What’s It Like to Live on $1 Million a Year… or $7 an Hour? 4 Men Open Up
We seem to be continually curious about this question: What is life like for the wealthiest Americans?
We watch TV shows, read blog posts and follow Snapchat feeds about it, trying to get a taste of what life would be like with more money.
Election years tend to turn our attention to the other end of the spectrum, as well. What is it like to live below the poverty line?
That question is particularly top of mind this year, as presidential candidates push for a higher minimum wage, laws roll out to provide better benefits for working families and new tax plans are, as usual, as varied as the melting pot of people who would live with them.
Life at Every Income
To illustrate life across income levels, Esquire asked four men, each of whom supports at least one child, about the lives they can afford.
The magazine chose four annual incomes in particular:
- $1,000,000: what it calls “the true starting point of real wealth”
- $250,000: the line politicians draw between the upper and middle classes
- $53,000: the median household income for American families
- $20,000: the federal poverty line for a family of three in the U.S.
Here’s a sampling of the responses.
The Frugality of the Rich
Tim Nguyen, 35, is the CEO/Co-founder of BeSmartee, a DIY mortgage marketplace. He earns $1,000,000 per year.
Contrary to the picture we get from Rich Kids of Instagram or “Real Housewives,” millionaires tend to be frugal folks.
As Nguyen illustrates, to earn and manage a lot of wealth, you have to be smart about money.
Yakov Villasmil, 41, is a real estate agent in Miami who earns $250,000 a year. He keeps a similarly tight budget to Nguyen, where he’s aware of every expense.
But even at this upper-class income level, his family’s budgeting strategy is more familiar to those of us in the lower brackets. He notes expenses for transportation, gas, rent, groceries and subscriptions to streaming services like Netflix and Pandora.
His monthly budget falls much higher than many of ours, probably: $7,000.
But it doesn’t seem absurd.
The Difference Between the Haves and Have Nots
Where the line is truly drawn between the “rich” and the “poor” is that both of the men on the rich side of our income scale say there’s nothing their family needs that they can’t afford.
And for those things they want -- Nguyen wants to help his parents retire, and Villasmil mentioned a $10,000 watch -- both respond as though it’s only a matter of time and planning.
For many of us, what we want and can’t afford remains a set of fantasies we’ll never realize.
Life for the Average American Family
Median household income in the U.S. is $53,657 per year. So, what does life look like for an average American family?
Michael Greene, 48, is a concierge for a property management group in Brooklyn. He earns $53,000 per year and supports his wife and three children.
Greene’s budget sounds familiar: $150 per month goes to BJ’s Wholesale Club to buy in bulk for his family of five.
Their weekly grocery bill is frugal, between $100 and $125, well below what the USDA considers a thrifty food plan.
When it comes to what his family needs but can’t afford, Greene said “a ranch-style home.” The family currently rents in Brooklyn. He doesn’t specify the size of their apartment, but at $1,000 per month, it’s probably not spacious.
And the luxury he wants but can’t afford? A Volvo. A six-seat family car “with a little TV in the back for the kids.”
Greene says he doesn’t stress about money. An average American income puts his family on a tight budget with few luxuries, but it keeps them comfortable.
Debt and Savings Below the Poverty Line
Demetrius Campbell, 25, earns $7 per hour plus tips as a bar-back in Chicago. He’s a single father of two girls.
Campbell is the only one of the four men who says he does not keep a budget because his income and expenses are unpredictable.
One of the starkest differences from Campbell to the other men, however, is his debt.
Nguyen reports “less than 10 grand” in debt and none from credit cards.
Villasmil reports $7,700 in credit card debt he’ll pay off by the end of the month.
Greene has about $7,000 left in student loan debt.
Campbell can’t definitively name all the money he owes.
“I'm in a lot of debt,” he explains. “I have traffic tickets, hospital bills, old phone bills. I'm pretty sure that my debt from the tickets alone is roughly $3,000.”
He has no credit cards. And while past-due bills and traffic tickets may sound like plain irresponsibility, they’re par for the course below the poverty line.
“By the time you get the money to pay the ticket, the fine has doubled. Then you get another one and can't pay that one. Like, I'm on a boot [booted vehicles] list, and I got the money to get off the list, but my car got towed that morning, so I had to pay half that money to get it out of the impound. It just keeps going like that."
Below the poverty line, saving is a distant fantasy.
At 25, Campbell says, “Retirement is a long ways from now.” He has to pay off his debts and be “in a better place” before setting aside money for his kids to go to college.
In contrast, both “rich” men report, interestingly, they don’t plan to retire in a traditional sense. They intend to continue managing real estate and other investments well into old age.
The desire to “always be working,” as Nguyen put it, seems to be a luxury of white collar work.
Worrying About Money
Villasmil does worry about money, “Every single day. Every single minute.”
But he doesn’t worry about not having enough to pay the bills. He worries about his “next move,” how to make more money to reach the income that will allow his family to live the life they want.
Nguyen worries about money “maybe once a week.” With the ability to forecast earnings and plan for future spending, he says he has little to worry about.
And how often does one worry about money while earning minimum wage?
Unsurprisingly, Campbell says, “Always. Living like this is hard to do.”
Your Turn: Do these experiences surprise you? What are your perceptions of life at various income levels?
Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).