In Discussions, Money, Wealth

Don’t get it twisted: Making a lot of money doesn’t mean you deserve everything now

I see this time and time again – people who start making a lot of money, or at least, more than what they earned before, start increasing their lifestyle to match.

In general, this seems reasonable — hey I make over 6-figures, I SHOULD be able to do things like take cabs any time I want, or hire a cleaner, drive a nice car, live in a nice apartment, etc.

These are all dreams and images we have in our head, constructed from a hodgepodge of television, movies, social media and just what we THINK is what  “rich” person should do or look like.

The cold hard truth is:

Making a lot of money doesn’t mean you are rich

Being truly rich, is having money in the bank

It can be hard to digest at first.

What? Making lots of money means I am not rich?



It just means that … YOU MAKE A LOT OF MONEY.

It took me a while to learn this, honestly, to really feel it, versus intellectually knowing it.

Someone earning half what you earn, but with a higher net worth than you is richer than you are.

It can be incredible but that shift in mindset is what helped me when I first started making good money.

I started at $65,000 a year which is A GOOD SALARY. It wasn’t the $90,000 investment bankers of my cohort or whoever else was making at the time, but it wasn’t minimum wage by any means.

As a single person at the time, I was earning the average household income of families in Canada, which I think was around $45,000 if I recall correctly.

Once I started earning that, I thought I could afford anything, and with net paycheques of $2700 bi-weekly being deposited, I had never seen so much money in my life.

Of course, I had debt, so I was smarter in the sense that I didn’t allow myself to spend that money but went hard on my student debt instead (as per the advice of my brother who told me to clear that motha ASAP), and that was what kind of saved me at the start.

Once I got out of debt however? A whole ‘nother story.

Even worse, when I quadrupled my income to over $200K a year, and I caved and gave in to Lifestyle Inflation.

Look at the percentages not dollar amounts

Had I known what I know now, I would have allowed myself to ease up a TINY bit on the spending, but then to keep my overall spending percentages low, and my savings high.

The problem with only looking at the DOLLARS of what I saved, was I was patting myself on the back.

I was thinking — Wow, I am socking away $2000 a month! … when in fact, it was a lower percentage than when I was clearing my debt!!

When I was clearing my debt I was living on 10% – 20% of my income.

When I was out of debt and “free” I was living on 80% of my income. HUGE. LEAP.

I didn’t think about it, but it still felt to me, like I was saving a ton of money, when in fact I was saving less than what I could have before.

Okay, maybe not living on 10% – 20% of my income kind of craziness, but I could have at least saved 50% of my income and made THAT my rule. :-\ then let myself spend whatever I wanted after I met those goals.

Then I would have deserved this sweatshirt back then:

If you make more than $50K a year, or more than $100K, you only feel rich but you aren’t… yet.

It is fine to FEEL rich, but it is another thing to spend it to feel rich. Did that make any sense? No?

Well, it is okay to think – I make over $100K, I am RICH!

… but when you actually start emulating that mindset and spend it all instead of saving it like you should, that’s when you should chill the F out and actually become rich by saving it instead.

I feel like anyone who makes a decent salary, has a warped idea of what that salary should be able to afford them.

I can tell you that I felt (when I made all that money) that it doesn’t FEEL like real money. It sounds so strange to say it, but it was just numbers in a bank account and I bought and spent it as I wished, knowing it wasn’t going to hit $0 or become dire, but this is a TERRIBLE mindset to have.

I didn’t treat my money properly with the care and respect it deserved, and I still made it out okay at the end of it all, but I could have done better, and that’s the honest truth.

I don’t regret a thing except not being conscious of my money in the sense that I didn’t set proper goals and saw it all as unlimited based on time & age (which in some sense it is), but as I got older, I realized it would make more sense to be more careful than to spend it on stuff I can’t even recall buying today.

The answer is — you can have anything you want but not everything you want

Want to eat out daily?

Can’t take cabs, AND live in a nice place AND drive a luxury car.

Want to take cabs everywhere?

Gotta cut on eating out, living in a nice place AND driving a nice car if any at all.

All of the things we want, have to fit into a box of what we can actually afford, and unless you track your expenses, have a budget (either detailed AF like me with expenses down to the penny or this loosey-goosey budgeting method), you will not actually know what is realistic based on your net income and goals.

Iz the truth.

So what do you really want?

If you are making a fkload of money (like $600K a year), but you are stressed out because you have 4 kids in private school, a fleet of 5 luxury vehicles, a McMansion with a mortgage that is choking you — is this what you want?

If at the end of the day, your net worth is lower than a pair of professionals, even teachers, being moderate in their spending and saving a lot more than is required, who is the truly rich one at the end?

(Spoiler alert – the ones with money in the bank…)

Just showing that you have the status symbols purchased on debt, is not being rich.

Just making a 6-figure income, is not being rich.

You can (and I do), spend your money on luxury clothes, goods, cars and food, but you can’t ever lose sight of the truth of what actually being rich means and I’ll say it again:

Being truly rich, is having money in the bank.

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Sherry of Save. Spend. Splurge.

Am my own Sugar Daddy. Am a millionaire at 36 after getting out of $60K of student debt in 18 months, a little over a decade earlier, using I have worked 50% of my career (taking 1-2 year breaks), and quadrupled my income within 2 years of graduating, going from $65K to $260K with an average lifetime savings rate of 50%. I have 11 side incomes that are on track in 2020 to make me $50K - $75K. I could retire today if I wanted, but love my work-life balance as a freelancing consultant in STEM (Science, Technology, Engineering, Math). I am all about balance - between time and money, and also enjoying my money. I also post daily on Instagram @saverspender.

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  1. LAL

    Being prudent still almost sunk us. We recently as in 6 weeks ago took a massive pay cut. We’re now making 66% of what DH used to make. We are making less than what we made when we bought the house we live in. The house we live in is not terribly expensive but it sure feels like it now. We are now at PITI 32%. Again not the end of the world but it’s not exactly easy to save 20% when you starting fixed expenditure is 32%! So now we have to be “prudent”. We have to budget again. Instead of relaxing and enjoying life and saving. I calculated we saved like 50% of our income last year and lived on 30% and taxes 20%. That 30% is what we make. But it’s hard going down another 20% to save. The only saving grace? This is a 2 year stint of trying to make a new business go. And if we don’t then DH gets a real job again. If he does? Then I guess we’ll decide what to do then. But we will have a better idea in a year so we can decide which way we are going and if we need to sell the house. I hope we do well and buy a new house!

  2. liteadventurer

    People in my line of work are notorious UAWs (under accumulators of wealth) despite a mean income just shy of 300k per year. Instead of picking one or two things to focus on, they tend to splurge on everything in order to keep up with their peers. I agree it’s important to figure out your priorities early on so you can focus on those and don’t end up in a gigantic clown house with a mortgage that eats up half your paycheck.

    1. Sherry of Save. Spend. Splurge.

      CLOWN HOUSE. You have the best way with words. But yes, gigantic clown houses make me think: Either you’re super super super rich or you’re very very very in debt. 🙂


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