Isn’t it weird how rich people feel so much scarcity? They don’t have the struggles that bind you on a daily basis. They could live like you and support four other families with the same lifestyle. Years ago, the richest person I knew referred to themself as middle class. I was too stunned to ask any follow up questions, and I thought about it often after the fact. After a decade of being intimately involved in the mindset and finances of a diverse set of financial planning clients, this isn’t weird to me anymore. The felt sense of abundance, scarcity, and power relative to others is in my experience unrelated to financial position. I realized that I am guilty of the same phenomenon, so I have a few tricks to cultivate self-awareness. Today, I propose that we play around with a wealthiness audit. This is something I do often to anchor myself, and I’m curious if it would be helpful for you too. Keep in mind that no action is required—you won’t be asked to redistribute your wealth or change your habits. No one will know, so let’s just be quietly honest with ourselves. The first thing I want you to do is calculate your household’s post-tax income. If you’re not sure what that is you can guess your gross salary x 0.7. Next, go to this site and plug that figure in with the number of adults and children who live on this income. My household’s income nearly classifies us as part of the 1%, globally.
Next, calculate your net wealth (also known as Net Worth) by adding all of your money, the value of your assets or property, and subtracting all of your debt. Then enter it into this calculator to see where you fall. Because of graduate student loans in my family, we are some of the poorest people in the world according to this calculation.
Of course, “poorest people in the world” could not describe a family that once bought an $800 vacuum cleaner. This is why a mix of income, wealth, and social factors are important for any sensible wealthiness audit. Resource Generation, a radical organization committed to redistributing wealth, uses a checkbox survey with signs that you’re wealthy such as “your passport has a lot of stamps in it” or “you dream of owning land with your friends or opening a retreat center” (I think this could also be a sign that you’re gay, but who knows). Here’s my result:
This chart from their class characteristics page is a useful tool for US-based comparisons.
Katie and I have a common refrain where she says that we are barely making it and I respond that we are so rich. By the chart above, we are both right. I think about the almost rotting berries I used to buy at the discount fruit stand, and how we now order as many berries as we want from a grocery delivery service. I’m grateful for the comfort I have, and I am aware of the stark difference between me and my neighbors in Bedstuy, Brooklyn. But it’s undeniable that it is hard to get by, whether that’s medical care in the thousands that insurance won’t cover, or having to piece together childcare for two kids. Living is difficult, despite the privilege. Like for my clients, it’s hard for us to choose between competing priorities on a limited budget—and nearly everyone’s budget is limited.
What’s the point of knowing if you’re rich? Checking your privilege might make you look tuned in with other educated progressives, but it doesn’t exactly save lives. After a disappointing lifetime in these circles, it’s hard not to roll your eyes.
But maybe if everyone felt they had enough, they would support political initiatives that create tangible opportunities for others. Maybe they would cultivate happiness through gratitude. Maybe they wouldn’t screw over their friends for money! Who knows? Many of my clients come from working class backgrounds but are now making professional incomes. Our access to privilege is complex and hard to pin down. Instead of using cost of living and different types of calculations to feel most marginalized, I like to try to hold them all in my hands as perspectives, an opportunity for self-awareness. I believe that every person is both villain and victim; awareness of both our power and vulnerability keeps us from perpetuating harm to others and ourselves. Without mechanisms to force redistribution, such as taxation or jubilee, the fact is it is very difficult for people to relinquish. When you think about the lives of those who make 20% of what you do, what comes up?
Scarcity mindset can keep you from being able to give, save, and spend on the things that are most important to you. Locating abundance through comparison might help you to find some mental flexibility and see the choices that you do have.
These ideas are meant for those who struggle with feelings of scarcity. These folks may be different than those who feel they have too much abundance—there is some reality checking that is useful for these folks too. Next month, we’ll also talk about self-preservation and keeping something for yourself. Let me know if this newsletter changed your perspective, or if it just stressed you out. Have a great day!