"PERSPECTIVE. The wealthiest person I have spent time with makes about $400mm/year. i couldn't get my mind around that until I did this: OK--let's compare it with someone who makes $40,000/year. It is 10,000x more. Now let's look at prices the way he might. A new Lambo--$235,000 becaome $23.50. First class ticket internationally? $10,000 becomes $1. A full time executive level helper? $8,000/month becomes $0.80/month. A $10mm piece of art you love? $1000. Expensive, so you have to plan a bit. A suite at the best hotel in NYC $10,000/night is $1/night. A $50million home in the Hamptons? $5,000. There is literally nothing you can't buy except."
Right now, if the money fairy came down and doubled my salary, I don't think I'd live that differently. Or if say $1M just landed in my bank account. I would worry less, but don't see me going out and finding things to spend more money on.
I think there's a lot of "wealth inertia" but it'd be interesting to see the idea explored. I think most people tend to live a certain lifestyle, and even if they could afford a higher level one, you probably don't immediately. The reverse is also true and tends to get people into trouble. I know if my salary started creeping downward it'd be very hard for me.
I wonder if this has been explored in any real detail - how much extra income really triggers lifestyle changes. Is it just affordability steps as the author claims?
A bigger impact on your life would be any of the following.
- Your health and exercide.
- The strength of your relationships.
- Having 1 or 2 close friends.
- Being grateful for what you already have.
- Enjoying your work.
- Having a dog.
- Learning new things.
- Giving back.
Perspective is the most essential thing here. Most people would probably see 1 million not much different from 1 billion (I mean they know it's different, but not much since it's just a big number). "A suite at the best hotel in NYC $10,000/night is $1/night", this hits me hard.
It‘s hard to say if you‘re far away from being able to afford things like that, and content with it. It‘d surely weaken the problems with relationships they mention at the end.
This is the key IMO. I know a few people who fall into various of the categories mentioned and, well, you wouldn't know it meeting them. The place they live is probably the only real tell besides maybe watches and acessories. Apart from the occasional splurge - weddings, the occasional destination getaway - they're pretty thrifty. They didn't get rich by throwing money around uselessly.
And that "perspective" concept doesn't really work that way in practise from what I've seen. If first class tickets were $70 instead of $7k i would never fly anything else, but people I know worth 100x more than me sure don't act like they are.
Like any group of people I don't think it's possible to draw these generalisations. Culture and individual personality plays a huge role. I also imagine the more you feel you have something to "prove" the more likely you are to engage in conspicuous displays of wealth, but for a large number of people that doesn't seem to be the case.
I've also had the privilege of knowing some people that fall into the categories from $1MM to $1B+. You couldn't tell which bucket they belong to just by meeting them. The down to earth guy who's just a dad to the kid on your soccer team, yeah he's worth $3 billion, but bikes everywhere. You son's best friends parents? They're normal, but have a 6k square foot home in the downtown area of a major city, but shop at Costco and only own one (nice, but used) car.
Agree that the flashy folks are the ones at the lower end of the spectrum. They've gotten some cash and are a) showing off and/or b) trying to enjoy it.
One of the biggest changes I've noticed (and have noticed this of myself as my career and income have progressed) is that you're aware that you are paying more for things, and therefore expect more. This definitely can create the appearance (and occurrence) of entitlement.