Will $100K/year be enough for your style?
You and your friend both make $100,000 every year. Why is he accumulating wealth when you aren’t?
If you’re a city lawyer, expect to own a lot of suits and ties. You might be expected to live in an enormous, elaborate house with fancy furniture and oak trim. You need to invite your friends for fancy parties, attend expensive rallies and banquets, and dine at finer restaurants while your kids attend private school.
Meanwhile, if your friend owns a mechanics shop in a small town, he’ll wear jeans and a t-shirt every day. He can live in a simple house, eat what and where he wants, send his kids to the public schools, and do what he wishes without societal expectations. He makes the same amount of money, though he spends less. He’s saving far more than you ever could.
Society expects different qualities of life for different people. The key is not to get too absorbed in image. No one wants to do the dirty work, though I wonder if it might pay off…
An interesting post. To a certain extent, you have control over how glitzy your lifestyle is. But I agree with you that some careers require a certain amount of glitz if you want to do well. This is one of my hesitations about going from working in a university library to a corporate setting. I’d have to make A LOT more money if I was expected to wear suits, etc, but maybe I’d even have to replace my car. I don’t really know.
March 8th, 2006 | #
My dad was mostly ALL in the corporate setting. He was suggested to wear suits, but no one ever said ANYTHING about his car. (He kept three beaters up so two would be running at any one time.)
We didn’t have a glitzy house. (Nice lower-middle class house)
Some of what is “expected” is in the mind. you see what others at your level in the business are buying/doing and think you have to do the same, that it is “expected” — but no company expects you to go bankrupt, that could adversely affect your working with them.
If you truly think there are expectations, sit down and find out what the concrete expectations are. And then figure out how you can do them perhaps differently — does the glitzy place to entertain HAVE to be your own house? Could you rent a place for the glitzy get togethers, or meet at a nice restaurant? Then you can have the house you want and won’t have to clean it up either.
March 13th, 2006 | #
I am sorry for the delay in getting this released. Your submission has been included in this week’s Festival of Frugality at the following URL:
http://neos-nest-egg.blogspot.com/2006/03/festival-of-frugality-14.html
Neo
March 14th, 2006 | #
One comment that is usually ignored in these discussions, is equity building.
Your mechanic who saves all his money is not going to accumulate as much wealth as the free-spending attorney, even if they keep similar income streams, simply because the high spending city person’s residence is going to accumulate wealth at a far faster rate than any investment vehicle.
What needs to be preached is a combination of frugality and WHERE/HOW to spend lavishly. (residences, anotherwards, in high growth areas)
March 20th, 2006 | #
I don’t know if I agree with you, necessarily, Mark. The mechanic’s house WILL appreciate. Maybe not at the rate of a city dwelling, but it’s not losing him money or even remaining stagnant over, say, ten years. So if you take that into account, and if we assume that his other investment vehicles can make 10% annually over those ten years, is the city dwelling going to appreciate 10% more a year than the mechanic’s home? if not, then the mechanic truly is building more wealth.
August 2nd, 2006 | #
[...] Aridni: Asks if you can make it on 100k a year. My answer? YES! [...]
June 12th, 2007 | #