Elgin Nelson, Staff
Living with zero financial stress sounds appealing but having a few million dollars in 2023 won’t gain you entry into the world of the rich and famous. In fact, the dollar value it would take to live anywhere near the lavish life you see in the movies or in the real life escapades of Jay-Z, Beyonce, LeBron James or P.Diddy, is likely to cost you somewhere around ten times that.
While a million dollars sounds like a lot of money, if it is all you have to live on, a general rule of thumb is that $1,000,000 in investments should be able to allow a person to spend approximately $40,000 per year without eventually running out of money.
So, a million dollars doesn’t mean what it once did.
“The media portrayal of rich looks more like an income of a million dollars per year, not assets.,” noted certified financial planner Aaron Agte. “And for assets to generate a million dollars per year in income, you probably need $30,000,000 or more.”
Consider that a luxury car can cost one a small fortune. A change of tires on a Bugatti Veyron—which reportedly cost $3 million in 2014— cost a whopping $33,0000. That coupled with expenses such as insurance, taxes and scheduled service means that owning one could cost $150,000 a year in maintenance alone.
And having that kind of money doesn’t necessarily mean you won’t have to work.
During his high-profile divorce proceedings in 2021, Robert De Niro’s attorney told a Manhattan judge that her client— who is reportedly worth $500 million— was working at an unsustainable pace at 77, in order to support his estranged wife and pay off back taxes.
In 2020, Charles Schwab polled 1,000 Americans ages 21-75 to find out what most people considered to be rich. Most put the number at $2.6 million for a comfortable net worth.
70%, however agreed that wealth means more than having money, even if many fell victim to the influences of lavish spending on social media.
According to the study, 54% of Gen Z and 47% of millennials say “they compare their lifestyles to others they follow on social media, with social media influencers driving some of their financial decisions. And most influencers are usually seen with luxury cars that symbolize their affluent lifestyle.
Still, wealth remains a subjective term. That’s why studies suggest smart investments, saving, and a fresh perspective put most on the path to becoming wealthy.
More importantly, the studies revealed that most young people weren’t concentrating on amassing material wealth. Instead, having a sense of security in a career, loving relationships, and life experiences was the preferred currency of young Americans.
“It’s things like having fulfilling relationships and experiences with their family and friends, good health, and even career flexibility. All these things matter more to people than having a lot of money or owning nice things,” Abel Oonnoonny, a vice president and senior financial consultant at Charles Schwab has said.
“We saw a shift toward personal values in how each generation thinks about money and investments,” he added.” It’s not just about accumulation; it’s about how they want to live their lives.” But to live comfortably in today’s society, net worth is imperative.
It also depends on where you live and your earning power. Smart Asset studied how much income it takes to be in the top 1 percent of earners state by state. Nationwide, your household would need to bring in $652,657 per year to hit that exclusive mark.
Here in California, one would have to pull in $844,266 a year. In Connecticut, which ranks at number one, that figure stands at $903,401. The bar is lowest in West Virginia where one would only have to earn $367,582 per year to be in the top 1% of earners.
Rich or not, the key to attaining financial security, according to experts, is abiding by a financial plan or budget and follow the following key rules: (1) Steer clear of credit card debt; (2) Invest early and wisely; (3)Make savings a priority; (4) Cut unnecessary expenses; (5) Stay true to your career goals; and (6) look for opportunities to increase your income.