Once again a very insightful video Erin. I am retired and have a liquid net worth in excess of $7,000,000. I am a widower with no dependents and no debt. In addition, my passive income far exceeds my burn rate. Therefore, by all definitions I would be considered rich. However, I think it is critically important to emphasize that RICH does not equal HAPPY. After living 68 years, I have met dozens of people who would never be considered wealthy but are extremely happy and feel grateful for the lives they have. Enjoying life, even in simple ways, and surrounding yourself with family and friends is much more important than being rich. Too much emphasis is placed on material possessions. Money makes things easier, but it isn’t the be all and end all for a happy life.
Being rich won’t make you happy, but being dirt poor can make you unhappy. But i do agree with what you said. It’s all about expectations. If your expectations are too high, life will always disappoint.
It's important to set goals and make a plan. Remember, wealth can mean different things to different people,One thing i can say that helped me in life to reach my first million was starting early, i got curious and informed i became open to passive income, investments in equities , etfs and the likes. Also sought help to handle my portfolio which was my foundation. i'm ever grateful to Susan Kay Mack my FA.
I’m 55 and plan to retire in the next couple of years. I have saved and invested fairly wisely, with rental property making up a good portion of my wealth accumulation. I use to think that having a large amount of money would make you rich, but over the last few years, my thinking has changed a little. I now feel that having enough money to cover everyday life, along with health and free time is what really makes you rich. I’ve spent 40 years of my life trading my time for money. Free time and being healthy are what truly make you rich!!!!
@@socalstr There are many ways to help others, either by giving money or material needs, providing labor, counsel, or jobs. Anything given out of love for your neighbors.
Charles Dickens “Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery” I read this as a young college age student and never forgot it. It's not an easy goal all the time, but one I recognize from my own experience to be true.
Living below your means has always been what I've done. I've told others that it doesn't matter how much you make, you adjust to spend differently. Whether you make $20/hr or $100/hr spend below your means.
@@Dave-sw2dm $100 is more than enough to enjoy life and save enough for retirement. Anyone struggling with that kind of income have no financial acumen.
I am so on board with this philosophy. I considered myself wealthy when the math says that I could stop working, continue to live my current lifestyle, and not run out of money in my expected lifespan. Oddly, that does not take a huge amount of money.
Another great video, analysis and discussion Erin. I agree, generally, with Scott Galloway's definition of wealth. In discussions around the meanings of the terms wealth and rich, it is hard to keep short and simple as everyone has nuances in their view. I have always enjoyed work and do it because I want to, not because I had to. I feel the fullness and enjoyment of ones life, family relationships, friends, and activities also factors into the discussion as it applies to the individual. I am retired for 13 years, have a close family, great friends, am active and have expensive hobbies and interests. My passive income exceeds my burn rate by a good margin and I have a healthy 7 figure liquid net worth. My emphasis has always been focused on family, what I am doing, learning, helping my kids and others when needed, activities, and my relationship with God rather than posessions. Keep up the great content Erin and I'll see you on the next one. Larry, Central Valley, Ca.
Excellent insights, Erin - and a great job delivering those insights! I used to ask audiences: "Who wants to be rich?" surprisingly, fewer than half the people would raise their hands. Then I'd rephrase: "Who wants to be financially independent?" That got everyone. "Rich" is subjective and ultimately within our control. Keep up the good work!!!
I fit into the top 10% in both net worth and income. This is the first time I've been at the same level on both that I recall; aka middle class millionaire. My annual expenses are right at half my annual income. My passive income is equal to or greater than annual expenses every year that the markets return 2.5% or more.
Erin, that's a great definition of "rich". It defines rich in terms that are relatable for each individual, and not a dollar amount. In our situation, between an annuity, our SS income, and my pension, we have a surplus to our normal budget. This allows us the luxury of not having to pull any funds from our IRAs, instead using that money for luxury purchases. This January we're checking off a bucket list item by taking our entire family (5 of us) to Kauai for a week, as an example.
I don't have a number. When I quit having any debt, quit knowing when payday comes around, and quit being worried about paying for unexpected expenses, I started feeling comfortable. My income / net isn't the biggest, but it's enough to grant me financial serenity.
@7:55 it needs to be pointed out that passive income exceeding expenses doesn't mean you can retire or no longer need to work. Your passive investment portfolio in the market can return 10% on average and cover your expenses in a typical year, but you should generally use 4% to determine whether you can quit working. Those are vastly different percentages.
I define being rich by being secure in my finances enough to not worry about running out of money if any unpredictable events took place: stock market crash, health issues, natural disasters, divorce, other events affecting my family including grandchildren. Yes you buy insurances for most of the above, but sometimes that’s not enough especially if they fail you when you need them the most. To summarize: you’re rich when money is not any of your worries ever.
Excellent definition! My wife and I bought long term care insurance and a nice life insurance policy on me. I no longer am concerned with running out of money and now I’m concerned with minimizing taxes. 😉
This is all great, but everyone here is describing financial security but calling it "rich". Why? Those aren't the same thing at all. Financial security is great, but it doesn't necessarily make you rich by any stretch of the imagination.
@ A man who can always be able to take care of his family is a rich man. I could die tomorrow and my wife and children, and potentially a few relatives, will be taken care of.
@@glasshalffull2930 No, that isn't what "rich" means in the context of finances. What you describe is financial stability, which is not the same thing as being rich. I don't understand why everyone wants to redefine this word. I guess it's because they aren't rich, but want people to know that what they have is actually more important. That's great, but use a different word.
Yes, that was a terrible thing. They acted like thugs and also threw away a wonderful educational opportunity to educate people on the complexities of helping wildlife. No respect for anyone involved with that.
