked his ass off to create a portfolio in the low 7 figure range.
As far as financial events that caused me to pinch myself to make sure it was really happening, here’s my list:
1. Paying off my mortgage on a (now valued at) 7 figure house
2. Paying for my kids’ college out of pocket
3. Giving multiple financial gifts to family members
4. Paying cash for most large purchases car, taxes, hvac, etc
5. Walking thru Costco and knowing I could buy anything I wanted but realizing I have everything I need and therefore buying nothing
6. Continuing to work because I like it not because I need the money
7. Knowing that my financial needs will be met for the rest of my life and my kids will also share in the wealth they helped inspire
8. Mentoring up and coming kids in the same way I was mentored by a friend who is now 97 years old and worth 50 million give or take
I do feel an obligation to encourage others who seek wealth because I feel so blessed at my good fortune. Capitalism and wealth accumulation now gets short shrift in our MSM, but the truth is there has never been more opportunities to work hard and gain wealth. Ok time to jump off the soapbox.
Here’s to a Happy and very prosperous New Year to all!
I liked your line about Costco. I go to car dealerships and walk the lot. I look at the sticker on a side window and realize I can pay cash for any car on the lot. I never buy one. I just like to know I can. Because I need a car, I own a 2017 Honda Civic. When I bought it, I asked the salesman which car was the cheapest on the lot.
It’s strange. Now that I can pay cash for what I want, there is little I want. Go figure.
I really like #6. I truly think that’s financial freedom.
First, off congrats on the great content, as always! This post, combined with the $3M as the new millionaire, are inter-related and very relevant to wealth discussions.
Agree with all points in both posts, but I’m wondering if your perspective is any different for those who start off on 3rd base? Many FI blogs, and the commenters, start with the presumption of striving, acquiring and then understanding what it means to be wealthy.
But what if you started out privileged, grew up in a wealthy, cosmopolitan international city, and many of your friends are high-achievers and/or come from wealth (parents have 8 figure+ net worth)? Many don’t want to downshift or unlearn their tastes or experiences – some would call it “downward social mobility.” How do you apply and internalize all the points when you are at least defined or inspired by your successful/lucky peers? Just as it isn’t practical for everyone to move from US to a Latin-American country to feel wealthier, nor even CA/NY to a heartland state, it’s never fun to exile yourself out of your group. How do you continue living in a world surrounded with style (periodic art, interior design, fashion purchases not for status but because it gives added color to life) and live a grounded, financially literate/responsible life, without having to marry well or enslave yourself to high-paying careers? Inter-generational wealth easily diminishes in one generation.
I know there’s not a lot of sympathy as these are first world problems, and everyone should be fortunate for their health, family and friends which I remind myself every day. I do find it interesting that no one in this set ever openly talks about money and how people manage, which is why I really enjoy your blog posts and learn a lot from you and your commenters. Hopefully there won’t be too much opprobrium.
Key is to stay humble and not take good fortune for granted. Share your knowledge and money so that others can benefit too. I enjoy writing here priceless because it’s free and can help others build confidence and wealth.
Giving is a great gift! And if you’d like to share your thoughts in a guest post to help others, I welcome it. One of my goals is to encourage more readers to take action, instead of wonder what action others should take. Let’s do it!
I felt rich when I rented out my personal paid off residence. I had quit my full time job 5 years previously to do consulting part time. I was moving to a cheaper area, and my partner and I had bought land and were going to build our own house.
The monthly rent was exactly half of my take home pay from my full time job. I didn’t need it because my consulting paid my living expenses It made me feel rich!
I noticed I started to tip more generously. Especially in tip jars at counters where I previously didn’t think tips were “necessary”.
My first taste of passive income!
Now 15 years later, I have replaced my needed income completely with 2 more rentals and a couple mortgage notes.
So yes I feel rich in both time and $!
I would say getting a full free 4 year ride at one of the top most expensive colleges in the world, making passive income as a student and surviving another 2nd semester of Zoom University:)
I started to feel rich once I used all six weeks of vacation a year to visit places around the world. That feeling increased a lot more as I gained even more freedom in my life and was able to set my own work hours. I don’t call myself rich but I definitely feel very fortunate and have more than enough money to live a comfortable life with my family. I also try not to think with an I’m rich mentality because that can lead to dangerous habits and taking things for granted
I feel incredibly rich when I can hold my kids tight and play with them without any distractions. It’s all these distractions about work, news, and stuff that tends to increase my blood pressure!
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 !!
This statistic can’t be right. Median household income in the US is $68,703 and the US has about 4% of the world’s people and a greater % of households. So, right there 3-4% of the world’s households are above $35k. Add in the relevant proportions in Europe, Japan, Canada, Australia etc and the upper middle classes of developing countries…. And that’s before we take into account that the purchasing power of a US dollar is higher in most developing countries… This article says that you are in the top 20% globally with $35k:
washingtonpost.com/graphics/2018/business/global-income-calculator/
Average and median are different statistics
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!
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.
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!)
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 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.
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.
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.
And I would say, “If you were REALLY rich, you WOULDN’T buy that car right now.”
Having an extra $$ foundation gives you the freedom to make choices that others might not…and not caring whether they thought it was weird or not.
Ironically, I have felt the richest, living in a fifth-wheel…because we CHOSE to do so, for a variety of reasons — none of them focusing on finances. We could buy a house or rent an apartment — we prefer to live in the fifth-wheel instead, because it lets us move where needed to help out with family. (And get away from the cold, Husband would add.) It is a real pleasure to be able to sleep in and leisurely have breakfast before we get on with our day. That’s worth a million dollars, in my opinion.
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!
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.
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.
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.
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 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
Real freedom is possessed only by those who are not anxious to be rich.
In the kind of society advocated by you there would be no happiness, for men would always be agitated by the desire to equal, in possessions, those more affluent than themselves.
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 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.
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!
Maybe the question is do you really need 400k in passive income? once u have a paid off home and no debt, COL falls dramatically. Maybe you will adjust that number as you get older.
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?!
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.
bias analyst
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.
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…
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.
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.
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!
The thing of it is, feeling rich has nothing to do with money.
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.
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!
well said as agree and the other line where the income stream is far greater that your work stream is the day you know that you arrived.
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 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!
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.
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.
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.
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 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.
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.
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 :)
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!
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 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!
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”.
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.
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?
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.
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 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.
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.
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 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!
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 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 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 the returns from my portfolio first exceeded my annual salary. Nice to make “more from your money” than you “make from your work”!
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’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!
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.
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
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.
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.
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.
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!
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!
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.
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.
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.
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.
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?
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.
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.