Why $2.3 Million Isn't Enough

What's the guys? It's Graham here. So, I just came across an article by CNN with the headline, "Is Two Million Dollars Enough to Feel Wealthy?" That really got me thinking: how much money does someone actually need in order to feel rich? Just think about that for a second. At what point do you feel like you're set for life and you have enough to be rich? Is it a million dollars? Is it two million dollars? Or is it a billion dollars?

Well, according to the Modern Wealth Survey conducted by Charles Schwab, the average person felt like they would need to have two million two hundred and seventy thousand dollars in order to consider themselves wealthy. That's enough to buy twelve median-priced homes here in the United States, and it's also enough to buy four hundred and fifty-four thousand Starbucks iced lattes. But how realistic is 2.3 million dollars in terms of feeling rich? And once you actually reach that point, will it really be everything you expected it to be?

Because I'm gonna say it: most likely, two million two hundred and seventy thousand dollars is not enough to make you feel wealthy, and I'll explain why. But really quick, the forty-one gets triggered and rents a nasty comment saying that I've gone crazy and 2.3 million dollars is a lot of money. Just do me one favor: watch the video until the very end before making any judgments. I promise there's a point I'm going to make with this entire video. As long as you make it to the very end and hit the like button, you'll understand why.

Now, first of all, let's look at this objectively. Two point three million dollars is a lot of money. I don't care who you are. Considering that the median net worth of the average U.S. household is just under a hundred thousand dollars, at two point three million, you're doing significantly better compared with most. Two point three million dollars is also enough money invested to earn an income between fifty-five thousand and ninety thousand dollars per year just from your investments, without ever having to work or step foot in an office or deal with an overbearing boss.

So, I think we could all agree here that the two point three million dollars would solve a lot of money-related problems for a lot of people. And when you compare that to how much most people have, you are very much rich. However, when it comes to feeling rich, here's a few things that some people don't consider.

Now, the first one is cost of living. Like, it's no surprise living in a state like New York is going to be a lot more expensive than living in a state like Mississippi. The Bureau of Economics really did a great job analyzing which states end up giving you the best bang for the buck. For example, in New York, 2.3 million dollars is really equivalent to about one million nine hundred and sixty thousand dollars in terms of what you get for your money. Whereas in Mississippi, 2.3 million dollars is really equivalent to two million six hundred and ten thousand dollars in terms of what you get for your money.

I gotta say, that's a pretty big spread depending on where you live in the country. Even when you compare for cost of housing, the average price per square foot here in Los Angeles is six hundred and fifty-five dollars, but if you go all the way to Little Rock, Arkansas, that drops all the way down to ninety-eight dollars per square foot! That is 85% less! This also means that depending on where you live, money takes on a different meaning, especially when two point two seven million dollars will not buy you this thirteen hundred and eighty-one square foot bungalow in Venice, California, but it can buy you this mansion in Arkansas.

Now, this is also backed up by another study by Charles Schwab, which found that in Charlotte, North Carolina, one point eight million dollars was the amount needed to feel wealthy. But if you moved to San Francisco, that amount jumps to four point two million. Now, secondly, when looking at a sizable sum like 2.3 million dollars, it's a lot less important to focus on the overall amount as it is instead about how much that money will realistically generate and last you for the rest of your lifetime.

Now, like I mentioned earlier, 2.3 million dollars invested should be enough to safely generate an income between fifty-five thousand and ninety thousand dollars per year conservatively, depending on where it's invested, without ever having to worry about going back to work again or without running out of your money. Now, that's an incredible income for anyone to make. In fact, you can basically earn what the average American makes in a year without actually having to work. I would call that a success.

However, feeling rich, earning between fifty-five thousand and ninety thousand dollars annually doesn't quite cut it apparently, according to surveys. Now this is because, according to a study by YouGov, most people surveyed felt like someone earning ninety thousand dollars a year was neither rich nor poor, and earning a hundred thousand dollars or more per year became the crossing point where 56% of people surveyed felt like that would make them rich.

Now, here's where things take a turn in a completely different direction in terms of how much money you actually need in order to feel wealthy. The answer is it just depends on how much money you already have. When surveyed, 92% of people earning between ninety thousand and one hundred and fifty thousand dollars per year either felt like they're not poor but not rich or they straight-up just felt poor. And what's even more surprising is that throughout all the income brackets up to one hundred and fifty thousand dollars, fewer than 10% of those people felt like they were rich.

So, why is this? Now the reason behind this is that we always compare our income with those that are doing better than us, and how much money we make just quickly becomes our new normal. A poll was done several years ago that highlights all of this perfectly. Almost half of the people earning thirty to forty-nine thousand dollars per year felt like making a hundred to five hundred thousand per year would make them rich. But if you ask people earning over a hundred thousand dollars per year what income they would need to feel rich, nearly half of those people felt like they would need to be making more than five hundred thousand dollars per year to consider themselves rich.