The state in which passive income exceeds expense just tells you that you’re financially free or independent without having to slave away for a paycheck while being able to keep or grow your nest egg. As the barometer is expense, this depends on one’s lifestyle. So in the end being rich or wealthy becomes a moving target using this definition.
Agreed. As soon as you reach the point where passive income > expenses, you're already worried about lifestyle creep. I think of rich as never worrying about money. You have enough to live as well as you want, you have enough to withstand lifestyle creep, you have enough to not think about running out. BTW, if you follow the Bigger Pockets podcast, there's an episode where they discuss FI folks and that it's extremely common their FI number keeps moving...
Exactly. Being financially independent is NOT the same thing as being rich. This trend of wanting to redefine words to make oneself feel better is silly.
Scott Galloway's definition would be the same as mine. To expand on it, the "Wealthy" normally aren't going to just passive income a little higher than their expenses. They have accounted for inflation AND the fact that they want their lifestyle to be better and better as they get older. This means bare minimum they're making twice their burn rate meaning only living off of 50% of the passive income they make. That's very conservative too cuz many will say it's best to live off of 25% or less so they can reinvest the other 75%.
I agree with Scott's definition of rich. I go to work because I enjoy it, not because I'm reliant on the paycheck. The stress of "I gotta keep this job to survive" mentality is soul crushing. I'm usually not impressed by or jealous of higher salaried people. Lifestyle creep almost always comes into play and they are worse off than I am.
We feel relatively wealthy because we can afford anything we want, but not everything we want. Our tastes are pretty modest except for a healthy travel budget. I do not know about Galloway’s definition though because we expect to spend down some of our portfolio before I draw SS at 70; I do have to keep reminding myself that it is ok for the portfolio to go down (it has gone up this year despite spending though, and I do not expect that to be the case every year)
Another well presented concise subject. Thank you. I can't help but wonder how much time a week you put into this website. It is amazing you have a full time job/business as well as a husband and small child. That all takes a lot of time yet you still present regular well researched and produced video. Thank you.
This is certainly not a solo effort. It takes me anywhere from an hour to four hours or so in preparation for a video. Depends on what kind of video it is and how much prep work needs to happen. It takes about 30 to 40 minutes to film each video. I have a wonderful editor, who works hard to make these videos, beautiful. And I am so lucky to have him. I know he puts many hours into making them beautiful. A thumbnail takes me anywhere from 2 to 4 hours to make. My day job I probably spend about 35 hours a week on. But again, I have a handful of really amazing employees. So that’s certainly not a solo effort there. And my son goes to daycare throughout the week. And we are so lucky to have a wonderful daycare where he has so much fun, he is making little friends, and learning so much. So, while it’s a lot of work, I would imagine in any given week. I probably spend 80 hours or so between both jobs. A lot of that is once my son goes to bed, or while he’s in daycare. Because once he comes home, it is one on one time with him. But it takes a whole team to make everything happen. And I’m very lucky to have a wonderful team. 😊
Loved reading your reply. Thanks for all of your dedication to your family (peanut too) your work and your TH-cam fans. You are an inspiration to all of us. Hard work, amazing talent and dedication/passion is an impossible trifecta to beat.
I was young with a family and working, not rich and very happy. Now I am old, still healthy but very rich. I still yearn for when I was young and not rich.
You work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K in a meme coin from just a few months ago and now they are multimillionaires.
I want to compliment you, you have said it all. I am a little business owner and I really want to expand my business to the next level by making myself an investor but I really don't know how to go about it..
Rich? It depends greatly on the population to which you're comparing yourself. If you're an American comparing yourself to the worldwide population, you're almost certainly rich.
For income its best to look at 1,5,10 percent by area you live. As to what I consider "rich", a well maintained home in good area with no mortgage, a Honda car, good medical insurance/care, ability to go out and get fajitas and margaritas when ever I want, and Netflix.
About 24 years ago, a guy from our message group cashed out with 4M from a bubble stock. Just recently, a former coworker mentioned he and his wife have around 3M in their retirement account. From what I've seen, I’d say 10M in assets is what I’d consider rich.
I love your video. I have Passive income as a landlord and yes it is truly passive! The tenant is a commercial express carwash and being a true NNN, I have no responsibility at all. They even pay my property taxes! And the rent covers my expenses and more 😎
The definition of passive income of more than expenses seems to define a comfortable lifestyle assuming the expenses are based on a planned budget. To make the jump to "rich", I'd think the passive income would need to support a lifestyle where you only had to loosely follow budget, eg not having to be concerned if you decide to spend more on some luxuries or extravagances (fancier/upgraded vacation, vehicle, dining out, etc). The biggest thing is to be able to support a lifestyle that makes you happy overall with a low worry on expenses vs income regardless of what that level is.
I define rich as having enough money, after taxes, to pay 2X my annual expenses. Of course, this will fluctuate depending on lifestyle. I'd love to be in this position.
Hey guys! What's up? Came into this video looking for a number, and came away with a MUCH better definition that makes more sense to me, and made me realize I'm closer than I thought. Great stuff, as always Erin. Thanks!
No matter how much you have you always look up to that next tier and want that. The secret is to separate “enough” from “more”. I have enough, and I feel bad for people who can never say that regardless of their bank account.
I believe what Galloway says is to be Financial independent. To be Rich for me is to be able to access exclusive spaces, groups, experiences, objects, investments with the money that you have or generate
I've thought for years that it's 2 - 3 times what you have / earn. In another video that interviewed people on the streets in the Philippines, they asked a guy what he did for a living and it was an IT job that would pay about $100K / year where I live. He was getting $700 / month. When asked how much he would need to earn to be "rich", he replied $2000 / month. That's less than I get from Social Security. It's always relative...
