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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I’m guilty of sharing my extra income (as I did yesterday), but I have never shared our overall income or income that we make from our actual jobs. I figure I’m a semi-anonymous blogger and a lot of people come to my blog to hear about different ways to make extra income, so it’d be better if I showed them what I make as extra income. Basically so that I’m not talkin’ the talk and not walkin’ the walk :)
Makes sense. What about showing readers how you made the income instead of just showing the income? That would be a great addition.
I have made plenty of posts showing readers how I make the extra income. I have a page dedicated to all of the posts that I have made on it so that readers can find everything easily makingsenseofcents.com/extra-income
I’d add another reason:
Competition: If you’ve been given a lucky break or worked your way up and are in the top 10% of income or net worth then you want to know what it takes to get to the next level. Once you are in the top 1% then you can look to the top 0.5%, 0.1%, etc… Putting your income / net worth out there helps you benchmark this. Also studying someone in the next tier can give you ideas to emulate or a mindset change so you can re-focus. It can be constructive in a semi-anonymous setting.
I would never divulge my income or net worth to colleagues, even close ones. Either you are making more or less than them and both can cause jealousy or bad feelings. I even tell colleagues that rent and expenses are tough, that is what they want to hear I see. There is no point telling them I haven’t paid rent or a mortgage in 7 years and am saving a ton of my take home income. Also no point telling them that I am getting bored with work simply because, even with saving 70% of my income each year, I can only grow my net worth 6% a year by working and saving.
Your friends in the top 1% are quite wise indeed.
-Mike
Sounds like a never ending comparison study that leaves one feeling unfulfilled.
The higher you go, there really is no point, except to feel adored. You’ve financially won, so I think it’s better to just give back instead.
So when I started my blog, I didn’t reveal my income. Eventually I decided that it might help people understand where I’m coming from (close to median income), so I published it. One surprising result is that I’ve gotten a few requests from readers to help them similarly invest their median range salaries. I didn’t start the blog to help people, but it’s an interesting opportunity I might not have gotten if I didn’t reveal about how much I earn.
Ross, makes sense if you are hovering around the median and everybody makes more or less. It’s when you start making above the median where things get a little dicey.
I discuss income with my friends from college who were in the same field as me quite a bit and get pretty detailed. It’s not so much a competition, more for getting a real idea of the marketplace. When you’re out of school if one company is paying young kids 70k and another 50k to do the same job knowing vs not knowing this can mean a 40% increase in pay. I try not to discuss money with coworkers as that information is probably going to make them hate you if you make more than them. Also companies I’ve work for try really hard to keep how much they’re paying people a secret so that you won’t request a raise or try to leave because of lack of knowledge.
You need some way to figure out what you’re worth to your company and online surveys of job titles doesn’t really do it justice.
Yeah, talking w/ co-workers about your income is really going to stir up a hornets nest. Definitely don’t do it folks! Even your closest co-worker friends, be a little vague. If you can get info, great. But, I wouldn’t disclose.
I tend to agree, man. If I make more than someone, then that’ll only make them feel bad and make things all weird. If they make more than me, then I’m sure I’ll feel jealous adn probably think in my head how I deserve to maek more than them. And that ain’t a great way to keep friends either. So if we all just keep quiet about it, unless it’s somehwo super important in some weird way, then we can all stay cool.
Better to always let everyone know you make less than you do as a result!
I sometimes want to reveal my income (whether online or in daily life) but I remember not to because I still want to be making much more. I know it’s possible and by keeping my current income in the dark, it was easier for me to negotiate a higher consulting rate for a new side gig I just took on (albeit one that I have been working on getting since October!). I also heard this statement once, “Anyone who’s making less than you thinks you’re getting overpaid.”. So I keep a low profile…
Now that is a great quote. I agree. We can’t hep but think we deserve more than we do, and always look to critique others who make more.
Maybe because of a credibility? Lots of bloggers reveal their income because I imagine they want to attract more readers. So they post their income so that others want to join in.
I don’t know why anyone would reveal their income in person. It makes no sense. Most of my friends that make really good money have never revealed it or even hinted at it. You can just tell that they make good money from their job titles.
