Are you high income but still feel average?

Amongst all the discussion about stage 3 tax cuts and cost of living crisis, I came across this post about a couple in the US earning $500k income ($278k after tax); spend a lot, have little savings after their spending, and still feel average.

https://twitter.com/SMB_Attorney/status/1750530057251295384

I initially thought that is ridiculous. But then I did some quick sums in my head and realise we spend more than this, but structured quite differently.

Our annual spending at a high level looks like:
- mortgage payments: $200k (all investment and >50% is principal payments. No PPOR mortgage).
- general spending: $120k (about $10k per month goes through the credit card)
- kids schooling: $65-70k (base is $30k each X 2, plus plus. e.g. eldest is going on European music tour this year).
- holidays: $10k-35k

TOTAL: ~$420k p.a.

Shocked me a bit how high that is. I consider us quite simple and don't splurge (drive 16 & 18 year old cars, non expensive travel, etc).

What does your household budget look like and do you feel wealthy or average?

 

That’s net. Work that out pre tax and you need to be bringing in some serious dollars. Although $200k is investment loans so that changes it up some what.
Also have 2 kids and our living expenses would look similar. Slightly more monthly spend. Holiday expenses would be at the top end of your allowance and no loan repayments at this time. But add in a good amount for car holding costs and churn costs.
I won’t say I feel like we have an average lifestyle, but don’t necessarily feel like we live an over the top lifestyle. I think part of the problem is the world has changed. Social media now makes a high end lifestyle feel average, when you’re on socials comparing your life to the billionaires or pretend billionaires.

 

When I first moved out with my partner our combined income was around 60ish… I was such a tight ass I had the crappest car, never used the aircon because every penny I made went towards my first house deposit.. froze my food and ate the same thing every day.. It’s around 150ish now. We don’t spend stupid but our expenses rise in line with our income plus adding kids to the mix is tough esp childcare fees ... There isn’t much I can cut out but I’ve been trying hard to increase income… Using Xero to monitor finances..

 

120k after tax general spending?!

I can get all the other expenses lik 200k investments, kids schooling obviously private and even up to 35k on holidays but 120k after tax for a family of 4 is just crazy.

Good on you for doing so well but with all due respect , if you are feeling average, you might need to just put the TV on an watch some news ...

 

That’s exactly the problem how people feel and the reality is so far apart and that’s thanks to social media and the daily comparing? What’s that saying about comparing being the biggest killer of happiness.

 

Yeah, I justify our spending bu thinking that we bank $100k (from principal payments) before doing anything else.

Agree the world is different with all the social media. I'm not one to compare with others though, and often tell the missus not to worry about what other have or think.

 

How closely do you monitor your finances? Once a year I would download our spending (mostly on credit card) and go through it. Didn't change any habits or spending though, so stopped doing during covid times.

 

The delineation between opulence and mediocrity imho frequently resides in the realm of mentality and psychological disposition, transcending mere fiscal standing. Those in possession of substantial seven-figure incomes may, paradoxically, articulate a sense of 'averageness' , while individuals with more modest earnings may experience a profound sense of affluence and satisfaction. It has been my strong conviction now for a number of years that the pursuit of a prosperous and joyful existence is intricately linked to the cultivation of an optimistic and grateful mindset, transcending the ceaseless pursuit of financial expansion.

 

Blimey @Sackie. My head hurt reading so many big words. Feels like I need to plug your paragraph into chatgpt to dumb it down for me to understand

 

I like writing mostly 'rubbish ' according to some.

 

Wages $0
Investment income $ =never enough
No mortgages now
Monthly spend under $2k (No credit cards)
Hols $8k

*52 and getting bored, but feeling so above average

I once posted in a thread to a meet up with @Beano In almost 110 years from now (based on how long we would have to live) to see our investment plans play out, I now know the chances of seeing 70 are low, so I just moved retirement forward and manage well enough with what I built up to that point.

 

Yeah, in retrospect that's quite a bit. I really should go through it with a fine tooth comb and cut out any unnecessary spending.

I rarely watch tv. Read a lot of news though. I often do think about my tenants though (most in low socio economic areas), and feel for them struggling.

 

Certainly not according to me .

.... And a lot less rubbish than some others (including me)

 

Social media is an absolute sickness plaguing our society. I have many friends in the position where they can be debt free in a matter of a year or 2 but they are such bad financial managers that they end up struggling for years just to drive that Range Rover or own that house with a pool in an average suburb....

The way they look to others is so much more important to them than anything else in their lives. They conflate happiness with contentment... There was a very good thread on this in the past.

 

Absolutely agree. I know many who appear very wealthy (e.g. spent $500k for 2 news cars recently), but all their wealth is tied up in PPOR, with no investments or investment income. So if they lost their jobs for any reason, they would be absolutely screwed.

 

It is your money at the end of the day and you are free to spend it anyway you want and you shouldn't feel bad for doing well just because others aren't.

Again, well done for being such a good provider to your family and you should enjoy it as generally and from my own experience, you have to work hard as an individual to be able to make good money.

On a separate note, we in Australia are very sheltered to the atrocities of the world around us. Most have absolutely no clue how good we have it here. This is coming from someone who was blessed and ended up here by sheer luck(and a bit of hard work...)

 

We are all guilty of it at times. We all say be grateful for what you have and don’t compare or lust over what others have. But no matter how little or how much one has, it’s human nature to every now and then compare and want for more. Social media has only accelerated this human trait.

 

Absolutely agree. We came over as refugees with nothing, studied hard, worked hard, took risks, invested for the long term and in our family.

Very few countries in the world that would enable us to do that.

 

It does highlight the old saying that money doesn't solve money problems.

Statistically I know that I'm ahead of most on income but I certainly don't feel or live any different to when I was starting the career years ago and earning peanuts.

I do look around a carpark or shopping centre and wonder how the heck all those people supposedly earning a lot less do it. I know I could technically afford thier degree of materialism, but would struggle to justify it to myself.

I assume a lot of people must be just treading water and using the house as an ATM.

 

I reckon you are right about this. Most people have zero or very little buffer if they were let go from their jobs.