At what point does money become irrelevant?

[itouchyou]

Short answer. Probably around $20m networth with residual income coming in that covers all your expenses and cost. This would be an amount for a family to live comfortably off of in upper middle class lifestyle. $50m and you'll be able to live upper class life with family. Remove the family and you can probably ball out with $20m net worth. The goal is financial freedom enough to live the lifestyle you want. But having this without discipline is meaningless. I made millions, and spent millions. A few million is still not enough to ball out. You'll be done in a year.

Really depends on your age and circumstances.

It's not about salary as much as it is about networth. Salary allows you to sustain your lifestyle now but networth will allow you to sustain in larger perspective. Having a fully paid off nice house, nice car, and businesses with residual income is a huge difference from someone who doesn't own a car and rents. That's like putting $5-$10k back into your pocket to play with monthly.

In theory, what your friends with double the salary you have can do and what you can do is not much different. More money ideally leads to more assets, more assets ideally leads to more income, and more income ideally leads to financial freedom.

your gravy train on $175k can end with losing your job. there's more freedom if you have more assets, especially ones that generate income.

Interesting. I thought the people making twice my income were able to do a lot more.

As far as having a paid off nice hours/cars etc, isn't this possible with dual income? I'm @ $175k now at 35 years old, and if I settle down with a girl making $125k which is doable, we'd be pulling in $300k-$350k. I would anticipate being able to pay off a nice home worth nearly $1M by the time I'm 50, with plenty of assets left over. I just fail to see why I'd need $20M networth. By 50 I'd anticipate having $4-5M or so.

 

[itouchyou]

This argument about whether money buys happiness is really silly and has way more nuance.

No wealthy person has ever thought "if only I could to live paycheck to paycheck and take the bus to work at a factory, I'd be happy."

Having wealth provides security and removes almost ALL small problems/stress from your life. You no longer have to worry about health, bills, self-care, emergency expenses, etc. While there is an increased burden when you have that kind of money (for instance, finding the best healthcare) it's relatively moot. When you're broke, you have tons of little problems that constantly get in the way.

That said, chasing money obviously will not lead to happiness, in the same way as chasing a career/corporate ladder, as most of us know. But take a broke person and give them $5m (assuming they're emotionally stable and wise enough to use the money properly) and the odds they won't be happier is almost zero. It won't fix any of your deeper problems, and in fact these deeper issues may only be amplified (for instance, drug addictions).

Personally I always prioritize health over money, after all health is wealth. I won't even work a job if it starts before 9am or requires weekends. I literally just walked away from a job that pays $31/hr with 6% 401k matching, in spite of being technically "broke" (debts from college etc) because it was too stressful, and I've done that before and will probably do it again.

There are two ways to live your life - either work really hard "grind", save early, and retire early, OR do a more slow burn and accept you may have to work later into your life (but maybe not). The benefit of the latter route is you can find ways of making money along the way that is actually somewhat enjoyable or satisfying, while developing skills, connections, creativity to make money on your own. The issue with the former route is the increased stress and the fact that you'll be wasting the best years of your life (30-50) working, only to retire with fewer hobbies, skills, passions, etc and you're left wondering "what now?" Of course it's not this black or white, but generally this is the two main paths most people take.

I don't really value early retirement. I have lived a semi retired life due to being able to consistently work only 5-10 hours a week for the past 5 years in my late 20s/early 30s. I don't like it because I feel like I'm not utilizing my mind. Feels like being unemployed.

I would rather find something I'm interested in and do that until the day I die. Maybe on a part time basis as I'm older, but never to the point where I'm not doing anything at all.

 

[AAAgent]

Interesting. I thought the people making twice my income were able to do a lot more.

As far as having a paid off nice hours/cars etc, isn't this possible with dual income? I'm @ $175k now at 35 years old, and if I settle down with a girl making $125k which is doable, we'd be pulling in $300k-$350k. I would anticipate being able to pay off a nice home worth nearly $1M by the time I'm 50, with plenty of assets left over. I just fail to see why I'd need $20M networth. By 50 I'd anticipate having $4-5M or so.

I personally never rely on anyone else and always plan to take care of everything myself. Whatever my partner makes and can help with great but always plan for worst case scenario. It's just how I always lived and my wife doesn't work.

Also, the $20m is referencing comfortable lifestyles for upper middle class where you aren't reliant on a job and have more control over your finances.

In this economic environment where interest rates are high and may continue to increase, easy monetary policy/spending is being crushed. This is resulting in layoffs and will likely continue over time. Layoffs mean less disposable income (houses, cars, everything in general) > lower sales at companies due to less spending > less spending leads to more layoffs and cycle will repeat unless interest rates lower or inflation comes down. All of this with the dollar devaluing and being at risk to global reserve currency, makes your job and our economy something that I would consider not something that should be entirely relied upon.