Basically, you’ve just found that the more money you make, the higher the bar is set, and the more money you need to make in comparison to make yourself feel rich. Like, if you make fifty thousand dollars a year, most likely earning a hundred thousand is rich. If you make a hundred thousand, most likely two hundred and fifty thousand is rich. If you're earning two hundred fifty, probably five hundred thousand dollars is rich, and so on. It's never-ending.

This is all thanks to what's called the hedonic treadmill. That's the phenomenon where no matter what happens in your life, your baseline of happiness is always going to return to what you consider normal. This means as you continue to make more money, your expectations also rise with it, resulting in the bar being continually set higher and higher without much permanent difference in your life. Another phenomenon also happens as you begin to make more money, and that is you tend to associate with other people who make a similar amount as well.

All of a sudden, when you're making two hundred thousand dollars a year, you're living in an area where everyone else is earning two hundred thousand a year, and all of your friends are making two hundred thousand a year, and you suddenly don't feel as wealthy as you once did when you compare yourself with all of your peers. In fact, you feel quite normal—the exact same as when you made one hundred thousand dollars a year and the exact same as when you made sixty thousand dollars a year.

Anecdotally, I can tell you this is all very accurate, and I can attest to this firsthand. I remember being seventeen years old and thinking I will have finally made it once I make one hundred thousand dollars per year. To me back then, that would have been the world. But when I actually went and made one hundred thousand dollars a year, I realized, like, wait a second, it's not as much as I thought it would be because after taxes you’re left with seventy thousand dollars. And if I ever want to invest and buy real estate and retire early, I need to save way more than that if I want to live in Los Angeles. So now I realize I actually got to make two hundred fifty thousand dollars a year—that would be enough.

This mentality is never-ending. I nearly guarantee that no matter how much money you make over time, you'll feel like you just need a little bit more to boost you into the next category and finally feel rich. And it's for that reason why I believe that 2.27 million is not enough to actually feel rich once you actually get there. Now, this isn't just my opinion either because other studies have shown that even once you reach millionaire status, most of them now believe that it would be seven million dollars needed to feel wealthy.

And I bet if you ask people with seven million dollars how much they would need to feel rich, I think they would say fifteen million. And if you ask those people how much they need to be rich, I think they would say thirty million. And then it just gets ridiculous. Here's what I'm getting at, though: feeling rich is not about hitting a certain dollar amount in your bank account or achieving a certain income per year. Even though you might feel a temporary boost by reaching certain milestones, it's not going to last, and we're naturally just going to seek out the next milestones and goals after that.

As humans, we're not designed just to reach a plateau and then stay there, because if we did, we would never have the ambition to go and climb Mount Everest or go visit the moon or go hit the like button. And if that happened, we would all be complacent doing absolutely nothing, and our society would not be the way it is today without the people continually pushing the boundaries and pushing their expectations beyond what they originally thought was possible.

However, it's still very important to understand that you will always be rich in the eye of someone else. To the person making a million dollars a year, that person is rich. The person earning five hundred thousand dollars a year is rich. The person earning two hundred and fifty thousand dollars a year is rich. The person earning eighty thousand dollars a year is rich. The person earning fifteen thousand dollars a year is rich. The person who has absolutely nothing and is just trying to survive—is really, at the end of the day, feeling rich is a state of mind, not characterized by numbers, but instead by your own gratitude for appreciating what you have.

This very much goes in line with a saying: “Wherever you go, there you are.” If you're a person who feels rich on fifty thousand dollars a year, I guarantee you will also feel rich on two hundred and fifty thousand dollars a year. And if you feel poor earning two hundred and fifty thousand dollars a year, I guarantee you'll also feel just as poor earning a million dollars a year.

And again, let's not kid ourselves here: two point three million dollars is enough money that pretty much anyone can retire from and live a very comfortable life almost anywhere in the world. But in terms of thinking how much you'd need to feel wealthy, I would say that true wealth really comes from stepping back and seeing the bigger picture. That oftentimes having a roof over your head and food on the table means you're rich in the eyes of someone else who has neither.

That's why it's so important to realize that feeling rich does not cost a certain dollar amount, but instead, it's the feeling of appreciation for what you have right now. That's why I believe 2.3 million dollars is enough to be rich, but it's not enough to feel it once you're there. Because, at the end of the day, feeling like you're wealthy is the journey; it's not the destination.

So, with that said, you guys, thank you so much for watching. I really appreciate it. If you guys enjoy videos like this, make sure to smash the like button—always do that! Feel free to subscribe if you're not subscribed already. Also, feel free to add me on Instagram; I post pretty much daily, so if you want to be a part of it there, feel free to add me there. And then I got a special surprise here, if I can find him; give me one sec.

So, here we go: here's a little kitten. This is two weeks after the last one I did with the credit card video. He's a lot better about being picked up now. But anyway, I think his name is gonna be Ramsey. I think Ramsey's a really cute name; it's kind of like Dave Ramsey, and someone commented that Ramsey would also be a good name because I saved him and Ramsey loved saving. So anyway, I'll put him back down, but that's Ramsey.