Probably. I think it’s way more telling in the long run to do, not just say. Anybody can say they make XYZ. But can anybody take the time to craft content that shows how to make XYZ? That’s the difference.
I’ve never made any of my info public, whether on my blog or to friends. I just don’t see a need for anyone to know. There isn’t much benefit to it in my eyes, and the drawbacks are too big.
Part of it is trust, especially down here, where I don’t want to question peoples’ reasons for being around me. Part of it has to do with not wanting to put a target on my back (or not) for potential scammers or thieves. Part of it is just the simple fact that it isn’t any of peoples’ business to know that stuff about me. Part is because I don’t need people coming out of the woodwork looking for handouts regardless of what they call it (sponsorship, donation, advertising)
On the other hand, I do talk about investments and do tax returns for others so I get to know their info. Some would probably say that I owe it to them to reveal mine to “be even” but I say to hell with that.
Professions that find out other people’s incomes is always fascinating to me e.g. accountants, bankers, tellers, tax folks etc. Everybody is human, and surely many gossip about the private financials they’ve seen.
W/ more income, comes more unfair expectations.
I think I mentioned this when you posted about why people shouldn’t reveal income, but I am pretty open about mine. First, I don’t have a large income, so I don’t feel like I’m bragging – in fact, it’s more the opposite. I think people feel like I know where they’re coming from when they see that I’m paying off debt and reaching financial goals without a ton of money coming in, especially since most of my readers are single moms like me.
Another reason I disclose my income is because my parents were/are completely tight-lipped about theirs. I have never had any idea what my dad made, not even a ballpark (and still don’t). My parents missed a lot of opportunities to talk to me about managing finances because they were so scared I might find out their income level. I want my son to grow up knowing, “Okay, my mom makes this amount of money and this is how she allocates it. If I have a similar income (which is likely in our geographic area), I need to focus on X, Y, and Z.”
If I ever start making significantly more money, I probably won’t be as open about how much I make. I don’t want to alienate people. But right now it’s less “let me brag about what I’ve got” and more “if I can make it on so little money, there’s no excuse for not gaining control of yours.”
I like your reason a lot. Showing folks they can make it with less is inspiring to me and probably many others. Perhaps you should make an income revelation series then?
To be able to relate to as many people as possible is one of the keys to online growth. Given most people make under $60,000 a year, then go for it if you’re below that as well.
It is interesting to see a difference in how some people reveal their incomes and others choose to avoid sharing how much that they earn on a regular basis. I think it kinda depends on the “microsociety” that an individual grows up in.
I am not sure if people like revealing their income. I think a lot of people want to know your income. There is nothing positive about revealing your income! Some will be jealous others will resent it if you are more successful. I think in most cases, you can figure it out anyway without asking. Maybe, I am old school, but I see only negatives by answering this question.
I think the people who ask as least likely to become successful because they are concentrating on the money. Successful people are thinking about the goal not the amount of money they will make.
Although you are older than me, I’m in your camp as well. I can’t get over the hurdle of income revelation online these days, hence this post to try to come to grips with both sides.
The public records laws in my state are pretty open. It’s very easy to get salary information for state and local government workers. In fact, there are a few websites that have done all the work and make it easy to search and view.
When I worked for a city government I had full access to view payroll data. I remember one time when, during one particular fiscal year, the firm policy was no raises. I was working on a compensation report and was angry when I discovered that the HR Manager got a 7.5% raise during this no-raise fiscal year.
Yeah, now that is shady. How do you be in HR and get a 7.5% raise in a no-raise fiscal year? Somebody scratching or doing something w/ somebody.
I am of similar thought to Eric on this. Beyond my we, we really do not share publicly or with friends what our income is. I am a fairly private person by nature and not sharing income naturally goes with that. Working for many years in the financial industry I have just come to the thought those things should be kept private as I can not really gain much from someone telling me how much they make or vice-versa. At the end of the day it’s not really anyone’s business what I make nor do I really seek to find out what others make.
It’s even more sensitive in the finance industry. I enjoy privacy as well. When I was younger, I had to constantly fight back the urge to boast about my income and assets. Now, it’s fun going stealth wealth. I just have to not go too far, and I do want to write more insightful income/wealth related posts.
