Polls / July 22, 2010

How much do you need to earn a year to be "rich"?

Being “rich” requires earning €200,000 or more annually, say 60% of respondents to the latest eZonomics poll.

Am I rich yet? It depends who you ask
Exactly what qualifies as “rich” depends on who you ask. Just as one person’s trash is another’s treasure, one person’s meagre salary is another’s gold mine.
The Global Rich List website makes this point by allowing users to enter their annual income and find out how it compares with that of others globally (using World Bank Development Research Group figures).
Moreover, behavioural economists tell us people tend to only consider themselves rich if they earn more than people around them. Author Dan Ariely writes in his book Predictably Irrational about a comment that a man’s satisfaction with his salary “depends on whether he makes more than his wife’s sister’s husband”. In his The 7 Habits of Highly Ineffective People blog post, Ariely says this focus on others’ earnings rather than how much we need to earn to be satisfied means happiness “depends less on us, and more on the people around us”.

But living in a big city costs more
The amount of money needed to make you rich cannot be given as a set figure – but two major components do come into play. As we have seen, what (or who) you compare yourself with is one of the factors. The other is your cost of living. A person living in a big city, such as New York, London or Tokyo, is likely to have housing and living costs much higher than somebody living in a small rural town or a low-cost country.

It’s an age old discussion
One definition of being “rich” could come down to living within your means and budgeting. In the Charles Dickens’ book David Copperfield, fictional character of Mr Micawber utters the well-known quote: “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
It is an age-old argument. Managing income and spending is an important part of being rich in your own terms.

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