You want to read something bizarre? When you asked the question, for the first time in my life my first thought was "I am rich". I don't have anything near what brokerages think of as rich, but I do not fear economic insecurity. I am so glad you asked this question, because it made me realize how very fortunate I am.
New Subscriber here. I just came across your channel. This video really makes you think about where you are and where you want to be. Depending on your values and ethics being rich isn't monetary.
When I was younger I felt $1M was my goal, so I more than doubled it. But the older I get the more I resize being rich has little to do with money, more about happiness and health. BTW- I soon realized saving and investing in not a linear curve, once I passed my goal the returns compounded quicker than I realized. Glad you included the most important part, living expenses. A person making 6 figures plus, but spends 6 figures plus plus, is a "Broke Rich Person"- Dave Ramsey.
@@sambira @HighCountryRambler - you need at least a US$5,000,000 nest egg if you want to survive the 2025 to 2075 era. best to aim for US$8,000,000 and even then you have to make sure it keeps producing an yearly income for you to live off
I would add in a single addendum: the ability to survive a financial shock. If my expenses are $40k, and my passive income is $50k, I'm in a very good position as long as I don't have a major event that costs me $100,000 or more.
One reason a brokerage would not consider your home as part of calculation is that its more of a liability than an asset. You continue to pay towards it even without a mortgage and won't be easy to sell ( you pay a large penalty to realtors) and now you have to rent something to live in.
I earn over $1m dollars a year but this has only recently been the case. Nearly half of this goes in tax and a further $150k repays the bank in capital and interest on a business loan. I don’t really consider myself rich. I live in the same house I bought when I was earning $70k a year 10 years ago. I’ve managed to invest around $1m dollars and will feel comfortable when I’ve got no debt and around $3m to take early retirement. My main luxury is travel and now being able to turn left on a plane rather than right. As others have said though, good friends and family are more important than having a lot of money (although it is nice not to have to worry about money any more).
When I was in college, an accounting professor asked our class how much money you would need to be considered rich. Some students suggested certain amounts of wealth, and finally the professor said, "No, you're all wrong. When you can get up in the morning and decide whether or not to go to work, that's when you're rich." Which is basically the same thing your professor said.
Also there are two types of incomes (1) sweat income (2) auto-generated income… sweat is where one is working and some illness or physical ailment happens that needs to be treated 24/7 for 2-3 years then income is gone ; auto-generated is you can just sit at home and read a book and be with your kids and travel somewhere and pay your grocery bills and 2-3 hours a week you sit at a computer and maintain/touchup your stock portfolio, and every fortnight of monthly you get cash into your bank account from somewhere
The chart comparison of the net worth of the top 10%, 5%, and 1% within each age brackets literally lost me. Based on the labels and legends on the chart, how can a top 10% net worth be higher than a top 5%?
I’m tired of “TH-cam gurus”interchanging the word “rich” with “content.” They do not mean the same thing! So I hate it when people say something like “if you have health and a comfortable pillow, you are rich - even if you’re homeless.” At one time I was homeless, healthy, and content - but I wasn’t rich! And to suggest I was is kind of insulting.
Exactly. Rich is a word with a definition, and everyone here wants to redefine it to mean "health" or "I can pay my bills". That's great, but it's not rich.
I think rich is when your cash flow is an order of magnitude greater than your expenses over a given time, and is sustainable within any additional input from ones own efforts.
I would consider myself rich at $10 million. What is going on with the chart at 3:34? The Top 5% for age 45 and 50 is lower than top 10%? Shouldn't the top 5% always be more than the top 10%? It seems like the scale factor may be off for the 10%?
My definition of rich (better stated as : wealth) is the triangulation of Health, Happiness, and Money. As far as the money part is concerned, it comprises: a multi-year expense nest-egg + investments + passive income greater than expenses. This is a better definition of being rich (wealthy) in my book.
Having (active or passive) income greater than the living expense within a period of time in my 30s is a lot more confident than that in my 70s. The risks of unexpected expenses, mainly from health related / life threatening events that are correlated to age, should not be ignored.
Like many others have mentioned, wealth is health. Clearly the most valuable possession one can have. You can't buy it with money. So, if you have your health and you have happiness, your among the luckiest people on the planet. There are countless wealthy individuals who gave up their health for wealth. Ask any one of them if it was worth it.
You may value health more than being rich, but that doesn't mean being healthy makes you rich. They are entirely different things. Rich, in the context of finances (like this video) is a well-defined term that has nothing to do with health. I can't figure out why people keep mixing them up.
Good video, I like that definition better than net worth or income. Maybe *some* floor of net worth or income might be good... also adjusting by age has some value. Someone with a net worth of $1,000,000 at 25 is rich or is going to be doing pretty well by retirement even with some basic financial management. Was the word "greater" mispelled a couple times during the video? There was an extra "h"?
Hello, I'm a Doctor from Scotland, how do you make such amount? I'm a born Christian but sometimes I feel so down of myself because of low finance but I still believe in God.
Making touch with financial advisors like *Rosie Nolan Owen* who can assist you restructure your portfolio, would be a very creative option. Personal financial management will be crucial to navigating the next difficult times.
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
You are absolutely right, we also have lot's of expert, real ones with certificate and firms IDS out there waiting for investors to invest and experience the best of trade.
