Thursday, May 24, 2007

Getting nowhere at $250,000 a year

MSN Money has a report about the savings trends in different income brackets. The article focuses on those making up to $250,000, and how they do not save as much (or at least as consistently) as those making $50 to $100 thousand.

Do the rich (and I would classify them as rich) feel less concerned with having an emergency fund as the middle class? I would think they'd be more concerned. Owning a million dollar home (read: owing a million dollar mortgage) and a couple of leased Mercedes might be fine when you're bringing in top dollar, but what happens if you suddenly lose your job? Not only do you have to weather the period of unemployment, but finding a $250,000 job is going to be a lot harder than finding a $50,000 one. 6 months expenses? Try a couple of years of expenses.

These quotes stood out in my mind:

when HSBC asked what prevents them from saving more, the top answer was the need to pay everyday bills


Not surprisingly:

The savings rate in the United States dipped to zero in 2005 and has even fallen into negative territory


Of course, excuses are abound.

HSBC found that 49% of respondents with at least $250,000 in income aren't saving more because they simply "want some spending money."


Spending money can't be found in a quarter million a year budget?

respondents say they do not save more because "something unforeseen always comes up."


At least we know being in debt and not saving is not a class issue. Our excuses are the same, from the poor families on welfare to the high rolling elite.

I'll end with this gem of a quote, because it left me laughing.

people who earn $250,000 or more say they aren't even earning "enough to make ends meet as it is."


Right.

1 comment:

Jim said...

I think the problem is the higher you are, the harder the fall. Income seems to become relative with lifestyle, and those who earn a 250k feel entitled to have that 1M house and nice car. People who make this kind of income probably feel rather secure or think they should be able to enjoy their success, ignoring the concept of anything bad happening. Taxes also get really out of hand at these income levels too and they end up paying over 30% of their income in taxes alone. By having more money, there are probably more expenses to manage thus justifying not saving. At the same time I feel that people who do earn this type of income must have made the right choices to get there.

I know people who are in the 100k range and have the same types of financial issues as those who make half that. Everyone has bills to pay and should save for their future, but most of the time income justifies a certain lifestyle. If lifestyle gets carried away it sacrifices the important priorities.