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Household Finances

Not wealthy enough?

17 years ago

here is a link to the top 20% and top 5% incomes of households in various cities..Also provides the same for childless households and families of 4...

Here is a link that might be useful: How you doin'?

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Comments (13)

duluthinbloomz4
17 years ago
Interesting, but I'm still a believer in it's not so much what you earn but how much you keep. Beyond anecdotes, we don't get much sense of how those not actually drawing a salary are doing. The retired, the trust-fund babies, the whatevers...

What defines "rich" or "wealth" when it's tied to acquired, accumulated assets or anything other than being defined by a paycheck every two weeks?

Intellectually I know it's tied to lifestyle, the cost of living where one happns to be, one's own perceptions, etc., but there's more to being rich or wealthy than intellect - somewhere out there, there must be a dollar amount that could be generally accepted.
mary_md7
17 years ago
I find the way they present the statistics confusing. Take my area as an example. They give an *average* of the top 20% in DC as $256K. I'm sure that average has a wide standard error. What is the the threshold to be in the top 20%? It must start below $200K if the average "rich" couple with no kids makes $202K.
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chisue
17 years ago
"Averages" aren't as meaningful as "Medians". As has been said, "Assets" are not part of this picture either. I couldn't determine if they're talking total income from all sources or just salaries.

I liked the comment from a Canadian who said he didn't *have* to earn as much due to government benefits...like health insurance.
bill_h
17 years ago
wow, i used to be rich in detroit, now that my wife is retired, i only qualify as rich in el passo. oh well life blows, i live in detroit and i`am poor.
mnk716
17 years ago
those numbers do not signify wealth only income to live a certain lifestyle. wealth is what you keep and assets.
jy_md
17 years ago
I find the way they present the statistics confusing. Take my area as an example. They give an *average* of the top 20% in DC as $256K. I'm sure that average has a wide standard error. What is the the threshold to be in the top 20%? It must start below $200K if the average "rich" couple with no kids makes $202K.

It is confusing and I'm not sure I agree with the methodology. In the case of DC, they took the household income data from the census and simply took the top 1/5 of the household income - think of a long list of households with their incomes and chop off the bottom 80% of the list. Now compute the average of the remaining households (the top 20%). Like someone else said, the median would have been more meaningful because Ted Leonsis and Dan Synder are really messing up the average for DC.

What USN&WR did next was really sketchy. The $202,000 figure they give is totally made up and not realistic. The magazine divided the income average ($256,000) by the average number of people in a household (2.54) Then they multipled that result ($100,780) by 2 for a two-person family ($201,560) or by 4 for a four-person family ($403,118). I'm not sure what this does except really mess up the numbers. Are they assuming that all family members work and make the exact same amount?
dave_donhoff
17 years ago
What's silly (but not surprising.... given typical journalism) is that the metric for "rich" was decided as "income."

Some of the "richest" people in the U.S. have little to zero personal income. WEALTH is NET WORTH (the amount of asset value left over when you subtract leverage and debt.)

In my business I can't tell you how many people I work with (high end professionals) who make serious high six figure incomes, and have so little reserves they still HAVE to work.

When your working assets, and the safe growth they generate passively, are sufficient to cover your costs of a comfortable living WITHOUT you needing a yob... THAT is financial freedom... THAT is sufficient wealth.

Cheers,
Dave Donhoff
Leverage Planner
joyfulguy
17 years ago
As a personal financial advisor for a number of years, one of my major concerns was to encourage my clients to have 3 months' income on hand, so that if there were no paycheque during that period, they would still be afloat ... without sweating blood. If they had 6 months' cushion so much the better, and nine months' even better .. with a year's income a really good goal.

If they had some cushion left after drawing their assets down during such a period, so much the better.

If I had some cash on hand, not needed for awhile I'd probably use it to buy some quality stock that's had its price beaten down ... for there's a lot of tax-loss selling at the year-end, and usually an increase in price in January.

I'd rather run out of life before I run out of money, preferable to running out of money ... with some life remaining to live! On what?

Good wishes for increasingly skillful use of your income and assets.

ole joyful
ruffian1
17 years ago
The universal definition of wealth: Someone who has more than you : )
jenswrens
17 years ago
I found this article to be a little more enlightening... or at least more fun to read, since I am really not at all rich by the first article's definition!

Here is a link that might be useful: Just how rich is rich?
jy_md
17 years ago
Thanks jenswren! Fun read. I posted the Global Rich List link so that anyone feeling "poor" and see how fortunate we are in the US.

I think $25 million would be my threshold definition of "rich" - this, by the way, doesn't mean I would turn my nose up at $2.5 million or even $25,000.

Here is a link that might be useful: Global Rich List
chisue
17 years ago
Merely counting income is a weird way to decide who is 'rich'. You need to look at debts and assets too.
bethesdamadman
17 years ago
I think that it was Chris Rock who gave the best differentiation between rich and wealthy:

Shaquille O'Neal is rich.

The person who signs his paycheck is wealthy.

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