$25,000 vs. $25,000,000

This is what a $25 million a year salary looks like versus a $25,000 a year salary. About 20% of Americans live on this amount of money or less. I want to show you the lifestyles of people who make this much money versus this much money and everything in between. The reason I want to look at these differences is because of this graph—it's going up, which is a problem.

Let's start with $25,000 a year. All right, so let's say my name is George. I live in Atlanta, Georgia, I am single, and I have no kids. After some searching, I found this job as a security guard at a TV studio in downtown Atlanta. It'll pay me $12.50 an hour, which is quite a bit more than the minimum wage of $7.25 an hour. Let's assume I work 40 hours a week every week except two that I set aside for holidays, sickness, and vacation. This means I make $25,000 a year. At this level, around 29% of Americans earn as much or less than me.

So how will I spend it? This comes out to be just over $2,000 a month that I have to spend. I’ve got to pay taxes, which brings me down to $1,764 to live on per month. To calculate this next part for this income and all of the incomes we're looking at, I used data from the U.S. Bureau of Labor Statistics. It shows that people in this income bracket spend about 41% of their pre-tax income on housing. I've got about $850 for all my housing expenses. That's nearly half my after-tax budget.

Hence, I'll definitely be renting instead of owning a house. A lot of landlords these days require you to earn three times more than the monthly rent, so I'll probably need roommates to get approved for an apartment. All right, let's look at Craigslist. I really can't afford to live downtown, so I'll look in the outskirts. I found a place right outside the city—this is going to work, and it's within my budget for rent and utilities.

So how am I going to get to my job, which is in downtown Atlanta? It's 20 minutes away from where I live, and like most American cities, there's not great public transportation here. So I'm going to need to have a car. Let's say in this assumption—and it's a kind of big assumption—that I already have a car. Let’s assume it’s a 2004 Toyota Solara that I got on Facebook Marketplace. Lower-income Americans spend more of their income on transportation than any other segment of the population.

The data we'll use says about 15% of pre-tax income is spent on transport, which is $313 for gas, insurance, parking, and saving up for maintenance and repairs. We've got to be pretty careful about how much extra driving we do and hope that no big maintenance issues arise. According to this BLS data, I spend about 15% of my income on food. That includes both groceries and eating out. That's $313 a month for food.

A lot of people think that this income bracket just goes to McDonald's all the time. But the reality is, the average order amount at McDonald's is between $7 and $8, so that will not get me through the month. It will get me through 13 days' worth of food, so I gotta go to the grocery store. Unfortunately, in most lower-income areas in this country, there aren't a ton of grocery stores. The ones available are much less likely to carry fresh produce or other nutritious food. So I'm going to see what I can do by stocking up on beans and rice, peanut butter and jelly, Wonder Bread, Top Ramen, and freezer meals.

For fresh options, I'll be looking at potatoes and some of the cheaper produce, and no eating out—or rarely, occasionally on special occasions. If I do eat out, I'll be looking at the value menu at a fast-food restaurant. I'm looking for discounts and checking every price in the convenience store. Okay, but wait—don't I get government assistance for food, like food stamps? From my research, I can see that to get government assistance, I need my savings account to be less than $2,000—check. My income needs to be lower than $1,578, and I make $25,000, so nope, I don't qualify.

Okay, so we've covered our basic needs of housing, food, and transportation, but I still have a lot of expenses. We hear a lot about healthcare being a massive personal cost in the U.S., but Georgia’s Medicaid website says that I qualify for government help. Even with that, I will pay around 10% of my income on health-related expenses like medicine, doctor visits, and getting care that isn't covered by this government insurance. This is one of the reasons why people in my income bracket live around seven years less than the richest Americans.

After all these main expenses, I’m left with a small amount of money for everything else, and there’s a lot more that I need to spend just to live. Laundry, internet connection, and cell phone conservatively add up to $105, not taking into account the overcharges and hidden fees. Entertainment, fitness, and travel just aren't feasible. I have no emergency savings or rainy-day fund and live in the stress of an unexpected car repair or a health emergency; any of these unexpected charges could be a major setback.

I’m probably going to have to join the huge number of Americans who rely on debt to get through the month, whether it’s credit card debt or short-term loans with high interest rates. Maybe I’ll need to move back in with my parents or take on a second job; maybe I'll start driving Uber or DoorDash. But what's clear is that my full-time job, which pays much more than the minimum wage, is still not enough to make it through the month.

