Almost Rich: Earning $160,000 – $200,000 a year and barely making it
There was an article shared by Single Mom, Rich Mom in her post Judgey McJudgeypants referencing a Toronto Life article entitled: “Almost Rich: an examination of the true cost of city living and why rich is never rich enough“.
FYI, SMRM makes more as a single income earner than any of these people, and she is even more frugal than I am, which isn’t saying much because I don’t really consider myself super frugal (more of a conscious spender if that exists)… but I thought I ought to point out!
As a short recap, these people earn about $160,000 – $200,000 gross a year and are saying that it still isn’t enough to live the way they want and save. Toronto Life writes:
…the threshold for the top one per cent of income earners is much lower than you’d expect: $196,000, in the latest Statistics Canada numbers.
That’s no small amount of money, but hardly the means for a life of leisure.
In an increasingly pricy city like Toronto, where we pay a premium for everything from milk to car insurance, $196,000 can seem positively middle-class.
I am no good at reading these expenses in a huge paragraph, so I made graphs for two profiles I thought were the most interesting:
At the end of the month, after all the bills are paid, they usually find they have nothing left. “We have a weakness for designer furniture,” says Suzanne. “In 2010, we spent $5,000 on a table and Eames chairs for our dining room.”
THE LEWIS-KOONINGS BUDGET:
I estimated that they earn $125,000 net a year after taxes.
NOTES I’D LIKE TO POINT OUT:
- They’re saving 1.18% of their income for their kids and 0% for themselves
- …but are spending 4.73% of their income on Wine and 3.78% on Eating Out
He tries to stay debt-free, but occasionally he splurges on travel or a big-ticket toy, like the $7,500 Royal Enfield motorcycle he bought last year. “People think I make a lot of money,” he says, “but I lose so much of it in tax.”
THE HAYNES BUDGET:
I estimated that he earns $115,000 net after taxes.
Updated Note: Retirement should be “Need”, not “Want”, although he has a solid saving balance at the end of the year.
NOTES I’D LIKE TO POINT OUT:
- I don’t think his budget is that bad…. because he prioritizes what he wants to do!!!
- He also seems to be saving a total of about $40,000 a year based on his budget ($20K in retirement and $20K in budget leftover).
- I’m sort of curious about his quote about not making a lot of money and losing most of it in tax — he’s a single income household earning about $115k net a year which is a phenomenal amount of money
Read the Toronto Life Article here.
THEY EARN PLENTY TO SAVE, THEY JUST SPEND TOO MUCH
Same old, same old.
I will admit, I was reading the article and I was a bit shocked that they think what they earn, is not enough, but maybe that’s just Toronto Life’s spin on things to garner some shock so that the article goes viral.
I earn $30,000 less than the lowest earner, and I think what I earn is more than enough as a dual income no kids (DINK), although BF and I don’t share our income, we do split the essential bills 50/50 like Rent, Household and Groceries.
For those couples who say that they don’t seem to have money at the end of the day (Lewis-Koonings), they need to re-examine their budget.
The rest, seem to be saving, although not as much as they’d like.
EVERYONE PRIORITIZES WHAT THEY WANT TO DO WITH THEIR MONEY
They either want to spend it on Wine and Eating out instead of saving for their kids or their own future (Lewis-Koonings), or they decide that Wine is important, but they still make it a point to sock away the maximum for their retirement (Haynes).
I am not saying that NO ONE should be able to eat out or have a great bottle of wine a week.
I’m saying that if you feel like you don’t save enough, and you’re always living cheque to cheque then you need to re-examine your budget and put your money where your mouth is.
People who claim that they HAVE to eat out because they don’t have time to cook when they get home or are tired, are people who are not organized and conscientious about their money to be prepared for those weekly challenges.
I’m tired too. I get home, it’s late, I’m annoyed, but I cook ahead of time so that I don’t go hungry and start eating condiments and spices.
I AM NO SAINT… BUT I DO SAVE MY MONEY
I am no saint. I definitely spend when I want to spend, and I do what I want with my money, but that’s because I can afford to and I know it.
I save when I can, and when I feel panicky or anxious that I might be turning into a McSpenderson, I cut back and start re-evaluating my goals.
I always review my budget each month that I track with my budgeting tool, I set very lofty goals for my net worth (perhaps too lofty…), and I have significant savings outside of my retirement plans.
I try to be conscientious about my money, but I also want to live my life and be happy, even if it means spending $2.50 on a single macaron! (OK who am I kidding, I eat 4 macarons at a time… so make that $10.)
SO, IS A 6-FIGURE INCOME MORE THAN ENOUGH FOR YOU?
☸ 
Discuss - 19 Comments
I agree! I ate at Whole Foods every night for about 2 weeks, but by the end, I was so sick of the food, I was dying for a kitchen to cook in.
Trust me I’ve sat here and pondered how do most moms I know that work and stay at home drive truly luxury cars? We’re talking Lexus, Volvo, BMW, Mercedes? Cars upwards easily of $40K? How do you afford something like that with daycare or not working on I can’t believe they make 3x what my DH makes. Maybe 2x if they both work, but they aren’t taking home 2x with daycare and taxes probably close to the same.
