Everyoneâs definition of wealth and pure happiness are different.
Iâm not going to bother going through the specific income thresholds or tax liability rates of when it doesnât make sense to earn more. All you should know is that the more you earn in W2 income, the more you give to the IRS.
Since U.S. Federal Income tax is based on a progressive system, past a certain income, high-earning individuals start bailing out and decide to earn less due to this unfair advantage. The tax rates are set from 10â37% and the more you have to give up, the less taxes you want to pay so one in this situation most likely then goes about hiring an accountant, gets into estate planning, sets up a trust to eliminate their income, state, wealth tax on top of avoiding probate, instills more privacy within their holdings, and provides a juicy payout plan to their beneficiaries.
Without going into too much depth, not debt, the easiest ways to legally pay less taxes and in hindsight keep more is to:
-Move to a tax-generous state-be neighbors with all the billionaires and retirees in Florida to pay no estate or income tax!
-Adjust/reduce your gross income so it isnât reflective as the amount of money you report to the IRS which in turn puts you in a lower tax-bracket. Easiest way to do this is by setting up a business, LLC, own real estate, or any sort of entity (small or large-blog or salon that allows you to depreciate your expenses as it appreciates to get a tax-write off)
-Give back through charitable contributions or donate your clothes, items, cars, etc. to those in need
-Tax deductions/reduce expenses through depreciation via any kind of business, real estate or blog as examples
-Strategize your investment holdings (when selling + holding)- Long-term capital gains vs short term capital gains (income tax rate much higher 10â37% versus 10,15,30%) on stocks, real estate, bonds, CDs, commercial paper, etc. most tax-advantageous move is to buy and hold
-Contribute to a tax-deferred account and withdraw once tax liability/income level lowest which is during retirement when you arenât working. This puts you in a lower tax bracket
-Contribute the max, $6k per year to an after-tax account such as a Roth IRA when you arenât earning much and pay less tax on contributions
Now that weâve covered the annoyances of earning more, owning more precious assets such as physical (agricultural, industrial, commercial, residential) and private property (jewelry, cars, collectibles, investments, life insurance, annuities, etc.), letâs uncover the true feeling of wealth behind the scenes with real life scenarios.
The Privilege and Burden of Being Too Well-Off
People want what they donât have and tend to pay closer attention to it than what they do have. This naturally makes people more envious, depressed, and get on their dark side all because of money. It is a dangerous drug when mixed with emotion and no objective broader view. Even the richest gal/guy in town will never have everything which in a sense can make them jealous forever as well. The key is to step out of that blurred reality and focus on what you have. Majority of the materialistic possessions we own donât make our lives better anyway so why do we assume the next gadget will? We assume everything we donât have has to be better. A dangerous lie.
The truth is, having more zeros tied to your name does in fact NOT make you a better person. Sure you can think so and this article probably wonât single-handedly change your view until you actually experience reality for yourself. But all I can say according to countless research, studies, my own account, and my circleâs is that everything plateaus and starts to matter less when we have more of it, even more ice cream.
Your relationships start to become opaque, you loose the real friends that arenât just hanging out with you for the free lunch, and you start to become warped up in your own bubble unable to envision the harsh realities 99% of Americans face.
Past the ~$50 million dollar net worth mark or so, you are already glued onto a steady incline going 60mph on the hedonic treadmill never satisfied. You chase what the top 1% deem as important which tend to include space, an antique Rolex, and what yacht is the biggest because your sense of reality is altered.
Just look at the richest people alive. Only one of them realistically practices frugality and that kind of frugality is unheard of by most! Hypothetically and unrealistically if everyone on earth became billionaires, I guarantee you 99.99% would not continue to live in their Omaha home they purchased in the 1950âs and thatâs the problem! Their goals are possessions not real solutions.
