How does an almost 30-year old have over $300,000 saved while only earning $20,000 net a year?
This link by Financial Post entitled: Young, educated and making it on less than $35,000 was shared by Makin the bacon on Twitter, and as I read through the profiles, the first one raised some red flags.
I think (as one commenter mentioned below) that they were missing a big chunk of information, as in:
“How much financial aid did your parents give you
(e.g. tuition paid, down payment for a house, etc)?”
..because I read Seanna Magee’s profile who is about my age and she has a rather large whackload of money considering her income has been less than $35,000 since she graduated (about the same time as I did):
Here is her profile:
Her budget looks like this if you are interested:
Then when you continue reading, you get to this point:
Say what!? O_O;;
SHE HAS A $308,000 NET WORTH ON A $20,000 NET INCOME A YEAR
Assuming she netted $20,000 a year since she graduated (around the same time I did):
Her total net income earned: $140,000
Never mind that it doesn’t even cover the $250,000 condo that she earns, she still has to pay for living expenses too, which are about $1600 a month or $19,200 a year.
That eats up pretty much her ENTIRE net income of $20,000!
As someone who has a lower net worth around the range of $200,000 I can tell you that when I graduated, I did not earn $20,000 as my net income a year.
I earned about $50,000 net a year, or more than double her net income.
Aside from the fact that we do not have the same living expenses (my freelancing expenses blur into my personal ones as I have to travel for work), and I also spend a heck of a lot more than she does and I take a lot of “sabbaticals” in between my contracts…
HOW I GOT MY $200,000 NET WORTH AT THE SAME AGE
I was curious enough to do a comparison of what her parental contribution might have been compared to me, someone who received $0 from her parents since she left home at 19.
For one thing, I started $60,000 off in the hole.
Then I earned about $50,000 as my net income for the first two years ($100,000).
After two years, I became a freelancer and earned $72,000 net for 3 months.
Then I had a year long break in between (housing crisis hit), and then I made $144,000 for 9 months.
I had another yearly break in between (I traveled around the world for a year), came back, and made $104,000 in 10 weeks.
And now, expecting my first child as well, I am taking an involuntary yearly break in between.
(I am still holding out hope I will get a contract before the baby arrives, but so far.. it’s looking like I might have to work ASAP next year, the earliest being when the baby is at least 3 months).
My total net income earned (same amount of time): $420,000
This is exactly 3 times more than what she has netted over the years, and I started with $60,000 in debt.
(Again, not taking into account that I like to shop and travel a lot, and she seems far more practical / frugal than I am.)
With the $60,000 I started off in debt, and another ~$60,000 over this time was spent on my shopping ($10,000.. or more!!), moving from country to country ($20,000), and traveling all over the world ($30,000), it makes up for my lack of net worth parity to even reach her $300,000 net worth.
…but I am at peace with all that. I don’t regret anything I’ve done.
IT IS EASY TO FEEL JEALOUS UNTIL YOU KNOW THE WHOLE STORY
I’ll admit it, the green-eyed monster came out very briefly when I read her profile… then I shoved it back into its dungeon because I acknowledge the following:
- She is far more frugal / practical than I will ever be… especially on that income.
- She probably didn’t start $60,000 in debt as I did
- The business school she went to DID NOT not cost a bundle (see below)
- She probably had her parents pay for her education, along with living expenses for 4 years
- She probably had her parents generously give her a condo or at least paid a huge chunk of it
- She worked the entire 7 years, I lazed around for about 3 years & spent a lot of money doing so
The business school she attended, only cost about $5500 a year for tuition alone.
I paid upwards to $20,000 a year (a little under 4X as much), which is why I also had to work 2 full-time jobs while in school:
..THEN SHE SAYS SHE IS BROKE BEFORE EVERY PAYDAY
It all becomes a little clearer that she obviously had a lot of financial help from someone(s) because she says the following:
You don’t say.
I know better than anyone how travel and daily spending basically eats away at your net worth!!
I’m fairly sure that if she can barely make her own budget work on her income, saving only about $200 a month, she would only have about $16,800 saved as her net worth.
The rest, had to come from her parents, to the tune of about $291,200.
Inheritance, aid, help.. whatever it is.
I am not saying this is disreputable or horrible in any way to have such lovely, kind, money smart family members… [in fact, I don’t even know if perhaps her parents died suddenly which is the reason why she has all the money (goodness forbid!!!)] but it just isn’t portraying a true-life story of people who actually make less than $35,000 a year and make it work.
If you are to post an extraordinary story such as Magee’s — having about $300,000 as your net worth while only earning $20,000 a year — you should ALSO post the circumstances behind it.
If not, other readers who are making that income level (heck, even someone who made 3X what she did would feel a twinge of jealousy) don’t suddenly fall into a kind of depression over how she has so much saved while they are earning barely anything and have nowhere near those numbers.
The part that kind of bothers me very slightly is her saying that she doesn’t think money is that important.
Of course she doesn’t.
I don’t think money is very important either now, but it’s easier to say that when you have at least $100,000 banked than when you have $1000 in your bank account and truly scraping by on $20,000 net a year.
Lastly, she complains about how employers are evil and don’t want to pay her what she’s worth.
This I partly agree with in principle because I run across this as a freelancer when I negotiate for my rate …. but she comes off as slightly entitled saying this, seeing as she is already very financially secure for her age, and is working a retail store manager job at The Running Room.
Does she really expect The Running Room to pay her a ridiculous salary like $60,000 a year as a retail store manager?
I mean, those jobs aren’t usually held by people who have business degrees, I keep hearing of store managers who have Arts degrees, but rarely Business!
All I have to say to her is: You are either not good at what you do to be able to move up the ladder quickly and/or you are in the wrong career, my friend.
Employers appreciate great employees.
You just may not be a fit for that job (or the company) which is why they don’t “recognize your value”. Or maybe there is just no upward mobility in that company, which makes it a dead-end job (retail store manager? Methinks that has something to do with it..).
So quit, and find a job that recognizes your value, or suck it up and try to work your way up the ladder to an executive position in that company and pay your dues.
Anyway, I just wanted to post a financial comparison for anyone who has read that article (or has thought about similar articles) to show that you can’t know all the circumstances behind a person’s net worth until you ask them.
So don’t feel bad or jealous as I did. You can only concentrate on what you can save and what YOUR circumstances are.
Again, the article I am citing is here: Young, educated and making it on less than $35,000