So how the heck are they and their spouses affording everything? I’ve still never figured it out. How they afford organic everything, luxury cars, eating out, and savings? I have considered if my DH and I didn’t save what we do we’d have an extra $3-4k/month so I guess it’s completely plausible on our income that we could have two luxury cars, stay at home, and eat out or only buy organic without struggling. But then we have to save something still right?
Organic food can be easy to find for cheap if you avoid places like Whole Foods…. Although it isn’t easy or AS cheap as normal stuff.
We do a mix of organic and not.
Absolutely. My DH and I raise our kids in a city just as expensive as toronto with a six figure income and I cannot complain. I stay at home so what’s there to complain about? I have such privilege. Sure my car is older than everyone I know but heck I don’t see the point in working to buy a new car rather than spending time with my DD.
Now I consider working for mental sanity but definitely not for money. We save something like 35% to boot, live on less than half of what we make and I think we’re living well. I would never say we’re struggling and I would have to say that if worse came to worse I could be working.
You have options and no fear about what would happen if things went south, but these people seem to be genuinely scared on what they’re making
Exactly!
Spend your money, DO NOT complain if it’s more than enough and you have the luxury of being able to choose to buy organic or expensive cuts of meat for yourself or your family.
I think it’s just unconscious spending, which is very eerily familiar to me. *pats budget*…. now it’s a lot easier to say no.
By having their stories published, these two households are just begging to be robbed. Those desperate with nothing to loose would think neither household would notice anything missing …[sarcasm]. Seriously, the numbers don’t lie.
Well hopefully they didn’t give their addresses out….
Agreed.
I was quite shocked, myself. It’s no small amount of income, no matter where you live.
There are plenty of people living in big cities like NYC, SF, Toronto, Vancouver, who don’t make that kind of money.
I guess it depends on how you see yourself living your life.
If you’ve ever watched those ‘Princess’ or ‘Til Debt do you Part’ shows on Slice with Gail Vaz-Oxlade, the things people will say, shock me sometimes.
There was a girl on an episode yesterday who had a personal driver because she was sick of driving herself around. That’s the kind of behaviour I expect from someone making millions.
Ah I see!
I separate out “Groceries” from toilet paper and so on.
You make a good point. It’s more that the groceries you buy, have to be tradeoffs. In my cheese example, I wouldn’t spend $30 on cheese everyday. Perhaps once a month, as a treat.
I don’t feel sorry for them even if they live in an expensive city. I think its terrible when privileged people complain about how bad they have it. Especially when they live in the first world and in the richest continent (North America) that the world has ever known in the history of the world.
Our first world problems are rather nice compared to what the rest of the world is facing.
Anyway, there are always ways to cut costs and save no matter where you are. The first family would benefit by cutting out on spending too much wine, eating out, and their other entertainment needs (phone, cable, etc). Maybe stop buying too much designer furniture.
Normally I don’t have a problem with someone spending $5k on furniture, $500 on wine….if they can afford it. But if a person feels that type of spending would squeeze them financially then I can’t feel bad for them. Especially when they make more than the rest of the population ever will.
You know I like watching movies, fine dining, wine, and nice electronic gadgets, I think everyone does but there’s away to have the nice things without spending yourself into debt. Like saving up for every purchase. I know affluent people that have stayed rich because they don’t spend everything they make.
The designer furniture told me that they spend impulsively and unconsciously.
They’ve probably never tracked their spending for a whole month or longer, or made a budget in their lives. They seemed to live very in-the-moment.
My parents are a bit like that, and from experience in living as a kid with them and helping them learn how to budget now, it is NOT a sustainable long-term solution.
I was trying to think how groceries cost so much, but if you buy organic and fancy cheeses, it really adds up. The other day we bought fancy cheese for $30!!!! For one meal for 2 people that is outrageous, but it was fab cheese….
But you don’t live in the city?
It is enough! My husband and I make less than either of your examples, and we live in an expensive city, too (Washington, D.C. area). We used to make more, until I cut back to half time at work. We decided that quality of life meant more than the money, and, yes, we are frugal. Enough so that we could pay off our first house (we’re renting it out now), and buy a second house in a better school system for our son. I’m actually on the path to starting a second career that is potentially more lucrative (this is what I’m doing with the extra time now), and will hopefully pay back in the future in spades. One of my goals is to own more rental homes (it’s great mostly-passive income!). Saving up for houses is also a great incentive for saving in general, since they’re so expensive. We’re in the process of looking for a 3rd house for rental income. We both also max out our retirement savings and contribute a significant amount to our son’s education fund.
You are both on the right track then! Any big city is very expensive and I am in NYC right now, so I KNOW expensive living :/
Uh, yeah, a six-figure income is more than enough. I save at least 50% of my net income and I don’t see why I would spend that much more than that. I don’t spend my bonuses- those go to savings. The only reason I spend so much on clothes though is that I have all this income and got tired of saving it all, so I figured I should wear nicer clothes than t-shirts and jeans.
These people say that living the Toronto life is expensive. Well, yeah, it is. But is that really what they want to be doing?
I’m guessing that the couple didn’t examine their budget at all when they had kids… Daycare at $2,500/month is a huge expense.
$2500 sounds reasonable to me for 2 kids. I know from my siblings that it is not easy. It is $600 a week per kid (what they pay) and it depends on their ages too.