I'm going to pause the video really quick. I'm excited about the sponsor of today's video—it's the first time they're sponsoring a video, and it's Headspace. I started using Headspace over a decade ago when I was in college, getting into meditation, and I love it.

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With that, let's get on to the next income tier.

All right, now let's see what we can do with $40,000 a year. Now, my name is Simon. I am the representative of the median American income of a single earner. I make $40,000 a year as an event coordinator at a country club in Atlanta.

My $40,000 salary gives me just over $33,000 a month. After federal and state taxes, I'm left with just under $2,700. [Music] Using that same data set, my budget for housing is $1,133. I'm kind of feeling this one-bedroom house.

Let's say between rent for this house and my utilities, I'm paying $1,133 for my monthly housing expenses. The country club is kind of far from my house, and because there's no public transportation, I'm going to need a car. I saved up and purchased this 2011 Subaru Forester on Facebook Marketplace. I got it for $4,500.

Like George, I spend about $136 a month just on gas to get to my job. This leaves me with a little over $400 for everything else. Guys gotta eat; what am I going to do for food? According to the BLS data, someone like me spends around $467 a month on food.

I typically spend about $100 a week on groceries and can use the rest on a dinner out or two. I've got a Kroger grocery store four minutes away from my house, and at this point, I'm definitely cognizant of every price on these shelves. I'm using coupons, trying to get the best deal, but I have leeway to spend a little more on maybe a decent cut of meat or some fresh produce. Maybe I buy organic every once in a while; I can comfortably feed myself if I'm smart about how I spend and don't eat out too much.

This income level is right on the threshold where employers start to sponsor your health care plan; they begin to subsidize it—that's a thing here in America. Luckily, my employer does, but even still, I spend $300 a month on health, medicine, and out-of-pocket doctor visits pre-deductible expenses. Now I get to pay for a gym; I signed up for this low-cost gym for 10 bucks a month. After covering these basic needs, I have $231 left for everything else.

All my other essentials—laundry, cell phone, internet—brings me down to $126. I will try to put some of this away for an emergency or a trip, put it into a savings account with a good interest rate so it will grow over time. To be honest, I'm probably going to spend this on entertainment. I want to go out, have fun; I want to see a movie, subscribe to Hulu and Netflix, maybe buy a book, and might go out with friends.

After all of that, I end up around zero. All in all, I'm doing better than George but not that much better. I've got some money left over at the end of the month, but an emergency expense would still leave me in debt. Let's up this to 100 grand a year and see what our budget looks like.

Okay, now I'm Tim, and I just found this job in sales that makes me $100,000 a year. I'm officially in the six figures. I make four times more than George and double the median income Simon makes. I'm now near the top 10% of earners in this country.

My salary gives me $8,333 every month; $2,200 of that goes to taxes, leaving me with just over 6 grand. In this income bracket, you see that people spend around 30% of their income on housing. Until recently, this salary would've been enough to buy a house, but these days, not so much.

For our assumption, let's say I, Tim, have been saving for 10 years and am finally ready to purchase my first home. Zillow is telling me that I can afford a house around $314,000. I'm going to buy this nice one-bedroom townhouse in Atlanta; it's got nice wood floors and natural light.

Oh wait—there's a condo fee: $426 per month, probably for that fancy workout room. We're going to have to keep looking. I found one—it's a one-bedroom condo with a fireplace, pool access, and a fitness room in a good location, just under $260,000.

With the condo fee, I'll be paying around $2,700 per month, about 32% of my income for housing. I get to spend more on housing than George and Simon make in a month. By the way, I will have to cough up $22,000, my whole savings, for a 5% down payment and closing costs for this house purchase.

Thanks to my good credit, I can qualify for a good car loan, allowing me to buy this beauty—a $50,000 BMW. It'll cost me $754 a month for 5 years, leaving me with $579 every month for gas, repairs, and insurance. I'm even able to afford to bring it to a professional car wash place, getting it detailed every couple of months.

I am upper middle class now, so I only pay 11% of my income on food per month to feed myself. I get to eat out a lot more; at the grocery store, I peruse fresh, nutritious food more abundantly. I buy nice meat and produce, not overly concerned with prices, and order DoorDash once or twice a week, using money to save time and stress.

My job pays for a lot of my health insurance, but I still pay $500 a month on health, medicine, and kind of expensive supplements. I'm able to save money, so a minor medical emergency isn't a big deal, but doctors I go to must be in-network; out-of-pocket is too expensive.

