Friday, February 2, 2018

How Do We Talk About Money When We're Rich?

I've noticed something interesting about language in the personal finance community.  A lot of the bloggers who have been financially successful have gotten there as a result of being some degree of frugal (from Frugalwoods extreme to Physician on Fire more relative frugality), and as result, even when people have a lot of money, they don't necessarily think of themselves as being rich.  Instead, the term "financially independent" is often used to describe net worths that many people would consider enough to make someone "rich".

Does it matter?  Is there any difference between describing yourself as financially independent versus rich?

From a totally self-absorbed perspective, I think it does.  Even though I am way far away from the net worth of Physician on Fire, I have recently started thinking of myself as rich.  I am earning six times the median household income for my city, I'm increasing my net worth at a delightfully high rate, and I can afford to buy pretty much anything that I could possibly want.  I am very financially lucky, and I will hopefully continue to be this lucky until I retire at some to-be-determined date in the future.  This, to a person who spent all of her life until recently at the lower end of the middle class, is rich. 

And for me, there's value in calling myself rich.  It helps me control my financial anxiety by reminding myself that I am actually doing really well, even though the part of me that craves security always wants my net worth to be higher.  It reminds me to be grateful for what I have, because this level of earning and financial security is not ordinary.  It also makes me mindful to not be a jerk to my friends who are not as financially well off, and to invite them over for dinner instead of out to eat at an expensive restaurant.

Personally, I also believe that being rich carries with it some obligations to society.  People who are rich have a disproportionate amount of power in society, and I believe we are morally obligated to use some of that power to help shift society towards greater equity.  That might mean voting for progressive tax laws that favour lower income earners, even if it costs you directly (i.e. doing the exact opposite of what the POS Republican tax bill just did).  Maybe it's advocating for a $15 minimum wage so that people who work full-time can at least come close to supporting themselves and their families with a single job.  Maybe it's giving some of your wealth to charities that help marginalized people and strengthen the communities they live in.

When we don't call ourselves rich, it's easy to ignore these obligations.  It's easy for someone with a $2 million net worth to say "I'm just an ordinary guy trying to live frugally" while leaving a shitty tip for his underpaid server.  But if we acknowledge our own wealth, it at least gets us closer to recognizing that the server needs (and deserves) that money a lot more than we do.  And maybe acknowledging our own abundance makes us a little bit more likely to share it with others.

Thoughts?

17 comments:

  1. I can't imagine ever having to ask myself your question, but having enough to share or just be generous with would be a treat.

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    1. I'm definitely very fortunate to be in this position.

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  2. I remember discussing tipping when I first started dating my husband. I calculate 20% and then throw in a few bucks extra because I know they will value it more than I do, and I eat out not terribly often, so it’s not an onerous expense for me. It just seems like the right thing to do and puzzles me when I go out to eat with somebody and they are stingy on the tip.

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    1. I agree with the 20% and up. Someone being stingy on tip makes me question their values.

      I hate the whole concept of tipping and the power dynamics of it and wish that everyone was just paid a living wage, but I'm not going to protest the system by screwing over the server.

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    2. The system isn't quite as bad in Canada, as servers are paid the same minimum wage as everyone else. Serving can actually be pretty lucrative, especially at a good restaurant. I have a friend who is a music teacher who still works her bartending job that she's had for 20 years because the hours are flexible and the tips are good.

      I judge people who tip poorly, especially wealthy people.

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  3. I'm grateful you see things this way and I appreciate it in the blogs I've found through you such as Frugalwoods (my favorite of the batch, and I'm so sad about Frugalhound nd appreciate them even more for how much they loved her) and Mr. MOney Mustache and ... oh, I can never remember the guy who's making a pun of the name - Feierstein or something? (ETA: Mad Feintist.)

    Anyway, I appreciate that they all seem to prioritize charitable spending and make it a budget category. One blog post I saw was "How to donate like a billionaire" or something like that, and it broke down prioritizing charity.