I reveal and regularly update the status of my investments on my site, but I don’t think I’d be comfortable revealing my income or my entire net worth as some other bloggers do. I share what I share in order to have some level of transparency and show that I am practicing the things I preach on my blog.
I think its to each his/her own. I’ve never really noticed a whole lot of commonalities between people who are open about their incomes either online or in real life. To me theres no big difference between generally knowing someone makes 1% money or knowing that they make exactly $667k/year.
In your case Sam, I don’t think you have to worry about offending or making people angry if you choose to reveal such things in your posts. You write a lot about retiring early, being financially independent and what it takes to get there. I think in a way, using personal examples can strengthen your point because you’ve actually done it. There is a difference between revealing in context and doing so just to make sure people know.
There’s definitely an element of practice what you preach that every blogger should incorporate. Revealing in context.. very important. I’ll continue to work on the upcoming posts.
We share our full income statement every month on our blog (February’s went up yesterday). Yes, the top line is cash income (after withholding), but I think the more useful part of the report is the rest of the income statement – the expenses. Where our money goes and how much is left behind as savings/investment/debt payment each month.
We’ve shared vague generalities on income with other friends, but mostly just ones that are considering applying at Mr. PoP’s work, or if we’re talking retirement planning. In general, the IRL friends that we have shared our income levels with are all in the same marginal tax bracket, so it’s more to share strategies and never to make anyone feel bad.
I guess I tend to look at pay like other work benefits like health insurance or vacation days. It’s socially acceptable to talk about those, yet I think telling someone you get to take 30+ paid vacation days every year when they get 10 (or even none!) is likely to inspire as much or more envy than if that person told you they earned 8% more than you. After all, they’re basically getting paid for an extra month’s worth of work that they get to take as time off that you don’t get.
I don’t think I’d ever tell anybody with only 10 vacation days that I’ve got 30+ vacation days paid. That would make them feel bad, don’t you think?
Vacation and pay is a good analogy though for higher income though.
Money can be a really touchy subject. I have no plans to reveal details of my income to anyone, friends and family included. Getting too personal with income can change relationships and I wouldn’t want someone to like me more or less based on the amount of money that I make or don’t make.
I do share certain aspects of my income through financial goals and budgeting though. People are inherintly curious about other peoples wealth and income though, so some people will always want to dig for info, or share their info whether it be for educational purposes or more for just gossip.
Financial goals and budgeting seem fine. I guess it’s nice to provide occasional updates on how such goals are progressing. I’m thinking once a year on the passive income side. Not sure if more is necessary. Too much gossip exists. I hate gossip.
Sure am looking forward to your future posts! As you know I reveal my monthly income and although its not that high, I think it shows my progress or otherwise. I simply think it is an indicator of how I am doing and hopefully inspiration for some. At first I really disliked being so open but there is no question that I get the most interest when I post my monthly income reports. Quinn
Stay tuned then for the annual passive income retitiremnt report. I plan to really emphasize the “how” part of it. The thing is, I’m really focused on building an audience beyond the blog world. Bloggers can find my thoughts on the same on Yakezie.com.
I didn’t know about revealing your income online until I started reading personal finance blogs. And while I was shocked I really enjoyed reading it! I don’t like the taboo attitude about money. Though I do agree if you made too much money it could be a problem to reveal your income.
I also enjoy your injections of Buddhist stories in your articles! I was talking to a friend about the Buddha recently and his life before he went to meditate.. Apparently an everyday conversational piece ;)
Glad you enjoyed the injection. I enjoy the Buddha’s teachings as it pertains to all and is not forced upon others.
Religion was also one of my favorite classes in college, but I ended up getting a B- no matter how much I studied!
I don’t think it’s a generational thing from a behavioral standpoint; people our age just happen to talk to people our age more often and openly. Our parents all knew people who talked about what they made too. I think the income gap has widened considerably which has created a whole generation of 20-somethings making 6 figures and 30-somethings making $250K and up. Even correcting for inflation, going back a generation or two this was quite rare. So, there are simply more very highly compensated people to talk about their income in the current generation.