Happy or Not
When you observe the happiest people on earth which tend to reside in the Nordic countries from the Danes to the Swedes, they consistently rank as the happiest due to specific features and habits that have never been installed or practiced in the U.S. such as:
-Robust and secure social welfare programs from free education to health care and guaranteed parental leave
-Economic security supported by govât, graduates arenât expected to be employed and instead live at home for a couple years as they rely on the bank of mom and dad
-Value family time, meals, and less tangible physical junk + social media
-Live the minimalist, frugal and experiential not materialistic lifestyle
Isnât it disappointing how the U.S., the wealthiest country with top elite universities and the most transformative, brightest human robots on earth cannot be happy? We have everything we could possibly need or strive to achieve yet consistently rank below the top 20 on the happiness scale.
I find happiness is more about what we donât need than what we think we need. Subtraction than addition.
In the U.S., everyone tries to take advantage of each other and even the top 1% refuse to help out the bottom 50%. The top 10%+ could easily give up half of their wealth to end hunger, poverty, provide free education to all who need it, and relieve the deficit through paying their fair share in taxes not a mere $75, and still lead the ranks on the Fortune 400 list! They are close-minded and not part of a community.
With no ethics and values, things are bound to get messy.
The Definition of Wealthy
To me, someone earning $10m per year and spending 80% of it is not only financially irresponsible and careless but poorer than one earning a third and saving more than 50%.
There are plenty of cases where this is true and believe it or not, even with no financial literacy education, it is easier to spend less with less since you arenât living in the world of elitism, obsession, or hanging out with people with more.
With more, you feel inclined to show your status. Thatâs why itâs virtually impossible for people to let go of spending more when they earn more. They feel more worthy and constantly need to prove something to someone or even themselves, their biggest trap.
Now donât get me wrong. Thereâs no reason not to spend what youâve rightfully earned to provide yourself a better existence. But at the end of the day or shall I say your life, wouldnât it be better if you had a little more than a little less?
Itâs disappointing to witness those who you would never imagine would run out of money to quickly sabotage themselves and go broke. From ex-wife alimonies, to vacation homes, or too many late-nights, people blow themselves up, become targets, and risk their financial livelihood leaning towards the belief that they have too much they could never possibly loose.
Until you control yourself, you can never be fully stable or happy.
Although itâs technically easier to save more when you earn more, itâs not often the case and there are dozens of factors from location to cost of living to the values you grew up with that play into how much you spend.
If we wanted to spend less we all could. Itâs just a matter of if weâre willing to pave the path towards financial freedom now or later. Humans are horrible at projecting the future and caring for our distant needs. We want things now or never.
It Only Gets Harder
The grind never stops. Sure you can choose to retire more freely the more you have, but similarly to working at a startup, you also have to keep one eye open at night. You never know when you can get replaced or during the pre-IPO stages, all of a sudden the founders could decide to never cast you as an official member and run out of left-over pre-IPO shares to disperse even though you were a long-lasting loyal employee since its founding.
My colleague got his arms tied up in that situation. It was nasty. Never depend on anyone to build your financial plan.
As a New Yorker, Iâve been privileged enough to meet well-off people in the top 10%+ earning seven to eight figure salaries. Some kill themselves doing so while staying seemingly happy supporting their luxurious family lifestyle while others seem miserable but cannot resist departing.
So where do you draw the line on how much is too much?
With more, shouldnât it be easier to let go of everything, follow the FIRE movement, and not care in the world what your elite friends are up to as well?
Unfortunately, itâs easier said than done and in this small world, these folks are attached to a treadmill they canât sprint away from.
If you had the chance to experience it, after a dream net-worth, youâll soon realize that money doesnât provide more happiness. After your basic needs are met which I personally believe is after earning roughly $250k per year, especially living in certain areas itâs not a whole lot, not just $75k as researchers find, your happiness starts to plateau after every purchase, dinner date, and flight.
After all, you will never be happier if you are dealing with an ailment. Dealing with any kind of pain or illness redirects your whole life and perspective on that pain until it is gone. It can hurt or heal your life sometimes. Things happen for you not to you after all.
Health is priceless and without it, you can never achieve full satisfaction.