Frank Knight report, which is one of the top reports on wealth said that to be considered as 1% in usa one needs 5.8 mil net worth after all debt. #1 in the world is monaco, need to have 12.5 mi to be top 1%.
i agree with your idea of being rich to a point that point would be if and when your income stops (like a job) what do you have left to survive on add to being rich, enough to survive on when if when your income stops
Just my two cents on being a landlord: when it's passive, it's passive...but when it's not, it's really NOT. When the property is up to date and you have a well-vetted tenant, it's great. Generally, the experience is passive most of the time, but it's punctuated by occasional periods of hard work needed to get it back up and running. I think it's worth it in the long run, but it's not without its headaches.
Thanks Erin, you have nailed what is a really important way to think about "being rich" in retirement. My advice to people would be even more conservative: save, invest (and pay off debt), live beneath your means, AND shoot for a retirement passive income that will be 150% more than what your bills might/will be when you retire (if SS is going broke, add more!). Example: retire from your job at 65 making 100k, and with $1M in investments. Sounds amazing right? Assume your bills are $60k per year. Adding up SS, pension and 4% rule means (roughly) $88k per year. Depending on taxes, that is more than your bills (woo hoo!), but, is less than you were making while working. Is that "comfortable"? To me it sounds like a pay cut. I would say to aim for approx $2.0M in investments to make (in retirement) $132k.
5mil in assets. You can take 4 percent per year and live moderatly comfortably at 200k per year and work only when you want and be unlikely to ever run out of money
3:29 as someone between the ages of 45 and 50 I'm very confused by this chart. How can the wealth needed to reach the top 5% be lower than that needed to be in the top 10%?
Once I realized I could generate enough passive income to cover my expenses I felt financially secure. Or possibly "comfortable", lol. I still don't feel rich. I don't know what it would take me to feel rich... probably a couple more million?
Financially speaking, you are rich when you can turn on the "spicket" whenever you need or want something, and $ comes out. If the flow slows down or stops, then you are no longer rich
I think of being rich as being financially solvent. I can see why the poll is around 2 million. That puts most people in the ballpark. But that amount is subjective.
You’re rich when you no longer watch TH-cam videos trying to figure out if you’re rich. 😁
😂😂😂 Fair!
This comment wins. I am watching because I’m not yet there.
No matter what you have there will almost always be someone richer than you.
@@JBoy340ait’s not a competition
@@JBoy340aOf course but not working and not worrying about money is the point I think
Once again a very insightful video Erin. I am retired and have a liquid net worth in excess of $7,000,000. I am a widower with no dependents and no debt. In addition, my passive income far exceeds my burn rate. Therefore, by all definitions I would be considered rich. However, I think it is critically important to emphasize that RICH does not equal HAPPY. After living 68 years, I have met dozens of people who would never be considered wealthy but are extremely happy and feel grateful for the lives they have. Enjoying life, even in simple ways, and surrounding yourself with family and friends is much more important than being rich. Too much emphasis is placed on material possessions. Money makes things easier, but it isn’t the be all and end all for a happy life.
sorry for your loss. thanks for the perspective. All the money in the world is not worth losing my wife.
Couldn't have been put better. Here's to you, Scott.
Hi Scott, I'm your long lost son. How are you? how have you been?
SPOT ON 🎉
Being rich won’t make you happy, but being dirt poor can make you unhappy.
But i do agree with what you said. It’s all about expectations. If your expectations are too high, life will always disappoint.
I feel rich when my Doctor tells me I am healthy. Everything else in life is secondary to health!
I wish I could afford to go to the doctor.
100% agree. The one thing you can't buy.
cliché
So true! It is very easy to take this for granted until you or a loved one experience a serious health issue!
Agree
My passive income is larger than my burn rate, so I’m Rich. 😊
It's important to set goals and make a plan. Remember, wealth can mean different things to different people,One thing i can say that helped me in life to reach my first million was starting early, i got curious and informed i became open to passive income, investments in equities , etfs and the likes. Also sought help to handle my portfolio which was my foundation. i'm ever grateful to Susan Kay Mack my FA.
An everyday millionaire. Well done
I did read about Susan Kay Mack on the web., quite a great resume she has.
Everyone knows what to do, but not everyone does what they know.. long lasting results come from steady and consistently applied effort kudos
I’m 55 and plan to retire in the next couple of years. I have saved and invested fairly wisely, with rental property making up a good portion of my wealth accumulation. I use to think that having a large amount of money would make you rich, but over the last few years, my thinking has changed a little. I now feel that having enough money to cover everyday life, along with health and free time is what really makes you rich. I’ve spent 40 years of my life trading my time for money. Free time and being healthy are what truly make you rich!!!!
I'm about to turn 41 and thus is where my head is at. So close I can taste it.
Rich is being able to help others in need, without concerns about your own finances.
Or being able to go to the grocery store and get whatever you want without looking at the prices. That is a very liberating feeling.
@@philochristos That is going from poor to middle class. Rich is something very different
“Help” meaning you pay them or employ them? Or “help” meaning you go over and mow their lawn or walk their dog for them?
@@socalstr There are many ways to help others, either by giving money or material needs, providing labor, counsel, or jobs. Anything given out of love for your neighbors.
Charles Dickens
“Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”
I read this as a young college age student and never forgot it. It's not an easy goal all the time, but one I recognize from my own experience to be true.
Erin you are one of my top 5 favorite TH-camrs
In the middle of watching your videos, I almost always think, "But what about...." And later in the video, you almost always answer my question.
haha! I love to hear that!
Living below your means has always been what I've done. I've told others that it doesn't matter how much you make, you adjust to spend differently. Whether you make $20/hr or $100/hr spend below your means.
Wisdom.