People that talk about what they make without some legitimate reason usually have self-esteem issues. Years ago, I used to do blogging reports because it was related to blogging, making money online and I’d throw some affiliate links in there. I’ve never talked about my actual real salary though, online or to my friends or family. I don’t even think my wife has any idea what my W-2 income or blogging income is.
Your wife doesn’t know what you make? Now that is impressive! Do you need to know what she makes?
She could probably guess within $25K. But if someone asked, “what’s his salary, his bonus/stock/options each year, his online income”?… she would have difficulty coming close on any one of the three or combined.
What does she make? She’s invaluable :> (home w the kids and keeping my life more manageable these days; things will be very crazy when she goes back to work)
Indeed. It depends who you share the income info w/, however, sharing the info with other folks in your space also causes a lot of problems. Trust me on this one! Once the info is out, it’s impossible to take back. I say go for it if you want. Just fade it away when you start making way over averages.
I have gone back and forth on sharing net worth, but never income online. Since I’m not anonymous, I can’t share my income online per my employee contract. And sharing my online income wouldn’t be inspiring ;)
It’s funny, though, I would hesitate sharing my income to strangers, but share all the time with close friends and family. And it’s never in a competitive way, it’s in a relative way, to show how having a budget can make dollars go further. For example, my parents make much more than we do, but their money just disappears, they have no assets, and only have a retirement because my Dad works for the city. I try to show them how they can have more of what they want and less of what they don’t if they could just put together a budget and work on sticking to it.
As a side note: I’m a tax professional, so I also get to see people’s incomes every year. It definitely is interesting, and shows me what industries make money, and which ones don’t. It also kind of inspires me to NOT do taxes any more, because I’m doing the tax work for a lot of small businesses, and they’re building something they love. I mean, I’d like to be the guy on the other end, building a successful small business doing something I love. And I’ve found that taxes are not necessarily my passion, though I enjoy doing them.
tl;dr
– I don’t share my income online, but might share net worth
– I share income with friends and family to help them
– Taxes are not exciting like I thought they would be (go figure)
Ahh… taxes… the bain… I find ways to reduce taxes exciting, but definitely not doing the taxes or someone else’s for that matter.
What industries have you found make the most? And is it true that starting a business is the best way you’ve seen people shelter their income or reduce taxes? What strategies have you noticed? Thx
Engineering and computer sciences end up really paying well after about 10 years of service, with amazing benefits and bonuses as well. And the small businesses I am doing taxes for are still getting off the ground, so pay VERY little in taxes, but they honestly get KILLED in SE taxes. I would say growing a small business to making $40k+ profit, then incorporating is a great way to protect assets, and if done right, help reduce SE taxes. But as always, consult your tax guy before making any of those decisions.
I wrote a recent post called “tax deductions are a bad investment”. I find that when people eat up their losses and start up costs and start making a profit from their business, they get irrational and want to reduce their tax bill by spending money, but the math is bass ackwards. There are many other (better) strategies for reducing taxes, soe you have even highlighted recently on this blog!
Sam: what a thoughtful post, man! I felt a bit guilty reading this post, but at the same time I feel as if I have come full circle.
I was a starving artist, making barely any money as a trombone player (and being told I would never make any money too!!). I worked my tail off in the music biz and ended up making $250k a year…all in music. I was freaking proud. And yes….I told people! But it still came from insecurity.
It all doesn’t matter. Who freaking cares, really? In the big scheme of things, it is the life you lead and the people you help that is most important. Which is why I am taking a huge pay cut soon and just doing the work I love…still in the music biz (YES, there is GOOD and BAD work even in a beautiful career).
Tony, making $250K/year in the music business is impressive! Now that is a post I’d love to read!
Similar to doing taxes like Jacob, I once worked as a credit analyst for a commercial bank. I had to analyze the creditworthiness of individuals and small LLCs seeking commercial real estate loans. I was amazed to see the annual income and net worth of many of these people. All of them had net worths between $1MM – $10MM, mostly in real estate. Just relatively small real estate investors working for themselves and operating in a 90K population southern university town. Of course this was in the early ’00s. I left that job in ’06 before the real estate crash. I heard it was not pretty for these guys.