Interest rates being lowered will likely help ease the pain but this doesn't seem to be the case as inflation is still extremely high and not slowing down fast enough.

--

It seems like you are more focused on what your earning now, where financial stability and freedom requires to plan to unforeseen events and losing your job or this earning potential can drastically change which is why I consider assets and networth important. Forward looking, thinking, and planning is vital.

My brother in NYC is telling me his car sales numbers are halved. I've laid off 6/9 people on my team and will likely slim down even further going into year end. Sister in law is switching from selling houses to renting. Some friends on Linkedin have been laid off.

 

[itouchyou]

I personally never rely on anyone else and always plan to take care of everything myself. Whatever my partner makes and can help with great but always plan for worst case scenario. It's just how I always lived and my wife doesn't work.

Also, the $20m is referencing comfortable lifestyles for upper middle class where you aren't reliant on a job and have more control over your finances.

In this economic environment where interest rates are high and may continue to increase, easy monetary policy/spending is being crushed. This is resulting in layoffs and will likely continue over time. Layoffs mean less disposable income (houses, cars, everything in general) > lower sales at companies due to less spending > less spending leads to more layoffs and cycle will repeat unless interest rates lower or inflation comes down. All of this with the dollar devaluing and being at risk to global reserve currency, makes your job and our economy something that I would consider not something that should be entirely relied upon.

Interest rates being lowered will likely help ease the pain but this doesn't seem to be the case as inflation is still extremely high and not slowing down fast enough.

--

It seems like you are more focused on what your earning now, where financial stability and freedom requires to plan to unforeseen events and losing your job or this earning potential can drastically change which is why I consider assets and networth important. Forward looking, thinking, and planning is vital.

My brother in NYC is telling me his car sales numbers are halved. I've laid off 6/9 people on my team and will likely slim down even further going into year end. Sister in law is switching from selling houses to renting. Some friends on Linkedin have been laid off.

Makes sense. In my case I am in the engineering (not tech/software) business and we've been doing great. I haven't heard of people in my industry being laid off. My industry is one in which there is low supply of talent and high demand. Not really concerned for my job, and if I do lose it, I have a year's worth of expenses ready. I always keep my living expenses low and have marketable skills.

As far as wife working, in my culture the women these days are all very accomplished and most work just like the men. I don't see them being stay at home moms due to feminism and whatnot.

 

[jaygreenb]

Interesting. I thought the people making twice my income were able to do a lot more.

As far as having a paid off nice hours/cars etc, isn't this possible with dual income? I'm @ $175k now at 35 years old, and if I settle down with a girl making $125k which is doable, we'd be pulling in $300k-$350k. I would anticipate being able to pay off a nice home worth nearly $1M by the time I'm 50, with plenty of assets left over. I just fail to see why I'd need $20M networth. By 50 I'd anticipate having $4-5M or so.

At 175k, do you have an actual plan to get to 4-5M at 50? Unless you catch an early parabolic move in an asset and make no mistakes, it will be very challenging with your current income. If you save 50k yearly after tax(75kish pre tax income) with a 10% annual return, which both are very optimistic, and make no mistakes would get you to 1.7M @50. Not saying it can't be done by then but you will have to make major changes income and lifestyle to get there. This is from a 0 starting point, if you have a current significant net worth today its a different story

 

[FlirtLife]

If you run $20M through the 4% rule, it supports $800,000/year spending. That would replace OP's income 5 times over - let alone OP's spending. Was $20M picked because it is BIG and ROUND?

@itouchyou - How much of $175k do you save, and how much do you spend? You can search for the "4% rule" online, and multiply your current annual spending by 25x to see what savings the 4% rule (really a guideline) suggests. There's also retirement simulators if you want to dig in further.

 

[jaygreenb]

I personally never rely on anyone else and always plan to take care of everything myself. Whatever my partner makes and can help with great but always plan for worst case scenario. It's just how I always lived and my wife doesn't work.

Also, the $20m is referencing comfortable lifestyles for upper middle class where you aren't reliant on a job and have more control over your finances.

In this economic environment where interest rates are high and may continue to increase, easy monetary policy/spending is being crushed. This is resulting in layoffs and will likely continue over time. Layoffs mean less disposable income (houses, cars, everything in general) > lower sales at companies due to less spending > less spending leads to more layoffs and cycle will repeat unless interest rates lower or inflation comes down. All of this with the dollar devaluing and being at risk to global reserve currency, makes your job and our economy something that I would consider not something that should be entirely relied upon.

Interest rates being lowered will likely help ease the pain but this doesn't seem to be the case as inflation is still extremely high and not slowing down fast enough.

