> After a million dollars or so in salary, the absolute amount that a person is paid has no real impact on their life. They can't eat more meals in a day or wear more shoes. What matters to the manager is the relative amount.
Take the now-defunct "American dream" of a single-income family with 3 kids living in a house with a backyard, say, in Silicon Valley and other places that have mobs paying more than $1 million to people, and that goes away pretty quickly.
After tax, with standard deduction, and 5 allowances, that $1 million turns into $529k net. With a $7k rent plus $5k in personal expenses per person (pre-school tuition alone is about $3k, so $5k in personal expenses is not outrageous), that leaves at most $145k in savings.
With a $12k mortgage (the median price in Santa Clara county for all residential is $1.4 million, I'm using $1.8 for a house), that's down to $85k in savings if you live frugally.
But, as other people say, there's more to life than food and shoes.
> that's down to $85k in savings if you live frugally
Saving $85k per year, which is way more than the median income in the US, is fantastic for a family of 5, while simultaneously building equity in one of the most expensive markets.
And $5k in personal expenses per person per month is hardly living frugally, especially for a 1-income household where presumably child care (and pre-school) isn't necessary. I don't live in an HCOL area, but non-discretionary expenses for just me, besides rent/mortgage, are about $1200/month. Food and clothing aren't 4x as expensive in SV are they?
But isn't that the "relative" point? A house in Santa Clara doesn't cost $1.4M because it's 3x better than a house in another state, or costs 3x as much to build. It's because there are a lot of other high-salary people in the area who need a house and not a lot of houses being built.
Take the now-defunct "American dream" of a single-income family with 3 kids living in a house with a backyard, say, in Silicon Valley and other places that have mobs paying more than $1 million to people, and that goes away pretty quickly.
After tax, with standard deduction, and 5 allowances, that $1 million turns into $529k net. With a $7k rent plus $5k in personal expenses per person (pre-school tuition alone is about $3k, so $5k in personal expenses is not outrageous), that leaves at most $145k in savings.
With a $12k mortgage (the median price in Santa Clara county for all residential is $1.4 million, I'm using $1.8 for a house), that's down to $85k in savings if you live frugally.
But, as other people say, there's more to life than food and shoes.