Money. It makes the world go round and it’s the root of all evil. We all want it, we all need it, but is there ever an end to this insatiable quest for wealth?
Aside from recent findings that show an upper limit to the happiness money can bring you, a new report from the comparison site Finder has revealed just how much cash Australians say they would need before considering themselves rich.
According to their survey of 1,013 respondents, one in four of us wouldn’t consider ourselves wealthy unless we were earning more than $500,000 per year. In order to feel rich, Australians say they would need a salary of $326,000 per year. That’s more than $100,000 above the base salary of a federal politician. The Prime Minister’s wage is $549,250 per year.
This is interesting because the level of income we would need in order to feel rich is almost seven times more than what the median personal income is in the country — $49,805 — something that most Aussies don’t appear to realise. The median is the halfway point between all salaries, high and low, in Australia. Earning above this means you are earning more than half of those taking a wage in the country.
A small percentage of incredibly high earners skew the average, but the median is still a good way to work out what people are typically earning.
Lack of awareness about this may have something to do with the fact that discussing our income amongst friends and colleagues is still seen as a taboo, despite the fact that this has been shown to improve income inequality all around.
Finder’s research found that Gen X report needing the most money to feel rich ($354,100), while Gen Z needs a little less ($286,964). Millennials need to land much higher, on $329,290, while Baby Boomers want $313,031.
Kate Browne, personal finance expert at Finder, says that Australians, and Millennials, in particular, are guilty of spending beyond their means in order to keep up appearances.
“There’s nothing wrong with striving to be financially comfortable, but endeavouring to compete with others is exhausting and expensive, and you’ll never be satisfied with what you already have,” Browne says. “It can also encourage you to overspend on items you can’t afford.”
A US study by Credit Karma found almost half (48%) of Millennials spent beyond their means to keep up with their friends in 2019. This is a big jump from 2018, when that figure was just 39%.
Food (47%), clothes (41%) and travel (33%) are the main things Millennials were found most likely to overspend on.
“Remember social media is a highlight reel, and while it can seem like everyone around you is hustling their way to the top, appearances can be deceiving,” Browne added.
Of course, being rich and having wealth is about more than just how much you earn. What you do with that money, and whether your money works for you, is just as, if not more, important.
“Working on habits like cutting back on spending where you can and saving a regular portion of what you earn is a great start,” Browne explains.
“Aim to put at least 20% of your income every month into a savings account and let this grow. Having a savings goal to work towards — such as buying a house — will keep you motivated to keep going. Because interest rates are very low, you might also want to consider investing some of your money elsewhere for the future.”
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