--

It seems like you are more focused on what your earning now, where financial stability and freedom requires to plan to unforeseen events and losing your job or this earning potential can drastically change which is why I consider assets and networth important. Forward looking, thinking, and planning is vital.

My brother in NYC is telling me his car sales numbers are halved. I've laid off 6/9 people on my team and will likely slim down even further going into year end. Sister in law is switching from selling houses to renting. Some friends on Linkedin have been laid off.

One other thing to factor in as well, past 2 decades may have been the easiest time in history to generate large returns if in the United States. This primarily happened because of historically low interest rates and essentially being able to export our inflation to the world by having the global reserve currency. Would have to dig it up, but remember seeing a chart where the the index returns basically just mirrored the increase in money supply. Like you stated, a lot of potential variables to change and would not be shocked to have a lost decade in the stock market or at minimum a group of sectors. In a raging bull market it is easy to falsely believe your returns come from your ability and talent. I have certainly fallen into that trap in the past.

 

[itouchyou]

At 175k, do you have an actual plan to get to 4-5M at 50? Unless you catch an early parabolic move in an asset and make no mistakes, it will be very challenging with your current income. If you save 50k yearly after tax(75kish pre tax income) with a 10% annual return, which both are very optimistic, and make no mistakes would get you to 1.7M @50. Not saying it can't be done by then but you will have to make major changes income and lifestyle to get there. This is from a 0 starting point, if you have a current significant net worth today its a different story

My projections were based on the wife earning $125k alomg with my $175k. I'm only 35 as well and this isn't including anything except 401k, roth, cash, and house equity. Assuming markets return 6% yearly.

@itouchyou - How much of $175k do you save, and how much do you spend? You can search for the "4% rule" online, and multiply your current annual spending by 25x to see what savings the 4% rule (really a guideline) suggests. There's also retirement simulators if you want to dig in further

My monthly spend is $4k. Take home after deductions (max out 401k and roth IRA, health insurance) is $7.5k.

 

[jaygreenb]

My projections were based on the wife earning $125k alomg with my $175k. I'm only 35 as well and this isn't including anything except 401k, roth, cash, and house equity. Assuming markets return 6% yearly.



My monthly spend is $4k. Take home after deductions (max out 401k and roth IRA, health insurance) is $7.5k.

Maybe I missed this. Is this someone you are currently dating or just a hypothetical person? If it is not a real person who's values and goals you know intimately and have a long term functional relationship with, would hold off including them on any sort of future calculations. There are so many variables on this, you can't just go shopping online and have one programmed for your needs. I would plan on what you have control of, then can adjust if something else develops.

Looked at original post, What does might be dating a doctor soon actually mean? Have you had successful long term multi year relationship on the past?

 

[itouchyou]

Maybe I missed this. Is this someone you are currently dating or just a hypothetical person? If it is not a real person who's values and goals you know intimately and have a long term functional relationship with, would hold off including them on any sort of future calculations. There are so many variables on this, you can't just go shopping online and have one programmed for your needs. I would plan on what you have control of, then can adjust if something else develops.

Looked at original post, What does might be dating a doctor soon actually mean? Have you had successful long term multi year relationship on the past?

The only women I've dated since I was 27 have been doctors. Not sure why but they approach me lol. I'm of indian ethnicity and our women are all career types so no worries in that regard. Been seeing one recently in relation to the OP.

 

[jaygreenb]

The only women I've dated since I was 27 have been doctors. Not sure why but they approach me lol. I'm of indian ethnicity and our women are all career types so no worries in that regard. Been seeing one recently in relation to the OP.

ok nice lol I have a few Indian friends, they are all very industrious and plan for the future, own property, biz etc It is pretty impressive on what some have amassed while they have been here. One literally came with nothing as a teenager and didn't speak English. He is in his 40s now and has a very high net worth. Imagine if you stay in your culture, will make it easier to find someone on the same page as you.

 

[TheEveningChronograph]

Just invest in Hublot and hookers. F that old money aesthetic d0uchebaggery.

 

[itouchyou]

ok nice lol I have a few Indian friends, they are all very industrious and plan for the future, own property, biz etc It is pretty impressive on what some have amassed while they have been here. One literally came with nothing as a teenager and didn't speak English. He is in his 40s now and has a very high net worth. Imagine if you stay in your culture, will make it easier to find someone on the same page as you.

Yea and to be fair I'm not even expecting to settle down with a doctor, this is why I only expected the wife to have an income of $125k or so. I just want a simple girl that has an accounting or IT job, which is doable. The women these days just don't stay home as they feel it's oppressive or something, which is fine by me.