Even at $100 an hour you have to prioritize what is important to you. Travel? A vacation home? Boat? Motorhome? Can't have it all.
Living below your means is ubiquitous. EVERYONE must do it. The poor do it and are -poor and the rich do it and remain rich.
You can't live on $20. Not in any major US city. That's for sure.
@@Dave-sw2dm $100 is more than enough to enjoy life and save enough for retirement. Anyone struggling with that kind of income have no financial acumen.
When my daily job becomes an option, then I consider myself rich! Living frugally and invest; waiting until that amount in my investment
I am so on board with this philosophy. I considered myself wealthy when the math says that I could stop working, continue to live my current lifestyle, and not run out of money in my expected lifespan. Oddly, that does not take a huge amount of money.
Another great video, analysis and discussion Erin. I agree, generally, with Scott Galloway's definition of wealth. In discussions around the meanings of the terms wealth and rich, it is hard to keep short and simple as everyone has nuances in their view. I have always enjoyed work and do it because I want to, not because I had to. I feel the fullness and enjoyment of ones life, family relationships, friends, and activities also factors into the discussion as it applies to the individual. I am retired for 13 years, have a close family, great friends, am active and have expensive hobbies and interests. My passive income exceeds my burn rate by a good margin and I have a healthy 7 figure liquid net worth. My emphasis has always been focused on family, what I am doing, learning, helping my kids and others when needed, activities, and my relationship with God rather than posessions. Keep up the great content Erin and I'll see you on the next one. Larry, Central Valley, Ca.
A loving family is being rich.
So you’re broke…
Until you can't afford medical care for them.
My favorite financial vlogger on the internet! A great definition of rich!
Excellent insights, Erin - and a great job delivering those insights! I used to ask audiences: "Who wants to be rich?" surprisingly, fewer than half the people would raise their hands. Then I'd rephrase: "Who wants to be financially independent?" That got everyone. "Rich" is subjective and ultimately within our control. Keep up the good work!!!
In the graph at 3:29, why is the Top 5% lower than the Top 10% for some ages?
I noticed the same thing.
Either two values got swapped or its AI-generated
Because its wrong
@@montezuma6962 Yeah there's no way that the top 10% of 25 years olds have a net worth of $300K or 1% have a net worth of $2.5M. That is absurd.
Came here for this comment. Definitely a data error.
Simply, if you don't care how much stuff costs at the supermarket or how much gas costs - you're probably wealthy. Galloway's definition is very good.
I have no idea what eggs or milk costs and I buy it every week.
I like professor’s idea about passive income! I would say being rich is having enough for your needs and a few wants as well😃
I fit into the top 10% in both net worth and income. This is the first time I've been at the same level on both that I recall; aka middle class millionaire. My annual expenses are right at half my annual income. My passive income is equal to or greater than annual expenses every year that the markets return 2.5% or more.
Erin, that's a great definition of "rich". It defines rich in terms that are relatable for each individual, and not a dollar amount. In our situation, between an annuity, our SS income, and my pension, we have a surplus to our normal budget. This allows us the luxury of not having to pull any funds from our IRAs, instead using that money for luxury purchases. This January we're checking off a bucket list item by taking our entire family (5 of us) to Kauai for a week, as an example.
I don't have a number. When I quit having any debt, quit knowing when payday comes around, and quit being worried about paying for unexpected expenses, I started feeling comfortable. My income / net isn't the biggest, but it's enough to grant me financial serenity.
Yes, wealth is scale-able. A homeless person with no possessions and $50K in the bank is wealthy.
@7:55 it needs to be pointed out that passive income exceeding expenses doesn't mean you can retire or no longer need to work. Your passive investment portfolio in the market can return 10% on average and cover your expenses in a typical year, but you should generally use 4% to determine whether you can quit working. Those are vastly different percentages.
I define being rich by being secure in my finances enough to not worry about running out of money if any unpredictable events took place: stock market crash, health issues, natural disasters, divorce, other events affecting my family including grandchildren. Yes you buy insurances for most of the above, but sometimes that’s not enough especially if they fail you when you need them the most. To summarize: you’re rich when money is not any of your worries ever.
Excellent definition! My wife and I bought long term care insurance and a nice life insurance policy on me. I no longer am concerned with running out of money and now I’m concerned with minimizing taxes. 😉
This is all great, but everyone here is describing financial security but calling it "rich". Why? Those aren't the same thing at all. Financial security is great, but it doesn't necessarily make you rich by any stretch of the imagination.
@ A man who can always be able to take care of his family is a rich man. I could die tomorrow and my wife and children, and potentially a few relatives, will be taken care of.
@@glasshalffull2930 No, that isn't what "rich" means in the context of finances. What you describe is financial stability, which is not the same thing as being rich. I don't understand why everyone wants to redefine this word. I guess it's because they aren't rich, but want people to know that what they have is actually more important. That's great, but use a different word.
@@BigFunAgency So, let’s hear your definition! Exactly how much does it take to be rich?
You nailed it, Erin and that's my retirement goal. Living comfortably below my income.
His achievements are nothing short of phenomenal! He’s showing that with vision and perseverance, anyone can build a lasting legacy.
100 beeeeellion dollars! Justice for Peanut!!
Justice for Peanut.
Yes, that was a terrible thing. They acted like thugs and also threw away a wonderful educational opportunity to educate people on the complexities of helping wildlife. No respect for anyone involved with that.
Government gone wild.
I like the definition of wealth based on passive income exceeding expenses. It helps many people see that becoming wealthy is more achievable!