Good to know. I’ve always believed there is way more wealth out there than anybody really knows. Those folks might have gotten hit, but it’s back to good times baby! Hope they held on.
I suspect some people share income either to brag, to offer up information in the hope that you share your information, or they are just naive. Admittedly, I do have some interest, but I’m more private about sharing.
For the past 20 yrs or so I have worked as a manager, so I know the salary of people who are in my group, as I get to tell them their salary increases whenever that happens. Of course I never discuss one person’s income with another. However since I am basically told by my management who gets what, I do have the chance to tell my manager my opinion of who deserves what.
So not the same as discussing one’s own salary. But also interesting.
As it happens, no one who ever worked for me earned more than me.
On the other hand, I have ever told anyone my salary; aside from some tax professionals, mortgage bankers. I did tell my wife though. Since I do our taxes, I know how much she makes too ;-)
Would you be OK if one of your colleagues below you made more than you?
It happens all the time with high performing sales people vs their managers.
Sam,
I am considering dropping 500 big ones to buy this watch… the first ridiculous purchase I’ve ever considered making:
https://luxatic.com/richard-mille-rm-057-dragon-jackie-chan-watch/
I think it would go up in value over time and would be pretty cool. There is a dialogue going on between the two sides of my personality on this at present. Any thoughts from you, respected Samurai?
-Mike
You should do it Mike. Jackie is an icon. He was incredible in Drunken Master. How big is 500 big ones though? $500? $500,000?
$500K USD! RM makes the most expensive watches in the world! Still think I should do it?
If you love it and can afford it, go for it. I’m sticking with sub $20,000 watches myself.
You’ll enjoy this post I wrote: https://www.budgetsaresexy.com/2012/12/how-to-make-money-selling-watches/
I used to be a big watch collector.
I’ll have to think about it – it’s about 16% of my NW… I’m alternating hot and cold about getting it…
-Sudi
That link was awesome. I’m glad I asked your advice!
My military income is publicly available anyhow. My online income is something I show to demonstrate to people both that making money online is difficult, yet possible. My net worth and drive toward building assets serves as both a cautionary tale and a demonstration of correction.
I think when you begin to build success around other metrics beside money, transparency becomes much easier!
I do like your online income reports Mike, and your cautionary tale regarding net worth is helpful. I do wonder though when you break out to the upside for your net worth and really accumulate a lot whether you’ll be as open. Who knows?
A very good question and one that I haven’t considered until now. I guess I’ll cross that bridge when I get to it, but I tend to linger over questions that puzzle me, so you can expect that I will over the next few days…
Though I can always point to Pat Flynn, who makes more in a month than the average annual salary of most Americans. He still puts it out there!
Munger is a smart man. He discusses Yin and Yang here.
It is funny how everybody has an opinion on how we should spend our money once they know isn’t it? I’m guilty of asking one of my very wealthy friends to buy a Ferrari so we can go for joy rides. :)
Thanks for your perspective. It will be interesting to see if income revelation feelings change for your generation over time. I think the more you end up making and accumulating, the more you will find discussing how much you make to be harder.
Let me know in 10-15 years!
Hilarious actually! Maybe we should make it a rule that all folks who reveal their incomes above a 1Standard Deviation should be open game for loans… and also to pay for dinners.
It’s funny you mention that, Sam. I do not talk about salary with my close friends from high school…if I had to guess, I’m sure I am at the top or near the top. But I do tend to insist on buying dinner, as a way to be fair to them and show my appreciation for spending time with them–a gift. My closest friends are fine with this; as I talk about my job, I think they understand it’s not a burden for me. But this bugs the heck out of some people! They want to be fair in the moment–split the check, or take turns paying. Even buying dinner takes balance and social intelligence.
If there’s a wage scale, it’s not as relevant, but I can still see resentment for those who are higher up on the scale who might not be perceived as working as harder as the lower downs.
There is no upside to sharing your income & net worth beyond your immediate family…it’s not what you want to be famous for. However, I would be interested in the “average net worth (& other finance measures) of rock stars”, as you eluded to in an earlier post. Whether you use yours or your opinion/goal, that is up to you…
But what about the upside of Adoration? I have to imagine this is a big part of it. Either to feel good telling everybody you make much more than them, or feeling good you’re on the right track, or feeling good that even though you make less you’re still making it work.