 

[EyeBRollin]

Yea and to be fair I'm not even expecting to settle down with a doctor, this is why I only expected the wife to have an income of $125k or so. I just want a simple girl that has an accounting or IT job, which is doable. The women these days just don't stay home as they feel it's oppressive or something, which is fine by me.

Where are you located?

 

[AAAgent]

If you run $20M through the 4% rule, it supports $800,000/year spending. That would replace OP's income 5 times over - let alone OP's spending. Was $20M picked because it is BIG and ROUND?

@itouchyou - How much of $175k do you save, and how much do you spend? You can search for the "4% rule" online, and multiply your current annual spending by 25x to see what savings the 4% rule (really a guideline) suggests. There's also retirement simulators if you want to dig in further.

Doing the math and actually having the money are two completely different things. We are human and not robots that follow things 100% to the T. Not all assets will be generating income/interest. If all your assets are generating income, you'd be homeless and walking everywhere.

Nice watches, wine, cars, houses, these things don't generate income. I would say I live close to an upper middle class life but my kid is only 1. Our monthly spend is above $10k/m. I expect as I have more kids and as they get older, expenses will probably double if I want to maintain this lifestyle.

If half of the $20m is generating that 4% you're referencing, that's $400k per year. Spending about $240k just to live a comfortable life with nothing too extravagant. upper middle class vacations, dining, and overall living while still putting aside some cash in the bank.

--

when you get to $50m, more assets are generating income. Less are sunk costs and much more disposable income. $20k monthly spend to live comfortably but then you just start splurging on extravagant things like $1k bottle of wines, flying on planets/jets. That's where upper class things seem to come. Really all depends on circumstances.

 

[itouchyou]

Where are you located?

I'm moving to NYC next month or so.

 

[AAAgent]

Interesting. I thought the people making twice my income were able to do a lot more.

As far as having a paid off nice hours/cars etc, isn't this possible with dual income? I'm @ $175k now at 35 years old, and if I settle down with a girl making $125k which is doable, we'd be pulling in $300k-$350k. I would anticipate being able to pay off a nice home worth nearly $1M by the time I'm 50, with plenty of assets left over. I just fail to see why I'd need $20M networth. By 50 I'd anticipate having $4-5M or so.

single at $150k and $300k there's obviously a wage gap but you're both able to afford nice things. The things out of reach are still out of reach. It's just the $300k is able to afford more of the nicer things than the person at $150k. That's why I don't consider it too much of a difference. Also, at $150k with a fully paid off house and car, and at $300k with a home mortgage and car payment, you're essentially living the same as well. Very small different at this point.

 

[EyeBRollin]

Nice watches, wine, cars, houses, these things don't generate income. I would say I live close to an upper middle class life but my kid is only 1. Our monthly spend is above $10k/m. I expect as I have more kids and as they get older, expenses will probably double if I want to maintain this lifestyle.

Houses don’t generate income? Umm..

> $10K / month spending is exorbitant for a couple with one young child.

I'm moving to NYC next month or so.

Good idea. Plenty of options here for career, women, and neighborhood. We have a huge professional class in the entire NYC metro.

The only women I've dated since I was 27 have been doctors. Not sure why but they approach me lol. I'm of indian ethnicity and our women are all career types so no worries in that regard. Been seeing one recently in relation to the OP.

Huge Indian population here in central New Jersey living in some nice areas with beautiful homes and great schools. I really wish my community (black) had things going like that!

 

[Reincarnated]

The best thing you can do long term is when you start making more money do not upgrade your lifestyle and aggressively invest for the next 5-10yrs. Once you reach upper 6- low7 figure net worth in liquid assets you start to reach escape velocity where a 5-10% return is really meaningful and you have many years for it to compound. When you start doing the luxury buys and lifestyle you basically eat up those income increases. It is also a lot harder to dial your lifestyle back when you get used to living that way. "A luxury once tasted becomes a necessity"

This is correct, the term is called "lifestyle creep". Avoid it at all costs.

 

[AAAgent]

Houses don’t generate income? Umm..

> $10K / month spending is exorbitant for a couple with one young child.

Houses - meaning the home you live in doesn't generate income. If the houses are a business that's a different story.

Just to help breakdown the $10k+/m (below is $11.5k/m)

Two cars - $2k/m
House - $3k/m
Groceries - $1k/m
utilities/insurance/gas/gym - $1k/m
dining out - $1.5k/m
day care - $2k/m
luxuries (hotels/wine/watches/guns/bags/massages) - $1k/m
--

I don't consider this exorbitant but more along the lines of upper middle class comfortable living where I don't have to worry about needs. This is not having kids going to extra-curriculars or have their own cars which would drive the spending probably closer to $20k/m. This doesn't factor in private schools, tutors, etc.