The state in which passive income exceeds expense just tells you that you’re financially free or independent without having to slave away for a paycheck while being able to keep or grow your nest egg. As the barometer is expense, this depends on one’s lifestyle. So in the end being rich or wealthy becomes a moving target using this definition.
Agreed. As soon as you reach the point where passive income > expenses, you're already worried about lifestyle creep. I think of rich as never worrying about money. You have enough to live as well as you want, you have enough to withstand lifestyle creep, you have enough to not think about running out. BTW, if you follow the Bigger Pockets podcast, there's an episode where they discuss FI folks and that it's extremely common their FI number keeps moving...
Exactly. Being financially independent is NOT the same thing as being rich.
This trend of wanting to redefine words to make oneself feel better is silly.
Exactly. It's a terrible definition. It basically means almost anyone could be considered "rich" if they live like a poor person. It makes no sense.
This is a great diadiatic video! Since financial literacy isn't taught in school. These videos are that much more consequential. Thank you!
Scott Galloway's definition would be the same as mine. To expand on it, the "Wealthy" normally aren't going to just passive income a little higher than their expenses. They have accounted for inflation AND the fact that they want their lifestyle to be better and better as they get older. This means bare minimum they're making twice their burn rate meaning only living off of 50% of the passive income they make. That's very conservative too cuz many will say it's best to live off of 25% or less so they can reinvest the other 75%.
Your bloopers at the end. Now that’s rich!
I agree with Scott's definition of rich. I go to work because I enjoy it, not because I'm reliant on the paycheck. The stress of "I gotta keep this job to survive" mentality is soul crushing. I'm usually not impressed by or jealous of higher salaried people. Lifestyle creep almost always comes into play and they are worse off than I am.
We feel relatively wealthy because we can afford anything we want, but not everything we want. Our tastes are pretty modest except for a healthy travel budget. I do not know about Galloway’s definition though because we expect to spend down some of our portfolio before I draw SS at 70; I do have to keep reminding myself that it is ok for the portfolio to go down (it has gone up this year despite spending though, and I do not expect that to be the case every year)
Another well presented concise subject. Thank you. I can't help but wonder how much time a week you put into this website. It is amazing you have a full time job/business as well as a husband and small child. That all takes a lot of time yet you still present regular well researched and produced video. Thank you.
This is certainly not a solo effort. It takes me anywhere from an hour to four hours or so in preparation for a video. Depends on what kind of video it is and how much prep work needs to happen. It takes about 30 to 40 minutes to film each video. I have a wonderful editor, who works hard to make these videos, beautiful. And I am so lucky to have him. I know he puts many hours into making them beautiful. A thumbnail takes me anywhere from 2 to 4 hours to make.
My day job I probably spend about 35 hours a week on. But again, I have a handful of really amazing employees. So that’s certainly not a solo effort there.
And my son goes to daycare throughout the week. And we are so lucky to have a wonderful daycare where he has so much fun, he is making little friends, and learning so much.
So, while it’s a lot of work, I would imagine in any given week. I probably spend 80 hours or so between both jobs. A lot of that is once my son goes to bed, or while he’s in daycare. Because once he comes home, it is one on one time with him. But it takes a whole team to make everything happen. And I’m very lucky to have a wonderful team. 😊
Loved reading your reply. Thanks for all of your dedication to your family (peanut too) your work and your TH-cam fans. You are an inspiration to all of us. Hard work, amazing talent and dedication/passion is an impossible trifecta to beat.
@@ErinTalksMoney Thank you for sharing some of your time with us through your postings. Bless you for the life you live and example you set.
I was young with a family and working, not rich and very happy. Now I am old, still healthy but very rich. I still yearn for when I was young and not rich.
You work for 40yrs to have $1M in your
retirement, meanwhile some people are putting just $10K in a meme coin from just a few months ago and now they are multimillionaires.
I want to compliment you, you have said it all. I am a little business owner and I really want to expand my business to the next level by making myself an investor but I really don't know how to go about it..
imagine investing in Btcoin earlier.... You could have been a multi millionaire precently
@@kelseyeadelmarr6109 You are right. Been thinking of going into gold and cyptocurrency
Assets that can make you rich
*FX
*Btcoin
*Stocks
*Gold
*Real estate
I totally agree with you it has been an eye-opening experience for a lot of people.
Rich? It depends greatly on the population to which you're comparing yourself. If you're an American comparing yourself to the worldwide population, you're almost certainly rich.
Not really. In fact, 50 million Americans suffer from hunger. Just being American most definitely does NOT make you rich.
Love you Erin. Good video. I think Henry David Thoreau's definition is better than Scott Galloway's. "Wealth is the ability to fully experience life."
That’s a great one!
Best Personal Finance Channel on You Tube. Continue the good work Erin!
Wow, thank you! 🙏
For income its best to look at 1,5,10 percent by area you live. As to what I consider "rich", a well maintained home in good area with no mortgage, a Honda car, good medical insurance/care, ability to go out and get fajitas and margaritas when ever I want, and Netflix.
About 24 years ago, a guy from our message group cashed out with 4M from a bubble stock. Just recently, a former coworker mentioned he and his wife have around 3M in their retirement account. From what I've seen, I’d say 10M in assets is what I’d consider rich.
I think you described what is rich perfectly. Love watching your videos and learning. You always have an interesting take on things.
I love your video. I have Passive income as a landlord and yes it is truly passive! The tenant is a commercial express carwash and being a true NNN, I have no responsibility at all. They even pay my property taxes! And the rent covers my expenses and more 😎
The definition of passive income of more than expenses seems to define a comfortable lifestyle assuming the expenses are based on a planned budget. To make the jump to "rich", I'd think the passive income would need to support a lifestyle where you only had to loosely follow budget, eg not having to be concerned if you decide to spend more on some luxuries or extravagances (fancier/upgraded vacation, vehicle, dining out, etc). The biggest thing is to be able to support a lifestyle that makes you happy overall with a low worry on expenses vs income regardless of what that level is.