    I've always been frugal so "denying" myself isn't that big of a deal - but I've also not actually worked much of my adult life. I've traveled and done short-term gigs, always planning to die before retirement age. And the closer I get to that age, the stupider I think that plan. No regrets of my carefree youth but time to buckle down.

    So I have a job that I despise, as a cog in a machine that perpetuates a very unjust status quo. And I have leveraged its advantages - the health insurance and more flexible schedule have allowed me to recover from some pretty nasty tropical illnesses. I don't want to curse myself, but I'm starting to think that after over four years, I may be recovered.

    I ran numbers and living as I do without any catastrophe or unexpected expenses, I could probably be to retirement position in about 7 years. That's still early and kind of shocking considering how I never considered retirement before I started facing 50.

    But.

    I kept reading and thinking about this. (Big thanks to you, Solitary Diner, for putting this on my radar. I sort of vaguely thought of my financial future but didn't really do the analysis deep dive it until reading your posts.) And while I've not ever been a huge charitable contributer (also I'm not a slouch, but no one would call me a "philanthropist"), I show up. I volunteer, I do things that matter. I've been a teacher of at-risk kids for most of my time but also set up a school on a refugee camp and various other such things. And that really matters to me. And I'm not allowed to do the volunteering that I want to do in my current job. More than want: that I feel is my obligation.

    Anyway, I'm on the cusp of potentially leaving my current cushy job with a pretty good salary to one that will pay 1/2-2/3 as much and have fewer benefits. It is a job I held before and couldn't afford to keep doing while paying my bills but I think I could now, when I run the numbers. And read my heart. It is to work directly with abused and neglected children, which is my love and also my skillset. I can handle the vicarious trauma of this work because I am making a positive difference. And I'm a very good interviewer, organizer, and rememberer - I can be formidable. Being formidable is not desirable in my current job, which is a pity, because it makes me happy to use that power for good.

    So we do have an obligation. I'm rich by some people's standards though in many ways I'm living paycheck-to-paycheck (of late I've been directly saving at a high rate). And I'm also rich in terms of my education and resilience as a result of never being through the traumas that so many other people have been. For me I think that showing up to help others is always going to be the most rewarding (though I am very well aware of when it's more helpful to send cash, and I also do that). And it comes from the same place as your recognition of privilege and obligations to society.

    Also I'm with you on the "come over for dinner" thing. Even though I live in New Orleans where the food is amazing, I rarely eat out these days. When I do, I make sure it's worth it!

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    1. You raise so many good points in your comment! It should be its own blog post. I'm glad my blog inspired you to think more about finances. Mr. Money Mustache totally did that for me a few years ago, and I think my life will be much better for the discovery, partly because I will be financially better off, but even more so because he helped me appreciate how little money a person needs to be happy.

      Finding the balance between work you love/believe in and work that pays the bills is a challenge. There are times in my work when I feel like I'm doing not so good things to make money, but as I get more secure financially, I to minimize those things as much as humanly possible. That's another huge benefit to recognizing that I don't need all the money I make; I can better align my work with my values rather than focusing on the bottom line.

      Your point about charity being about more than just money is also huge. I am sadly probably worth more to most charities as a funder than a volunteer, but I also try to do some volunteer work. At the moment I'm on the board of directors for a theatre company and I volunteer with a local theatre festival, but once I cut back my hours/retire, I will probably broaden what I do. I'll probably volunteer more hours in retirement than I am currently working!

      It's too bad I live so far from New Orleans, otherwise I'd totally invite myself to your home for dinner. I think we could have some good conversations.

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  4. I really like this post. It is only in about the last year that I have started to think of myself as "wealthy" (the word "rich" still feels too dirty to me!), and it has had the same effect. It pushes me to actually commit to donating to charity, which isn't something I was used to. I've always been good at being grateful for what we have, but not as much knowing what to do from there. I also was a server in college, so tipping well and knowing that it means more to them is a habit, but it still is a struggle to give to charity. A struggle, AND a joy, though!