If I kept anonymous, sure why not. Now that people know my real name, no way. Not worth all of the other risks that come with that, especially in this environment of bashing the rich.
I’m certainly not trying to prove to others what I have. You can either believe what I say is true, or not. After all it’s easy to type a few extra zeros in a net worth statement listed on a blog. Unless you have copies of tax returns online, it can be all BS.
Let me start with the caveat that nothing I am about to say applies to my work environment. In my position, I know what everyone in my department makes, even my boss. I have to in order to properly do my job. At the same time, this knowledge is nothing I would ever share because my job also requires me to keep it confidential.
That said, there’s a part of me that wants to say I’m one of those people that doesn’t care. Except if I didn’t care, I wouldn’t feel the need to comment here. ;-)
I do not go around telling people what I make. I don’t look for opportunities to share my salary in every day conversation. And I don’t go around asking what other people make. At the same time, if someone asks me, I have no problems sharing the information. I do NOT think personal finance information should be taboo. And I honestly believe that if we were more willing to talk about it, we would have less of a personal debt crisis in this country than we do know. I think it even could have been possible to avoid the housing bubble and subsequent crisis.
Did you ever see the commercial where it’s talking about this guy who appears to have everything in life, and when it comes to him, he turns to the camera and says “I’m in debt up to my eyeballs.” I’ll be honest, I don’t even remember what that commercial was for, but I remember that image. Because I think that as a society, we would be able to make more informed decisions if we more information.
Yes, it is uncomfortable for the neighbors who make the same amount of money and one is in danger of foreclosure while the other just paid cash for a European vacation. But which one of those people would you want to take financial advice from? And how do you know which one of those people to listen to if you don’t have the information?
Think of the bank sites that will supposedly tell you how much house you can afford. have you played with one recently? Most people who are aware of their finances and have an idea of what they would honestly be comfortable paying each month tend to be shocked by how much house those sites say they can afford.
But what if you’re just starting out? What if your parents are the people who have been in debt all of their lives and know nothing different, and no one has ever talked to you honestly about finances. In that case, how do you know that you should be looking at houses considerably less than what that calculator says? I mean, your mortgage and real estate agents are almost certainly pushing you toward the top end. These professionals who are supposed to guide you don’t get paid on a set fee. If you spend more, they make more. Why would they ever push you toward affordability?
And it’s that idea that seems relevant to me in what you want to share. You want to show people how to invest or make money. And if you’re encouraging people toward a specific figure (say 1 million) then you need to be sharing specific figures yourself.
I can’t know if what you say is workable for me without knowing the math. And since you can’t know the specific financial situations of all your readers, you can’t honestly say whether or not your plan would work for them. All you know is that it worked for you, and you believe it can work for others.
Perhaps I just get jealous about how much your salary was. (I don’t even know it, and I’m a little jealous.) Or, I can look at your advice and say, well, I don’t make that much money, but that doesn’t mean I can’t scale this advice for what I do make. Maybe my goal shouldn’t be a million in 2 years, maybe it needs to be a million in 4 years.
Yes, there is risk involved, and that risk includes other people being uncomfortable around you or unproductive/negative jealousy. But if you are trying to educate people, show them real world scenarios, then I think you do a greater benefit by putting your cards on the table and being honest about the numbers (and honest about what it took to get to that place to begin with), and let your readers do the math to translate it to their situation.
Must be very empowering to know EVERYBODY’s income at work! Ever feel a tinge of “What the heck” or “How can he make so much?”?
I try and make the posts which have any of my income or net worth figures as salient and miniscule as possible so folks don’t overfocus on the numbers, but the message and the how. Let’s see if I can do it again with my upcoming passive income update post.
I own a services company and am part of a small peer group of other owners around the US and Canada. We share all for the purpose of developing best practices and coaching each other. All owners are in the top 2%. Sharing company financial statements and to a lesser degree, personal financial statements, has helped each member think and plan better.
What’s watched improves. Accountability partners keep you moving in the right direction. It’s not a competition, it’s friends helping each other excel.