I am happy with the data source you provided, so I can read it in full.
I define rich as having enough money, after taxes, to pay 2X my annual expenses. Of course, this will fluctuate depending on lifestyle. I'd love to be in this position.
Another wonderful presentation! Great perspective. Very practical, informative and concise.
Keep up the great work!!!
Glad you liked it!
Hey guys! What's up? Came into this video looking for a number, and came away with a MUCH better definition that makes more sense to me, and made me realize I'm closer than I thought. Great stuff, as always Erin. Thanks!
No matter how much you have you always look up to that next tier and want that. The secret is to separate “enough” from “more”. I have enough, and I feel bad for people who can never say that regardless of their bank account.
That is hands down the best explanation of rich I’ve ever heard. Thanks!
Wow, thanks! 😊
Was that truly a revelation for you? That has been obvious to me for some time.
I totally agree with professor Scott Galloway’s definition of rich, at least it makes me feel rich! Hahahaha, thank you Erin for bringing that up 😊❤.
I believe what Galloway says is to be Financial independent. To be Rich for me is to be able to access exclusive spaces, groups, experiences, objects, investments with the money that you have or generate
I've thought for years that it's 2 - 3 times what you have / earn.
In another video that interviewed people on the streets in the Philippines, they asked a guy what he did for a living and it was an IT job that would pay about $100K / year where I live. He was getting $700 / month. When asked how much he would need to earn to be "rich", he replied $2000 / month. That's less than I get from Social Security.
It's always relative...
You want to read something bizarre? When you asked the question, for the first time in my life my first thought was "I am rich". I don't have anything near what brokerages think of as rich, but I do not fear economic insecurity. I am so glad you asked this question, because it made me realize how very fortunate I am.
Best rich definition I heard so far
I love your content so much. When you say “get invested,” is there something specific you mean? Or generally speaking just start investing?
Super sharp audio. Love it! Great content.
New Subscriber here. I just came across your channel. This video really makes you think about where you are and where you want to be. Depending on your values and ethics being rich isn't monetary.
Welcome to the channel! 😊
What kind of "net worth individual" is between $10M-30M? Very, VERY High Net Worth Individual?
When I was younger I felt $1M was my goal, so I more than doubled it. But the older I get the more I resize being rich has little to do with money, more about happiness and health. BTW- I soon realized saving and investing in not a linear curve, once I passed my goal the returns compounded quicker than I realized. Glad you included the most important part, living expenses. A person making 6 figures plus, but spends 6 figures plus plus, is a "Broke Rich Person"- Dave Ramsey.
Dave said it well. My dad used to say "it's not what you make but what you keep". He was a financial planner for most of his life.
@@sambira @HighCountryRambler - you need at least a US$5,000,000 nest egg if you want to survive the 2025 to 2075 era. best to aim for US$8,000,000 and even then you have to make sure it keeps producing an yearly income for you to live off
For me, rich is the ability to afford at least a middle class life without needing to work or rely on handouts for income.
So, what is a middle class life? This is a target no one can definitively state.
2 million in liquid assets, she said it in the video @@sambira
I would add in a single addendum: the ability to survive a financial shock. If my expenses are $40k, and my passive income is $50k, I'm in a very good position as long as I don't have a major event that costs me $100,000 or more.
One reason a brokerage would not consider your home as part of calculation is that its more of a liability than an asset.
You continue to pay towards it even without a mortgage and won't be easy to sell ( you pay a large penalty to realtors) and now you have to rent something to live in.
I was happier when I thought my house was part of my net worth.
It is. 💯pct.
It is part of your net worth, just not included in these silly categories.
$3 million - CAD $ / House - mortgage free $1 million - divided paying blue chip stocks $2 million - average yield 4% - annual income $80,000
Good job avoiding calling being a landlord a passive activity. I realized this the hard way.
Great explanation of different types of rich👍I’ve always lived below my means, and have always been a saver✌️I’ve still enjoyed life, and frugal also
Truth wealth is your own time and freedom
I earn over $1m dollars a year but this has only recently been the case. Nearly half of this goes in tax and a further $150k repays the bank in capital and interest on a business loan. I don’t really consider myself rich. I live in the same house I bought when I was earning $70k a year 10 years ago. I’ve managed to invest around $1m dollars and will feel comfortable when I’ve got no debt and around $3m to take early retirement. My main luxury is travel and now being able to turn left on a plane rather than right. As others have said though, good friends and family are more important than having a lot of money (although it is nice not to have to worry about money any more).
5M, I think I finally understand how to be financially wealthy, "make more than you spend".
When I was in college, an accounting professor asked our class how much money you would need to be considered rich. Some students suggested certain amounts of wealth, and finally the professor said, "No, you're all wrong. When you can get up in the morning and decide whether or not to go to work, that's when you're rich." Which is basically the same thing your professor said.
Also there are two types of incomes (1) sweat income (2) auto-generated income… sweat is where one is working and some illness or physical ailment happens that needs to be treated 24/7 for 2-3 years then income is gone ; auto-generated is you can just sit at home and read a book and be with your kids and travel somewhere and pay your grocery bills and 2-3 hours a week you sit at a computer and maintain/touchup your stock portfolio, and every fortnight of monthly you get cash into your bank account from somewhere
The correct term for "auto generated income" is passive income.
