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 feel 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 only factor. Perhaps you can share when you finally felt rich as well.
When Do You Finally Feel Rich?
Looking back, here are all the times 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 skating boarding 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 no more 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 spend 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.
Unfortunately, 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 income, I felt like I needed to generate more. There has to be some type of biological trigger that switches on in all people once they have a child.
Today, if we do not have a third child, our current passive income is enough to provide for a steady rich life.
3) When a new income stream comes out of nowhere.
None of us are maximizing our income potential. I’m going to guess that if we could make a maximum of $100 a month, most of us are really making only an average of $30. It’s kind of like how none of us utilize more than 20% of our brains. If we did, perhaps we’d find a cure for 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 and we planned to have another child.
Today, I feel rich whenever a new income opportunity appears on Financial Samurai because I’m still not proactive. I’ve just been more open to offers. It feels great to produce income from what I already enjoy doing.
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 $1.5 – $1.6M. I refused and took it off the market until I had an opportunity to re-list the home again in 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 $2,600,000! After much back and forth, I was able to get them up $1,040,000 more than I would have sold it for just five years earlier.
Not selling an asset at a bad time will make you feel richer and richer as time goes on. That asset can be real estate, stocks, or anything that would have continued to go up in value. The only way to counteract the bad feeling able selling is if you reinvested the proceeds in something that also went up.
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. The site has collected two 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.
Just look at the NASDAQ, up more than 40% in 2020 alone. Finally, Financial Samurai has given me something meaningful to do while stuck at home.
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 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 39 and 42-year-old parents.
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. 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, unless you can earn more than a billion dollars, you will no longer be willing to grind as hard at work or at building a business.
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 has probably been the most difficult year in millions of people’s lives. As a result, it was important to regularly publish posts and write more nuanced newsletters to help folks through muddy waters.
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 an extraordinary amount of wealth. 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.
A couple of my 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
Here are some other examples 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.
Readers, I’d love to know the times when you felt rich. How long did that rich feeling last? What are you doing to feel rich more often?
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.
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.
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.