There is a fascinating series on Esquire interviewing people at different income points. After interviewing men, they now turned to four women, making $1,000,000, $350,000, $80,000 per year, and $650 per week (just above poverty line). What I was most intrigued about was:
$1,000,000/year woman. 34 year old
- Is finally starting to budget
- “Only” spends $200 a week on groceries
- Would like to travel more, i.e. is a slave to her job and can’t afford the luxury of time.
- Plans on working forever
- Is cash poor (probably to invest more) and goes “broke” when a deal is delayed.
$350,000/year woman, 37 year old
- Real estate investor, has been investing since med school.
- Makes $350k + husband salary + 10 years of investing yet just passed the $1,000,000 NET WORTH mark. Definitely doing something wrong.
- Spends over $2,000 on eating per month.
- Can’t afford to buy time with her family.
- Financed a car, even though it was paid off in 4 months.
$80,000/year woman, 38 year old
- Stay at home husband but both still have student loans.
- Doesn’t seem to have an emergency fund and charges broken glasses on a credit card.
- Would delay retirement to put her kids through college.
- Will pay student loans until 47, a short 8 years before retirement age (teacher).
- “Hopefully” would like to make $100,000 ten years from now. With a 3% annual raise she would make $107,000. I hope she doesn’t teach math.
- Worries more about health than money. Seems to be in a situation where you can’t afford for anything to go wrong. Has to be stressful.
Poverty line woman, $650 per week, 38 year old
- Left all material things behind in a divorce.
- Rent is $400 per month, car is $360, groceries almost $1,000, cable $40, leaving her with under $1,000 a month, as a single mom to two autistic kids.
- Pays $40 for cable so the kids can watch Sesame Street instead of a $10 Netflix subscription.
- Says she is doing okay.
- The post was published this week, they have to move out in June, they don’t know where, yet says “we have a very stable life”.
- Spends “so much money” on laundry, probably would be cheaper to buy a washer, probably can’t afford it, probably hasn’t searched Ebay or Freecycle for a used one.
- Had never thought about retiring.
- Plans on making $7,000 a month in 10 years.
- Is the only one to think taxes are too high.
What do you think? Does that reflect the average person at these income levels? Who would you rather be?
Wow! The result of these interviews are rather alarming. I can’t iamagine earning $1,000,000 a year and being cash poor plus hoping to work forever. Then another spend $2,000 per month on food – that is my salary. Something is definitely wrong somewhere.
I guess when you make so much you don’t question your spending, and $2,000 on groceries seems normal. You just throw food, etc. but you don’t HAVE to save on food. Then as a result you’re broke on six figures!
Yep, interesting how none of them seems to have their finances in order. The 1M and 350K ones are of course the most nerve racking. With that kind of salary my family would be FI by the end of the year. (granted, we’re very close to FI, but still).
Imagine making 1M a year. Remove 30% for taxes, and you still have $700’000. One could literally work 1 year and retire. Add one more year if they have kids.
That is crazy! I can’t even imagine how I could inflate my lifestyle to become paycheck to paycheck on 1M a year.
Yikes! None of them seem to be doing well.
I’d rather have the high income, of course, invest it wisely, and retire in 3-5 years. 🙂
Looks like a lot of high income earners are unprepared to manage finances and end up broke having to finance cars and stuff. Depressing indeed.
People with less money always think that earning more money will solve their problems. The reality is not the paycheck, it’s your HABITS.
Rich people just drink more expensive wine to drink when they are worrying about affording their mortgage that is 10x the amount of the poorer person.
That and “because I earn more I deserve more” that can make you end up worse off in the end
That’s a great way to summarize it. I never thought about it in those words.
It’s like when an alcoholic quit for the first few days…They often say “I’ve been good, I earned a drink.” Spending is like an addiction in many ways.
It is. Or an ingrained habit that you don’t question. That’s what you’ve always done so that’s what you do. Like overeating and being overweight. You don’t challenge it.
RFI,
My stomach hurts reading this! The one person I’d love to help structure would be the $650/week individual who is moving at the end of the month. Why? Because she’s cut out material items from her life, lived in a very low rent range and appears to at least “know” what she can/cannot spend (outside of cable vs netflix and laundry). I feel like she would get the most satisfaction from someone who could advise her on what to do. Bah…
-Lanny
she sure would. However I have found people often want advice but rarely apply it. And on a low budget it is easy to overspend “because you had a hard week” and if you take that out then only the hard life is left..
Incredible, the only difference between them is the amount of money they make! There is a common misconception that the more money you make the smarter with money you must be. Definitely not the case.