Earning Six Figures and Living Paycheck to Paycheck
Last week I posted about The $500 Challenge, the report from a recent study that 63% of US workers can't afford a $500 emergency expense. That 63% figure wasn't the only thing the study said. It also found that more than one-third, 35%, of people earning $100,000 or more said they are still living paycheck to paycheck.
I am totally not surprised by the statistic about six-figure strugglers. It's basically the same thing as HENRYs (High Earners Not Rich Yet) from several years ago, but today more people are facing the conundrum. Here are three reasons why:
1) Traditional benchmarks of wealth don't mean what they used to. Once upon a time "millionaire" indicated a person who didn't need to work, owned a mansion, and led a life of wealth and leisure. That popular cultural notion is based on the economy of 70-100 years ago, though. Nowadays, after decades of inflation, almost 9% of US adults are millionaires, and where I live, a million bucks buys barely half a modest, 3-bedroom family home. Similarly, the notion of a "six figure salary" denoting an affluent person is about 25 years old and it, too, doesn't mean as much as it used to. In the most expensive US cities a salary of only $100,000 leaves you pretty skint if you're supporting a family on it.
2) A few years of high inflation has taken a bite. Real inflation the past few years has been serious. Overall inflation rates are not-bad seeming figures like 5% a year. The thing is some categories of goods and services have seen way higher inflation. And those are the things the working class spends a lot of their income on. Groceries are way up, for example. Just based on the things I regularly shop- and I shop Safeway, not places like Whole Foods, BTW- I've seen increases of 30%, 50%, even 100% over the past 3 years. Insurance has been rising more than 10% a year. Car insurance, home insurance, health insurance.
3) Lifestyle inflation is what opinion makers usually blame for people spending too much. The old green-eyed monster, envy, has always been around. Previous generations called it "Keeping up with the Joneses". Now it's about keeping up with the seemingly better-off people on Facebook, Instagram, and other sites. I agree lifestyle inflation is a real thing, and that social media has turbo charged it compared to how much it impacted previous generations- but I'd put it as the #3 cause, not #1.
I am totally not surprised by the statistic about six-figure strugglers. It's basically the same thing as HENRYs (High Earners Not Rich Yet) from several years ago, but today more people are facing the conundrum. Here are three reasons why:
1) Traditional benchmarks of wealth don't mean what they used to. Once upon a time "millionaire" indicated a person who didn't need to work, owned a mansion, and led a life of wealth and leisure. That popular cultural notion is based on the economy of 70-100 years ago, though. Nowadays, after decades of inflation, almost 9% of US adults are millionaires, and where I live, a million bucks buys barely half a modest, 3-bedroom family home. Similarly, the notion of a "six figure salary" denoting an affluent person is about 25 years old and it, too, doesn't mean as much as it used to. In the most expensive US cities a salary of only $100,000 leaves you pretty skint if you're supporting a family on it.
2) A few years of high inflation has taken a bite. Real inflation the past few years has been serious. Overall inflation rates are not-bad seeming figures like 5% a year. The thing is some categories of goods and services have seen way higher inflation. And those are the things the working class spends a lot of their income on. Groceries are way up, for example. Just based on the things I regularly shop- and I shop Safeway, not places like Whole Foods, BTW- I've seen increases of 30%, 50%, even 100% over the past 3 years. Insurance has been rising more than 10% a year. Car insurance, home insurance, health insurance.
3) Lifestyle inflation is what opinion makers usually blame for people spending too much. The old green-eyed monster, envy, has always been around. Previous generations called it "Keeping up with the Joneses". Now it's about keeping up with the seemingly better-off people on Facebook, Instagram, and other sites. I agree lifestyle inflation is a real thing, and that social media has turbo charged it compared to how much it impacted previous generations- but I'd put it as the #3 cause, not #1.