Other than the peer group, my CPA and my wife know my income. And the IRS.
What is the top 2% defined as? Gotta have SOME competitiveness in the group yeah? I find that positive.
Yeah, there is some competition, but it’s about company performance, not what the owners take out each year.
Top 2% is from your entry on top income earners. Somewhere between the 1% number and the 5% number. Low to mid 300s?
The only reason why I slowed down on revealing my earned income is because my ex-wife is a subscriber to my blog. :-)
Ha! Can’t have her finding out how much you got! Well done Romeo.
Revealing income is a dangerous thing in my opinion, hell I’ve never even told my parents what I make once I passed a certain threshold. It’s tough because there is always going to be somebody who gets jealous and or then thinks they deserve more or start taking advantage of you. It’s sad because I don’t/can’t even drive my nicer cars to work for fear the water cooler talking will start. There is absolutely a ton of stealth wealth out there, the richest people I know are all very understated publicly…lesson to be learned there.
Indeed. Yet, the lesson is missed by many younger folks today.
My parents always taught me you never ask someone how much they make or how much they paid for something. I guess that kind of stuck. I think you can’t win either way. There will always be those who have lots more than you who think you are behind. Then the ones who have less than you might get resentful. I am fine talking about how much debt we’ve paid or how much rental properties cost and cash flow, but I don’t think I’d ever put my income online.
Ah yes, talking about how much debt one has is good because it’s not something someone envies. It’s almost like a badge of honor!
Sam,
I think you are attributing false causality to the behaviors in The Millionaire Next Door. I think the purpose of living modestly is to live below your means; and consequently, you save more and build wealth. I view the fact that this also happens to mask true income levels because of the atypical behavior as a coincidence.
I think it’s true causality. Humble people last longer when it comes to personal finance.
I’m late to the discussion, but…better late than never?
I share my full financial picture – income, networth etc on my blog, since I am fully anonymous (at least I believe I am). I think it makes a difference to perspective and it helps readers to see where one is coming from. Eg. If I am making $100K a year, my idea of frugality is probably quite different from someone who makes $20K a year.
In real life, I believe in keeping it zipped at work – https://thesingletonfiles.wordpress.com/2012/06/15/no-i-dont-want-to-know-how-much-you-make/
I am quite open among friends and family, since we all more or less belong in the same strata, and quite a few of us are interested in personal finance. So I don’t mind sharing.
Cool. Checking out your income and net worth + property posts now!
I agree with your reasons for not sharing your income, but I think it’s different sharing on a personal finance website rather than directly with real-life friends and coworkers. It may get tricky though if your friends and family visit your site.
That said, I think anyone who regularly reads Financial Samurai has to assume your numbers are high. It’s obvious you’re smart, hard working, and had a great run in one of the highest paying industries.
Don’t bank on the smart part :) Hard working, yes. But that’s because I’m not smart enough to figure out a way to coast while having income stream in on its own!
Welcome to my site.
I share our income and finances on my blog because I hope to help others. We have slowly made progress with a somewhat small income over the years. The small amounts really add up over time and I wouldn’t have started improving our finances if I didn’t aim for them (small amounts).
I think maybe I share what I think would have helped me back in the day. As long as I can help one person make a positive change or be inspired, then it’s all worth it. Thanks to emails from readers, I know that sharing the actual numbers has helped. So I’ll keep on doing it until it no longer helps.
Also, sharing our financial details helps me keep track. Nice little bonus for me. :-)
First, I think it’s always interesting how cultures can view certain topics differently. In my birth country, asking someone their salary is generally socially acceptable, at least by older generations. My parents often joke that the first questions a male is asked are “are you married,” “where do you work,” and “how much do you make?” I should note that arranged marriages are still normal, so a lot of the interrogation-like questions are to vet potential suitors. Anyway, I always thought they were exaggerating, having grown up mostly in the U.S., but I met a bank teller who shared my birth country and she asked me the work and marriage questions the first time I met her. She was depositing some money for me, so she could probably calculate my salary based on information in my bank account. :o)
As some others have said, I believe that revealing income on personal finance sites is beneficial to provide a proper overview of ones finances. Speaking in percentages is often too vague and doesn’t necessarily help apply that knowledge to one’s own finances (usually the reason to read personal finance blogs in the first place). That is, if someone is saving 50% of their take home income at $50K gross, they live a vastly different lifestyle than someone saving 50% of their take home income at $500K gross. Similarly, exact geographic locations are important to understand cost of living factors and employment and investment opportunities (i.e real estate in San Francisco vs. real estate in Detroit, MI).
