It hit me the other day that none of the people I know in the top 1% have ever revealed their incomes to me. I’ve got a good idea of how much they make and what their assets look like. But beyond some vagaries, details have never been disclosed. Contrast a top income earner’s desire for privacy to those who make less than $380,000 a year and income revelation is much more common.
In the post, “Never Tell Anybody Your Income” I highlight all the downsides of revelation. Most agree, but some don’t because they say it “inspires others” or simply don’t care. There may be some sort of inspiration involved, but what about those who get inspired to rob you for having more? It’s dangerous to hover outside of the middle class in today’s society. During the Cultural Revolution from 1966 to 1976, the wealthy Chinese were often flogged and publicly ridiculed.
If you read The Millionaire Next Door by Dr. Stanley, you will see the constant theme of being discreet with one’s wealth – drive old cars, wear discount clothing, live in a modest house and so forth. At the same time, it’s no fun being so parsimonious that you miss out on all the spoils of wealth. The large majority of surveyed participants are also older than the median American age of 35. Such millionaires spent their lifetimes building wealth. They aren’t about to have some stranger or the government try and take it away.
There are two main goals for this post. The first goal is to better understand why some people enjoy talking about their incomes. The second goal is to find a balance on this site for my own income revelations to be used as examples in future posts. It’s much more useful to see actual figures in an example rather than talk in percentages. At the same time, I don’t want to come across sounding like an arrogant bastard.
UNDERSTANDING WHY PEOPLE ENJOY REVEALING THEIR INCOME
Here are some commonalities I’ve noticed by those who enjoy talking about how much they make. I’m also drawing from my own experience when I revealed portions of my income in other posts.
* Younger demographic. Maybe it’s a generational thing, but those who enjoy talking about how much money they make are generally younger e.g. under 40. Dr. Stanley and his subjects are all over 50. Perhaps thanks to the internet, it’s more acceptable nowadays to blast over Twitter and Facebook that it’s your birthday or a picture of your latest car. There have been several studies showing that Facebook is making people miserable because suddenly they have to compete with hundreds of “virtual Joneses” instead of a couple.
* A need to prove worth. When you’re young, it’s easy for others to overlook your talents. Why should anybody take a 27 year old financial analyst seriously when he’s only had five years of experience? Only until I turned 30 did I feel fully confident to talk to anybody about economics, politics, and investments. When a client asked me when I was 24 years old how long I’ve been in the business, I responded, “My entire career.” Use this line sometime. It works! Money is not a great barometer for worth, but it is one of the easiest variables to measure.
* Lower self-esteem. The people who are most confident have no need to tell anybody how much they make. They don’t need to buy a fancy car to make themselves feel better. They don’t need to incessantly highlight they went to X school and have Y things because their work and success speaks for themselves. Maybe those who constantly highlight their income do so in order to make up for deficiencies in fitness, education, or love. Perhaps they fell behind in life early on and need to pound their income drum to prove to the world they are somebody. How many of us have imagined returning to our high school reunion as great successes to prove our detractors wrong? By telling others how much more we make than the average or median, we feel better about ourselves.
* The desire for adoration. Adoration and self-esteem are tightly related. Have you ever met someone who was in good shape and keeps telling others she needs to lose weight? The reason why she brings up her weight is so that her friends can tell her she doesn’t need to lose weight! Everybody wants to feel pretty, respected, admired, and adored. It’s just one of our many traits as humans.
* New wealth. If you go from not having much money to suddenly making a lot of money, it’s hard not to get excited. An easy example is going from a poor student to making $100,000 a year as a first year analyst at an investment bank. There is immense attitude from Type A finance folks in NYC. Now imagine if you won the lottery. Although you probably shouldn’t tell everybody, you would be hard pressed not tell all your friends and relatives about your good fortune. You buy a new house you don’t need when you can’t even fill the one you have. Instead of figuring out a way to make your new found wealth work for you, you blow it on material things that provide only momentary reward. It’s immaturity with money that gets people in trouble.
* Lack of perspective. There’s a lot of suffering out there, but it’s hard to know if you’ve never traveled around the country or around the world. It’s like Prince Siddhartha Gautama believing that the whole world lived in privilege like he did within the walls of his palace. At the age of 29, Siddhartha left his palace for the first time to meet his subjects despite his father’s efforts to hide him from the sick, aged and suffering. The outside world moved Siddhartha so much that he strove to overcome ageing, sickness, and death by shunning luxuries and living the life of an ascetic. Eventually, he discovered the “Middle Way” and after 49 days of meditation under a Bodhi Tree, tradition says Siddhartha finally achieved enlightenment.
* Cultural differences. In Asian culture being self-effacing is important. If you cook a gourmet dinner for your friends, your response to a compliment is, “It’s nothing. I hope you enjoy the food because I’m a terrible cook.” This is despite the fact you are a master chef who spent five hours slaving away in the kitchen beforehand (haven’t you seen The Joy Luck Club yet?). In Western culture the response might be a little different, “Thanks. I found these tips and added my own secret sauce.” There are subtle differences in responses that portend to very different attitudes about accomplishments.
* Other people like to know. It’s always interesting to voyeur into other people’s finances because it allows us to figure out where we stand and where we need to improve. I don’t ask anybody for such information, but if they provide monetary details, then why not check it out. It’s fun to see where people stand and compare. In the online world, income and net worth reports attract visitors, and increasing visitors is what it’s all about. Some have even smartly used their income reports to make more income. Hence, if people like to know, we might as well give the people what they want to build our audience.
MAYBE INCOME REVELATION SHOULDN’T BE TABOO
Unless the person I’m talking to makes a tremendous amount more than me, I always regret highlighting my income even if they beg me to tell. Once I do, it’s as if I’ve minimized their accomplishments. As a result, I always make it a point for someone to go first in talking income so that I have a chance to adjust downwards if necessary. Most of the time I just avoid the subject altogether.
As a personal finance writer, things get a little tricky because I feel the same way about revealing income in person as I do online. Even though the income demographic on Financial Samurai is skewed towards a higher band of $85,000-$150,000 a year, due to the shear number of new visitors from search there are plenty of potentially loyal readers who make much less. Offending people is not the way to build a community. At the same time, how do I best illustrate investment strategies or various passive income ideas without providing actual figures?
I’ve got a couple posts in the queue that provides some very revealing figures that I’m not entirely comfortable publishing. One is a passive income update of Achieving Financial Freedom One Income Slice At A Time now that a year has passed. The other post is about how accumulating your first million dollars might be much easier when you are young. I feel these posts will fulfill curiosity for long time readers who want to achieve financial independence. At the same time, I can see how these posts will piss people off who are struggling to get by. Heck, plenty of people online are angry for a short 300 word post saying there is no monopoly on being rich!
In conclusion, unless your occupation is to teach people how to make money by showing them how much money you make, I advise caution when revealing income. It’s much better to keep things low key, downplay what you’ve got, and be the underdog to get ahead.
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