Too Rich To Save?
According to a study by HSBC,
49% of respondents with at least $250,000 in income aren’t saving more because they simply “want some spending money.” In 28% of the cases for those who earn between $100,000 and $250,000, respondents say they do not save more because “something unforeseen always comes up.” And in nearly one in 10 situations, people who earn $250,000 or more say they aren’t even earning “enough to make ends meet as it is.”
I feel so sorry for them. 10% of people who make over a quarter of a million dollars a year, can’t make ends meet! That’s just amazing. Maybe they should sell their fancy watches, cars and downsize to a smaller house for a while.
Or maybe not being able to make ends meet has a different meaning for rich folk. Maybe it means you can’t take the $20,000/week vacation to Turtle Island in Fiji, or you’re going to have to fire one of the nannies. Maybe downgrade the Porsche to a more humble 5-series BMW.
More people who earn between $50,000 and $100,000 save consistently than people who earn between $200,000 and $250,000 per year.
I can’t comprehend how anyone without a gambling problem can’t make ends meet on $250,000 income. I guess it boils down to living beyond your means.
The best way to become really rich is to save, invest and keep re-investing the gains for as long as possible. Investing only 5,000/year for 35 years at 12% will let you end up with approximately $2.5 million. If you not able to earn 12% or you don’t have 35 years of working life left, you need to save more. Compounding really is the greatest asset available. If you only have 25 years to save, even if you can get 12% return, you need to save $17,000/year to retire with $2.5 million.
If you’re not going to save even 10% of your $250,000 income, you’re either going to retire broke or going to have to work past 65.
Being rich isn’t necessarily about having money or material objects. Its about having the freedom to do whatever you like. (like Paris Hilton, only she’s not rich enough to stay out of jail. For that, you need to be Michael Jackson or OJ rich!)
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June 12th, 2007 at 7:33 am
It’s called greed. The more you make, the more you spend
June 12th, 2007 at 8:49 am
no, i think greed is wanting more as you make more.
spending more is just called stupidity or to be more politically correct, lack of fiscal responsibility.
June 20th, 2007 at 9:31 pm
Your findings are backed up by a great book called “The Millionaire Next Door”. You’ve probably heard of it as it is an older book. I highly recommend it if you haven’t read it yet.
Enjoy your blog. I am new to blogging and just started my own.
June 25th, 2007 at 12:42 pm
Great Post. It made me smile because I live a frugal life and enjoy. I drive a car that’s paid for and when I see people on a car with a $1,600 a month payment like a guy I met with a 700 series BMW. It doesn’t make me envious. It makes me smile.