    My husband very much says he doesn't feel wealthy or rich and points to our high cost of living area. Yes, this is true - but even then, we are still doing very well. So my next mission is to help him feel the way I feel.

    This is the closest I came to writing about it: https://stackingpennies.wordpress.com/2017/12/06/privilege-inequality-charity-activism-how-do-we-save-our-country/

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    1. Thanks! Maybe I should start using the world "wealthy" instead...you're right that "rich" has a very dirty feel. I spent most of my life resenting rich people, because they could afford so many things I couldn't, and now I am the rich person! I don't entirely know how to not view myself as a bad person.

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  5. I'm in a weird position that I already think of myself as partially rich even though I have significant student debt. Where I am now versus where I was raised means that my life feels abundant beyond measure. I've earned more doing temp work in the past 5 years in my field than my father ever did in his career. (I just went through all of his documents). I don't have any dependents.

    Words matter. So much. It is very hard to take millionaires seriously when they "don't feel rich." Your outlook on life and your likely longevity are incredibly impacted by the wealth you've obtained. Pretending otherwise is frustrating to see.

    That is all to say - I like this post.

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    1. Thanks! It's funny how much our past experiences influence our perception of where we are. I imaging a lot of millionaires don't feel rich because they were raised in wealthy families and their financial situation just feels "normal" to them.

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  6. This is all so true.

    When I think about ourselves in relation to who we were and where we came from, I absolutely identify as rich or wealthy. Living near Silicon Valley does keep me humble, we are upper middle class but we're surrounded by the 1%. Some of our friends are those 1%ers, I think.

    That doesn't absolve us of the duty to do the best we can for others who have less or need help.

    I think it's weird to paint ourselves with the same brush as the people we refer to as rich in the media but rich or wealthy we are. I suppose I use rich in the more all encompassing way - my focus is to enrich our lives. Not solely with money but in experiences, and depth, and caring. Bad people are everywhere, in every tier and level of society, so I refuse to cede "rich" to the bad rich people :)

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    1. That's an interesting idea to not let the bad rich people ruin the word rich. And indeed, I know lots of good rich people, and I hope to be among them!

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  7. I've thought about this topic a lot over the years. I think the challenge is that there's a cultural aspect to being "rich" or "wealthy" that goes along with the financial aspect. For those of us who are happy with leading a middle-class life and who wouldn't enjoy the cultural definition of a rich/wealthy one...it gets difficult to know how to classify yourself. And it's easier and more comfortable to say "middle class," because you live a middle class lifestyle and you worry about middle class things, even though you may have quite a bit of money saved/invested.

    I don't personally think that defining yourself as rich/wealthy has anything to do with whether or not you donate/tip/vote a certain way, etc. To Revanche's point-- there are a big range of motivating philosophies and goodness/badness at every tier and level of society.

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    1. Terminology is interesting...and you're right that there is a whole class issue here too. I think that's why a lot of frugal bloggers don't classify themselves as rich; they don't live as "rich" people do, so they don't feel like they belong in that class.

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  8. Wow this is super thought-provoking. I absolutely recognize that I'm so much more well-off than many, many people, despite the relatively low salary. It's a blessing. But there's definitely a scarcity mindset keeping me from calling myself anything more than comfortable. Some of it is that I would be scrambling to find any sort of work if I lost my job because I can't continue to pay my rent and living expenses for too long without it.

    But on the other hand, I'd survive because I DO have some money in reserve. And I live a comfortable life and almost always have some money left over at the end of the month. So the scarcity mindset isn't necessarily warranted. And I'm trying to work on that because I do realize it's limiting. I've spent a long time feeling guilty for not giving to charity, and I'm trying to make it more of a priority. Also it's hard to keep up a scarcity mindset if you're helping those less fortunate every month :)

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    1. The scarcity mindset is a really hard one to get over. I have way more money than I did before I started medical school, and yet it still doesn't feel like enough. I want to know that I could lose my job AND have a major market crash AND have a whole bunch of unexpected expenses and still be fine. Which of course is a long way off, if I ever reach that point of financial security.

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