I am always confused when people equate having money with having all one’s problems solved. Yes, money can solve a number of problems. But if money solved all problems, then we would have solved all our problems after our first or second raises.
Instead, most people make more over time and continue to chase happiness at the next income level. While you fantasize about how much smarter you’d be than those currently earning your dream salary, there are literally billions of people thinking they’d have it made if they earned your salary and lived in a first world country.
I was recently thinking about this idea that having a $200,000 or a $500,000 salary would mean an effortless life. I used to be at the lower end of this club and some of my friends are earning half a mil due to Covid- and other retention bonuses. And from my own experience and watching their experiences, I can tell you some of the problems this salary can solve and some of the problems it doesn’t solve or that it can exacerbate. Here are the problems of a $500,000 salary.
Mo’Money Same Problems
Before everyone gets all up in arms with me, my point is not “rich people have hard lives.” I have two goals here. The first goal of this post is humanization – everyone has problems. Those with big salaries have some similar and some different than middle class folk and some of the same and different problems than the really rich.
I remember a blogger once dismissing a celebrity voicing her frustrations with “you’re rich, successful, and beautiful. You don’t get to complain!” But having some advantages doesn’t mean you have to muzzle yourself or be grateful for every ingrown toenail. Yes, we are all born with some blessings, but we can be down too and that’s fine. Money doesn’t mean enlightenment.
The second goal is learning to differentiate between which problems money can solve and which problems it can’t. Even for the problems that money can solve, it’s not necessarily straightforward how to convert money into solutions. And many people are more than happy trying to sell you solutions that don’t work. Beware these pitfalls.
When You’ve Got a Hammer, Every Problem Starts to Look Like a Nail
When you’ve got money, every problem looks like one that money can solve. For some problems that’s true – like paying bills.
There are other problems that can be solved with money but money is not sufficient or perhaps not even necessary. Maybe you want to lose weight. You could hire a trainer but you still have to put in the effort. You could also buy into tons of weight-loss shakes or programs without any noticeable results. Sometimes money can offer too many loud ineffective solutions and cloud you from quiet ones that work.
Finally, there are other problems that could be solved by money, but would be better solved in different ways or are exacerbated by having money. These include relationship problems, logistical difficulties, problems involving misplaced expectations, etc. This is largely what I’ll be talking about in this post.
Money Can Delay Dealing with Problems
There are problems that can be solved with money or time and effort, but if you’re short on the latter, money can’t necessarily make up for it. If you’re a hoarder, it may take a while before you realize the magnitude of the problem because you can keep buying more space. But when you do try to catch up, the problem is immense.
If you have money to buy takeout, you may never learn to cook. If you are surrounded by yes-men instead of friends, you may not be able to see and fix glaring character flaws. When you have money for stylists, perhaps you don’t develop your own level of taste or autonomy. It can be easy to fall into the trap of depending on others when you really need to learn to depend on yourself.
More Is Expected of the Rich
People might not ask you for money if you’re broke. And you might not feel bad turning them down if you’re broke. But people come out of the woodwork if you’re rich.
Sarah Jessica Parker and Matthew Broderick got into a lot of heat once for having some very poor relatives. But even if you’re extremely warm-hearted, money isn’t necessarily the solution. Many people try to help others with money only to find that money doesn’t solve their relatives’ problems. Having money could mean you’re a target for sympathetic endeavors for problems without solutions.
Studies show that black people are less likely than white people to have extended family members with financial resources from which to draw on and more likely to have extended family members that require help. This doesn’t mean people are required to help, but compassion for your family members is hard to turn down.
The Limits of Big Charity
McKenzie Bezos made headlines for donating $4.2 billion to charity over 4 months. Mark Zuckerberg got a lot of press for donating $100 million to Newark schools. President Biden is trying to slash poverty in half with giveaways.
It’s true that if you give a person $13,000, they don’t count as a poor person in 2021 anymore. I doubt anyone really thinks of that as ending poverty without knowing that person’s particular circumstances. For most of us, poverty isn’t one moment in time, but your opportunities in the future. A random $13,000 check is not as good as the ability to work a stable minimum wage job with an upward trajectory. It’s the difference between giving someone a fish and giving someone a fishing rod, fishing knowledge, and showing them a pond filled with fish.
For people with a lot of newfound money, it can be tempting to try to solve big problems with big paychecks. But if money were the solution, we would have solved the problem by now. The US government spends some $550 billion/year on alleviating poverty. It’s important to note what money can solve and what it can’t. Money is not a genie that can end all the world’s problems. It has to be used wisely.
The Difficulties of Unmet Expectations
A while ago, a blogger posited that a middle class lifestyle costs $300,000. I understand why this was controversial – because people took the chart as entitlement. But I think the interesting part of that post was how expensive it is to live the middle class life we imagine.
At 300k or 500k, you can have the private school education, the multilingual nannies, the luxury car, the dream house, the designer clothes, the cushy retirement- but you can’t have it all. Or you can’t have it all without being strategic and maybe a little lucky. And it’s not “woe is me.” It’s just that it’s surprising. When you’re making $40,000, you think $300,000 is limitless money. But life is more expensive than we realize.