Whoa, awesome editing when the screen backed out to show the likes and comments!!!
The chart comparison of the net worth of the top 10%, 5%, and 1% within each age brackets literally lost me. Based on the labels and legends on the chart, how can a top 10% net worth be higher than a top 5%?
She mixed up the 5 and 10% bars.
With regard to top income percentile, are you considering individual earners or total household income?
I’m tired of “TH-cam gurus”interchanging the word “rich” with “content.” They do not mean the same thing! So I hate it when people say something like “if you have health and a comfortable pillow, you are rich - even if you’re homeless.” At one time I was homeless, healthy, and content - but I wasn’t rich! And to suggest I was is kind of insulting.
Exactly. Rich is a word with a definition, and everyone here wants to redefine it to mean "health" or "I can pay my bills". That's great, but it's not rich.
I think rich is when your cash flow is an order of magnitude greater than your expenses over a given time, and is sustainable within any additional input from ones own efforts.
I would consider myself rich at $10 million. What is going on with the chart at 3:34? The Top 5% for age 45 and 50 is lower than top 10%? Shouldn't the top 5% always be more than the top 10%? It seems like the scale factor may be off for the 10%?
Good point! Lol that cant be right
Rich Successful
Rich Healthy
Rich Happy
My definition of rich (better stated as : wealth) is the triangulation of Health, Happiness, and Money. As far as the money part is concerned, it comprises: a multi-year expense nest-egg + investments + passive income greater than expenses. This is a better definition of being rich (wealthy) in my book.
Having (active or passive) income greater than the living expense within a period of time in my 30s is a lot more confident than that in my 70s. The risks of unexpected expenses, mainly from health related / life threatening events that are correlated to age, should not be ignored.
Like many others have mentioned, wealth is health. Clearly the most valuable possession one can have. You can't buy it with money. So, if you have your health and you have happiness, your among the luckiest people on the planet. There are countless wealthy individuals who gave up their health for wealth. Ask any one of them if it was worth it.
You may value health more than being rich, but that doesn't mean being healthy makes you rich. They are entirely different things. Rich, in the context of finances (like this video) is a well-defined term that has nothing to do with health. I can't figure out why people keep mixing them up.
Good video, I like that definition better than net worth or income. Maybe *some* floor of net worth or income might be good... also adjusting by age has some value. Someone with a net worth of $1,000,000 at 25 is rich or is going to be doing pretty well by retirement even with some basic financial management.
Was the word "greater" mispelled a couple times during the video? There was an extra "h"?
*I'm glad you made this video* it reminds me of my transformation from a nobody to good home, $89k biweekly and a good daughter full of love..
My advice to everyone is that saving is great but investment is the key to be successful imagine investing $15,000 and received $472,700.
Hello, I'm a Doctor from Scotland, how do you make such amount? I'm a born
Christian but sometimes I feel so down of myself because of low finance but I still believe in God.
Making touch with financial advisors like *Rosie Nolan Owen* who can assist you restructure your portfolio, would be a very creative option. Personal financial management will be crucial to navigating the next difficult times.
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
You are absolutely right, we also have lot's of expert, real ones with certificate and firms IDS out there waiting for investors to invest and experience the best of trade.
Are those incomes and wealth levels per individual or per household?
Frank Knight report, which is one of the top reports on wealth said that to be considered as 1% in usa one needs 5.8 mil net worth after all debt. #1 in the world is monaco, need to have 12.5 mi to be top 1%.
i agree with your idea of being rich to a point
that point would be if and when your income stops (like a job)
what do you have left to survive on
add to being rich, enough to survive on when if when your income stops
Just my two cents on being a landlord: when it's passive, it's passive...but when it's not, it's really NOT. When the property is up to date and you have a well-vetted tenant, it's great. Generally, the experience is passive most of the time, but it's punctuated by occasional periods of hard work needed to get it back up and running. I think it's worth it in the long run, but it's not without its headaches.
I would say that being able to pay all your bills and have a safety cushion on the 4% rule is the best goal to be considered wealthy
Thanks Erin, you have nailed what is a really important way to think about "being rich" in retirement. My advice to people would be even more conservative: save, invest (and pay off debt), live beneath your means, AND shoot for a retirement passive income that will be 150% more than what your bills might/will be when you retire (if SS is going broke, add more!). Example: retire from your job at 65 making 100k, and with $1M in investments. Sounds amazing right? Assume your bills are $60k per year. Adding up SS, pension and 4% rule means (roughly) $88k per year. Depending on taxes, that is more than your bills (woo hoo!), but, is less than you were making while working. Is that "comfortable"? To me it sounds like a pay cut. I would say to aim for approx $2.0M in investments to make (in retirement) $132k.
Save money so one day your money can save you! 🙏🏻
5mil in assets. You can take 4 percent per year and live moderatly comfortably at 200k per year and work only when you want and be unlikely to ever run out of money
3:29 as someone between the ages of 45 and 50 I'm very confused by this chart. How can the wealth needed to reach the top 5% be lower than that needed to be in the top 10%?
Galloway nailed it.
Once I realized I could generate enough passive income to cover my expenses I felt financially secure. Or possibly "comfortable", lol. I still don't feel rich. I don't know what it would take me to feel rich... probably a couple more million?
Financially speaking, you are rich when you can turn on the "spicket" whenever you need or want something, and $ comes out.
If the flow slows down or stops, then you are no longer rich
I totally agree that being rich is when your passive income exceeds your living expenses.
Great vid!
I think of being rich as being financially solvent. I can see why the poll is around 2 million. That puts most people in the ballpark. But that amount is subjective.