Our society has to get away from the belief that the richer you are, the more you can buy and that materialistic junk will get you more friends, experiences, bliss, and more opportunities and in turn satisfaction and no worries.
Sure, it will for a few days or months but after a while, I guarantee you that milkshake will spoil.
How do I know that?
Without a purpose and drive, humans are miserable. We cannot all be replaced by robots and our goal isnât to be.
We are the ones who should fill roles and speak to other humans. Working isnât bad unless itâs only for wealth purposes.
It is our role to use our artistic, creative, and linguistic abilities. To use our past experiences to see what we are capable of in the future, not just compare ourselves to others or retire after graduating HS.
It only sounds great to put everything on pause and quit when you are working 100 hour weeks, miserable and frustrated, which I donât recommend in itself. At that time when you are pounding away regretting your every move in your early adulthood, you image how much happier you could be on an abandoned island sipping margaritas on the beach all day while simultaneously watching your spending like a hawk making sure you donât become homeless retired at 22.
Be realistic and unfortunately humans arenât. The grass isnât always greener on the other side. Especially retirement, the most expensive period of oneâs life, it isnât a quick decision.
We pay attention to what we donât have instead of being grateful for what we do have. This will never bring happiness.
I believe being truly wealthy is when you are able to have your money work for you in a way that it provides you the opportunity to do anything with your time and in return, get it back.
You donât need to worry about an upcoming unexpected charge due to a broken tire and can enjoy lifeâs pleasures. Financial stress is the number one worry Americans, not the Nordic countries, have for a reason. Americans are least underprepared while the Danes are covered and instead worry about lifeâs real worries, death and public speaking.
But as a consumeristic, short-term instant gratification, society media addicted society, we cannot function like this anymore. Weâve been programmed to believe more green dollar bills provides something better than what we have now and we wonât discover it until it comes into our pockets.
Real-Life
Enough with my talk. Letâs debunk this myth with the real truth.
I got the chance to speak to various acquaintances from all spheres of life in order to construct this article to the best of my ability. For their privacy, I have called them by their pronouns.
These acquaintances include a colleague at school, co-workers, neighbors, New Yorkers, family members, and old connections.
This list indicates their main job although at this stage of wealth, you are most likely involved in a variety of diverse projects where everything has its own individual weight.
Their net-worths are rough estimates from combined search results from the company, what they were willing to disclose to me, and projections from their estimated cash flow for the year plus how many years theyâve been in business as all of them coincidentally happen to be in business. What a clever way. It is the most tax-efficient way to earn and scale your wealth after all!
#1 She/Her, (Private Practice) Plastic Surgeon, Age: 52, Net Worth:Â ~$42â50m
âRich doesnât mean much to me. I did the same things with my money when I was 30 as I do today. Buy what I need not what I want. I donât religiously check my net-worth either. Sure itâs nice to have a stable support system at this stage but unmarried with no kids, I have too much and not anyone to pass it onto! I donât know how rich that really is! Regardless, I love my profession and thatâs what drew me to it when I first had $30 in my pocket.â
#2 She/Her, Nationwide Hair Salon Owner, Age: 36, Net Worth:Â ~$24â31m
âHaving grown up with no concept of money management and splurging all the way through my first few jobs out of Ohio, I had to quickly catch up once I realized that no one will do the work for me except for myself. Am I satisfied now? No. Will I ever be? No. I can be better and probably shouldâve started earlier, my biggest regret in life. Though, if you keep going, thatâs all that matters. Have a purpose or nothing will be found.â
#3 Him/His, Construction Company Owner, Age: 71, Net Worth: ~$92â110m
âMy father taught me the basic principle that itâs not about how much you earn, itâs how much you keep. This has stuck with me ever since I started selling lemonade in junior high when I did the opposite with the ten dollars I made. I couldâve retired 30 years ago but with the pandemic and the booming real estate business, I canât keep people waiting this long for their new chefâs kitchen! They are eager to make memories in their home and I want to see it! Nothingâs more exciting than revealing a kitchen weâve been working on for 4 + months.â