Personally, I don’t have a problem revealing my income if it were done so anonymously. Of course, it is very rare to be truly anonymous, even on the Internet, so I have avoided it for the time being. In my personal life, only my parents and wife really know what I make. And several dozen recruiters. I have always been annoyed that I often have to reveal my income to recruiters and potential employers. My perspective is that it’s not important what I make; what’s important is the compensation package it will take to bring me on board with a given company.
-Jon
I have shared my income on my site, simply because it is laughable right now. Also, I want to let people know that in 2012, I made approximately 20k and I still paid off debt and traveled too. I want it to inspire other people and be a reminder to myself of what I can do at such a minimal salary and that I will make more. At a time when I did make more money, I didn’t really share my income because there is always people making less or more than you. You don’t want to make the people who make less feel bad, and the people who make more feel like they should have pity on you.
I have never revealed my income online. I do share percentages so that readers know I am serious and practice what I talk about (such as our 40% in net income we stashed in savings/retirement accounts last year).
I find that people get really weird about money and start treating you differently if they know you have gobs of it, none of it, or more than they do.
I should add…it does make for some interesting reading! I love to read about what other people make (and have felt a little bad about this, except for the fact that the people who tend to share their income online enjoy doing so).
Nice breakdown Sam. Although some of your reasons are dead on, I feel that a lot of these income reports are social proof. “If you too want to be rich, successful, free, you should follow me and buy my products because I know what I’m talking about. If you don’t believe, here’s my handy income report.” Why would you follow someone or buy their product without hard evidence? Funny how different cultures react so differently when it comes to compliments and money. You should consider being a part time psychologist!
I’m a 38 year old female, well I’ll be 39 in less than a month. I recently got back on the dating scene. I have seen 3 men who have in some sort mentioned their income to me quite early in the dating. One gentlemen in his mid 30s would keep asking me how much money he makes. I kept saying I have no clue. I don’t want to appear to be some money hungry woman of course and I am not that way, although I do prefer a man with stability, he does not have to be well to do. He never quite revealed the amount because I’d purposely over talk him because I’d rather not know so early in the dating and I knew his job was a good job so I knew he wasn’t poor at least. Another man in his early 50s discussed financial issues he had from child support, etc that seemed to me to be irritating and an annoying rant. A 3rd man in his early 50s who I had already knew his income because when I Google his name just to see if anything bad on him for self protection, the only thing I found on his other than some work place write up information with his name at meetings was something posting his income…. well he literally showed me a statement from his employer with his income and benefits on it. I thought that seemed to almost a ploy to try to show me why I should date him. The 1st and the 3rd man seemed to me like they were trying to prove their worth to me where as the other man seemed to be still hungup on issues from his previous marriage. The 3rd guy talks about his ex wife’s an alfull lot too, so I bring up past relationships right back at him. I figure if he is going to do that, I’ll give him the same odd conversation in return. The younger guy wasn’t married but also talks about his ex girlfriend a lot. I’m trying to figure out who is somehow stopped being a taboo to talk about your ex’s with the person you are dating. It’s not a big deal to me, but I know some people this would be a complete turn off to. Anyhow, I am just trying to figure out why men seem to reveal their income so early in the dating process. I’m not speaking serious relationships, I’m speaking only dating. If you have any perspective on this I would.like to hear it. I’m assuming it is their insecurities and attempt at trying to prove self worth.
It’s b/c so much of a man’s self worth is tied up in his net worth and income. We’ve been conditioned to make money in order to be the provider, even if we don’t have to be.
See: How To Get A Rich Man To Be Your Boyfriend Or Husband
This reminds me of that H. L. Mencken quote: “Wealth – any income that is at least one hundred dollars more a year than the income of one’s wife’s sister’s husband.”