You can certainly have a very nice life on that kind of money. But finally reaching that brass ring only to find that it doesn’t solve our problems – that is a little disappointing. It’s ok to bristle when you realize that you still need a budget in order to achieve what you want in life even with a big salary.
Problems of Excess
When my dad was a child, tens of millions of people starved to death in China. In America, too many calories is more likely to kill you now than too few. Scarcity is no longer our biggest problem.
I’ve heard that this is the age when restraint is our most valuable ability. In a world where we have abundant cheap food, we have to avoid eating too much. We have organizers because we have too much stuff. People overdose because, well, they have too much of the drug. They not only have enough for a regular high, but have to keep increasing their dose as they get accustomed to it until eventually their bodies can’t take it anymore.
Theoretically lack of money might keep you from overdosing because you may not have the funds for a single dose, let alone an overdose. But what if you had plenty of money? What drug would you be worried about overdosing on? Maybe comfort or pleasure?
I rarely turn on my air conditioning, because I find that if I get too comfortable sitting inside, it’s more difficult for me to get my butt outside. And being outside is better – for Vitamin D, for mental and psychological health, for air quality, etc. And I reason that if I get too used to being in an air-conditioned environment, it’ll be harder to travel because most places are not like the U.S. with its ridiculous obsession with climate control. I want to get used to the humidity because it’ll make me stronger and better prepared for whatever life can throw at me. It would be a tragedy to get so used to comfort that I avoided uncomfortable situations. Because it’s in the uncomfortable that we find growth and unexpected joy.
Money Doesn’t Replace People
So many of my high-earning friends are looking for 1950s housewives – especially my female friends. They want someone who can cook and clean, take care of the children, figure out the logistics of events, and plan dinner parties.
Yes, you can hire someone to do these things for you, but to hire someone with a similar taste and judgment as you and to work the kinds of hours to support a busy professional – that doesn’t come cheap or easy to find. Actually, some people have placed a value on that person – $178,201. Even on a $500,000 salary, you’re just working to employ this person to take care of the stuff you don’t have time to do yourself.
Time = Money but Money Does not Necessarily Equal Time
My friend got a puppy and yes, he could pay for an array of dog walkers and sitters to take care of his dog.
But what’s the point of having a puppy? You don’t get a puppy in order to pay people to take care of it. You get a puppy so you can play with the puppy.
It’s the same with childcare. You can have a nanny and babysitters. But money is only the answer for the question “How do I meet the legal minimums for taking care of my children?” To answer the question of how do I become a good parent, you have to carve out time from your work. Technically, you could say that’s using money to buy time, but lawyers are typically salaried, not hourly. It takes emotional effort to make boundaries from your work.
Money can buy gifts but it can’t buy relationships For that, it takes time, and only time.
Can’t Buy Me Love
You may be thinking I just wrote the paragraph about money not buying love. But I’m talking about the love a parent has for a child or a craftsman for her craft.
I had a foster puppy a few years ago. If you had told me I’d be up at all hours potty training this dog, I wouldn’t have signed up. Even so, letting go of my dog was one of the most difficult relationships I’ve ever had to relinquish.
Rather than the hardship providing distance, the struggle made me love my dog. You grow to love the things and people you struggle for. And using money in exchange for that struggle means you don’t grow that love.
To be fair, I’ve seen my share of spoiled children with parents who make average salaries. But I can only imagine it would escape if you’re rich.
So many children of the rich live lives of despair because they never have to contribute to their families in any way and will never measure up to their parents. Rather than being a life of luxury, this leads to a life of meaninglessness. Everyone needs to feel needed.
The Higher You Soar, The Harder You Fall
A friend of a friend bought a $1M house recently and may be close to losing her job. Now this isn’t necessarily as big a mistake as it seems. The median house price in the area is over a million dollars and she makes a salary that would be very comfortable for paying her mortgage.
The problem with having a high salary is that you start betting on that high salary (and others start encouraging you to bet on that salary) and it’s not a given you’ll have it in the future. You can bet on a minimum wage salary – you’re very likely to find another job at that salary. But fewer than 10% of Americans earn a six-figure salary. And you’re still competing with the other 90% for those salaries.
Too many people land on the big salary and assume this is their future. It’s best to assume that the big salary is for a limited period of time, like being a star athlete. The best way to become a rich lawyer is to view your time at the big firms as limited. Whether you’re right or wrong, you’ll do just fine.
Mo Money = More Scams
There are no shortage of industries that have popped up helping the nouveau riche with limited time to make decisions. That means it’s more important than ever to ensure that you’re making the right decisions and that you have the right people behind you. So much of staying wealthy is having the right advisors.
That’s not something that’s easy to do and it’s certainly not something that you can flash money around to find (because that will attract some not-so-great advisors). It’s the kind of thing that requires time and dedication to find people who are going to do right by you. And a lot of luck.
Conclusion – The Problems with a $500,000 Salary
It’s nice earning a high salary and it does solve a lot of mundane problems. That doesn’t mean it will solve all your problems. So many of the fundamentals of personal finance are best learned when you have less to lose. If you’re earning a big salary, you have to watch out for the problems that beset higher-earners and make sure you have a good group of people with you to guide you through it.
If I had one takeaway it’s this: money doesn’t solve your problems, you solve your problems. I hope money is one of your tools but not the only one.