Why do people like to reveal their income? Is it due to arrogance and pride? Or maybe it's because these people are so insecure with themselves they feel a need to boast.
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. The rich practice stealth wealth.
Contrast a top income earner's desire for privacy to those who make less than $650,000 a year. The desire for people not in the top 1% to reveal their income is so much higher!
Try Not To Reveal Your Income
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 like to reveal their income. 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.
Why People Like To Reveal 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.
Gen Z is supposedly extremely focused on diversity, equity, and inclusion, which means getting paid as fairly as possible. However, DEI can also be taken to extremes with diversity hire initiatives that are unfair to others. So a balance is necessary.
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.
So when you're young, you might want to reveal your income to prove to others that you are competent. But senior people with wisdom might just chuckle at your income boasting.
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 reveal their income, some of these graduates can peacock their way up the status ladder.
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.
By revealing your high income, you want people to compliment you on your career accomplishments. Surely, Nancy must be great at her job given she's making six figures a year! It's like those viral “Day In The Life” TikTok videos from employees who post about how amazing their jobs are.
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 aging, 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.
One of the reasons why I get my kids to do rental property maintenance work with me is to make sure they realize everything breaks. And when things break, we need to fix it. Things don't just fix themselves. By giving them perspective, I hope they will better appreciate what they have in the future.
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. Bloggers love to reveal their income! 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.
To help people who might be underpaid.
But there is a good reason to reveal income too: to make sure you're not getting underpaid. The employment market is highly competitive and employees rationally want to make market rate. If you found out a new hire doing your same job is getting paid 30% more, you'd want a raise!
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. This way, 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?
People Can Get Upset If You Make More Than Them
I've got a couple posts that provides some very revealing figures that I'm not entirely comfortable publishing. One is a my passive income rankings with my latest passive income figure.
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 revealing your income. It's much better to keep things low key, downplay what you've got, and be the underdog to get ahead.
Make More Money Through Real Estate
If you want to make more money on the down low, then invest in real estate. Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and now manages roughly $3 billion for over 350,000 investors. For most people, investing in a private real estate fund for diversification and passive income is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Both platforms are sponsors and Financial Samurai is a six-figure investor in Fundrise funds at the moment.
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Corroborating income levels with friends to make sure you’re not effed over by employers will be a fertile ground for psychological research in the near future. A few insecure assholes might be harmed in the process but the majority will benefit. Nevertheless, it would still be wise to not bleed in front of sharks.
I mostly avoid to reveal about my income and assets but somewhere it becomes necessary to reveal to prove your worth and efforts and to motivate people who are following you as lifestyle not always show the real worth of a person.
Personally, I cant stand bloggers who are always bragging about how much money they make. I really don’t care how much money you make. Im reading the blog for the information and tips. Not too hear you brag about your money in every post on the blog. Just my opinion.
I concur, although it is helpful to know and learn how they made it so we can do the same.
Published: 03/05/2013
There is a word for people like you.
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.”
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
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 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).
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 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.
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 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. :-)
I agree with you. It can inspire others. My son got great job and I am not stopping talking how much his salary will be. I can’t help it,no secrets.
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’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!
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.
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!
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.
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.
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?
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.
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.
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 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.
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.
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!
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. :)