Posted by Tim Stobbs on August 25, 2011
As I was looking back at an older post over at Give Me Back My Five Bucks about making over $100,000/year would mean you are successful, it occurred to me that idea is more common that I would give it credit for. If you do a few Google searches you can see that idea is still somewhat common from its start in the 1980’s, but some people are questioning how far that money will take you now (for example see here).
The reality is $100,000 in savings to me is much more impressive than $100,000/year income as the latter doesn’t tell me a damn thing about your spending habits. Income levels only really matter when you compare it back to expenses, without that second piece of information telling me how you earn is a useless bit of data. I’m much more impressed if you earn only $50,000/year and save half of that, than someone who saves half of their $100,000/year income, since I understand how at higher incomes it is easier to save more.
Also speaking from experience my combined income (from all my jobs) is currently kissing that threshold and frankly it is more of a pain in the ass than anything. Why? In a word: taxes. In a progressive tax system like Canada’s you end up paying more tax when you make more income so by earning $100,000/year you’ve put a big target on your back that says to the government: bleed me dry of my money. So while earning more does have the potential to help you reach your goals faster you do spend a lot more time considering the tax implications of your decisions. For example, maxing out my RRSP contributions gets a lot more important when you are at a 40% marginal tax rate.
This isn’t to say that earning more is a bad thing, it just complicates matters, at least in my experience. A more useful measure of success depends largely on what you want to do with your life. Money is all well and good, but you don’t need to define your success in life by it. I would rather know that I’m happy most of the time at a job I like than a large income. Does that mean your success is any less because you use a subjective measure? No, it doesn’t change the feeling of pride that comes from meeting a goal.
In the end, don’t fall for the six figure income myth as being success unless you want it to mean something to you. Pick your own measures of success regardless of how odd they may be and strive towards those. Life is too short to chase other people’s dreams.
So have you ever made six figure income? If so, did it change anything or not? If you have never made that income, do you want to earn that much and why?