With all my big expenses covered, I still have $665 for Wi-Fi, unlimited phone data, and other essentials easily accessible in my complex. Even after essentials, I have money to save, invest, and a bit left for fun. Every few months, I've saved enough for vacation; work pays time off, so that's not a worry, and I just need to choose affordable travel spots.

Let's bump this up to a million dollars a year and see how our budget starts to shape up. Hi, my name is Noah. I'm a junior managing director at a big private equity fund—I'm in finance. I see myself working 70-hour weeks, making big deals. I earn $1 million a year—that’s $83,000 a month, though after taxes it’s more like $48,000.

In one month, I'm making double what George makes in a year, and in three years, I'll make more than he does in his lifetime. I'm officially among the top 1% of income earners. I'm very lucky because my income and wealth are increasing faster than everyone else's, and we'll see why soon.

With this kind of money, I can really get a nice home by spending 28% of my income, which means I can afford a $2.6 million house. This five-bedroom, five-bath home in Atlanta is quite nice; look at this kitchen and the beautiful yard outside. I might even consider taking up croquet.

Oh, and it even comes with this little friend—a taxidermy fox. Though I’m eyeing a summer house in Italy, I’ll settle for something modest like this one— I love the wooden tub, something I never knew I wanted, but I do.

At this income, most of the expenses that people at lower levels worry about don’t affect me the same way. I can afford top doctors, preventative care, and personal trainers. My health insurance covers virtually everything, and my expenses are manageable. Since I work a lot, my hours are much more financially valuable than those of George, Simon, or Tim.

Laundry, Wi-Fi, cellphone bills, those are all negligible costs for me. With leisure money left over, I can indulge in investing, entertainment, and philanthropy. I buy collector's items and art, and I'm a member of exclusive clubs for networking.

Even with all this, I have so much money left that my investments just keep on growing. Lastly, how about $25 million a year? Let’s see what this lifestyle looks like.

Meet Robert: a successful entrepreneur, maybe CEO of Zillow, Chevron, or in show business, making $25 million annually. Robert is part of the global elite, where thinking less about annual salary and more about total wealth is key. Most of his pay is in stocks, not cash, untaxed unless sold—in this role, the tax rate can be less than that of Tim, making $100,000.

With an income like this, I could truly afford a mansion with a pool, gardens, and a private chef. But I am set on buying a summer home in Italy, so I’ll settle for slightly less. My chosen home reflects an elite lifestyle, with yards and terraces that provide privacy— everyday concerns don't reach me here.

My travel setup includes various cars and even a private driver, costing me double George’s salary, that I can easily afford. I hire help to manage everything from meals to logistics, which grants me invaluable time. When flying, I often charter private jets or hop in first-class for less leisure trips.

Regarding food, don’t step into a grocery store unless it’s for fun. My chef stocks my fridge according to a nutritionist's plan—all meals are crafted with detail. High-end dinners are a staple of my routine.

My healthcare is top-tier: a full-time concierge doctor, daily health experts, and access to any treatment. I have veneers replaced, prioritizing health and performance. This infrastructure ensures longevity, nearly a decade more than average.

Among all expenditures, investments are not only essential but thrilling. Leisurely, I collect artifacts, own a diverse stock portfolio, and engage in philanthropy boosting tax benefits. Residual funds are a means for traveling and acquiring experiences while staying grounded with strategic saving.

This elite existence grants Robert amplified access to success— from networking clubs to distinguished global assets. It's about knowing the playing field is set to advantage. He never contemplates basic nuisances because every layer of wealth backs security and growth. The privilege resonates a release from average constraints and sets his lifestyle seamlessly upward.

The divide between these income levels is unfathomable yet defining. The top 1% captures vast wealth flows compared to the struggling 20% like George. Historically, once the wealthy gathered 20% of all income until reforms cut it by half in the 1980s. However, these gains are again at risk as disparity grows.

While America is an emblem of opportunity, its systems are increasingly ineffective. People like George encounter hurdles, mirroring narratives of instability, inequity, and socio-political risks.

Just as a century prior marked corrective action against such imbalances, our trajectory demands it again. With power concentrated in so few as $25 million earners, advocating for change is imperative. Resolutions can address both the present constraints and secure economic, political, and social longevity for all citizens.

[Music fades out.]