#4 She/Her, Student Age 21 with Family Estate Plan Inheritance of ~$170â200m
âMy parents got in at the right time at the right place and I know how fortunate I am to be a part of the top 1%. Thereâs no other way I can say it. I hope I donât reveal it but I admit itâs hard not to whenever someone comes over. What I can say for myself is that I donât believe Iâm any happier than you Mia. You know Iâm on social media and eat junk like a classic college student all day⌠How can I ever be happier than you that way?â
#5 Him/His, Software Engineer, Age: 29, Net Worth:Â ~$23â30m
âI plan on continuing to write code, make the world an easier place, and learn all I can before Iâm gone. I try to donate as much as I can each month on a recurring basis straight out of my paycheck. With all I have left from that, itâs for basic necessities and experiences here and there. Nothing special and it doesnât help to check what youâre worth 24/7. It makes me happier to not count and instead code.â
#6 Him/His, Retired Best-Selling Novelist, Age: 79, Net Worth:Â ~$86â94m
âEarning money is boring business. Writing thrillers and crime novels arenâtâââespecially when you havenât been able to sleep for the past 40 years! Since itâs easier to save than spend, I gave that a shot long ago and continued to live a life that would bring me joy not stuff and itâs worked out. Iâve heard more ânoâsâ than âyesââ and thatâs why Iâm still here. Plus I have no room in my tiny NY studio for more. Royalties have come and gone. Nothing is guaranteed besides the consistency of saving and automation.â
#7 She/Her, Professional Gamer, Age: 22, Net Worth:Â ~$26â31m
âThis isnât something you can do purely for money. This is my therapy, free Barryâs Bootcamp, and adrenaline rush that has slowly propelled me to become the best version of myself. Do I like shiny things and fancy belongings? Sure, but after a couple splurges, Iâm done and want to keep going with other things that provide more substance and action like gaming.â
#8 Him/His, Owner of National Plumber Service, Age: 32, Net Worth:Â ~$80â87m
âBeing a plumber isnât such a glamorous job especially when you have to reveal yourself and describe what you do every 5 years at your HS alumni reunion. But it keeps me going and no matter if people think Iâm worth less than them or unsure what Iâve done after age 13, I hope they look past that and at my personality instead. I would consider myself a likable and down-to-earth guy. If you put in the work, the work will work for itself and reward you without noticing it until the end and I havenât reached that point thankfully. No one needs to know what brings you hidden joy except for yourself. Keep cleaning the gutters if you enjoy it.â
#9 Him/His, NYC Co-op Super + Part-Time Celebrity Assistant, Age: 61, Net Worth:Â ~$51â58m
âTaking care of people in this welcoming warm building is my job, not my bank account. I donât have a goal and never had one. I just want to continue what I do and the earnings will come. Do I routinely check where my spending and investments are heading? Yes. Do I obsess over them? No. Donât let it take over your life or else it wonât become a part of your life anymore.â
#10 She/Her, App Developer, Age: 26, Net Worth:Â ~$36â42m
âThis is the only area I find real joy in and have only recently started earning from it. Thank you stock market. To find out what youâre really passionate about, find out how long you will do it for nothing in return.â
I admire each and every one of these folks for their generosity, sincerity, and openness to share what money means to them. They are extremely impressive individuals and if you crossed them on the street, you would never guess their net worths since they arenât here to impress.
Life is too short for that.
It took guts for them to explain to me what they do with their money and out of the handful of people I asked which was around 40 in total, it came down to 10 who were willing to take the time to answer. Being open to explaining your finances is also a huge step towards growing your wealth. The more comfortable you are around it, the easier it is to earn it!
I hope this provides some insight into what it means to feel rich and that the fascination for more zeros in the bank slowly disappears if you have no internal purpose.
Focus on what really matters in life. Who do you want to become? Donât bother comparing yourself to others or impressing strangers. Life is too short for that. I urge you to dig into what you do, know best, and the earnings will comeâââeventually and if not, move to Finland to become instantly happier!