The millionaires who don't feel rich

I found an interesting article in The New York Times whilst pottering about on the web earlier today. The author describes several people from Silicon Valley who, by a traditional definition of the term, are very wealthy but don't feel particularly rich because of the expensive lifestyles they maintain and their relative wealth in comparison to neighbours.

This has created a new phrase - the 'working-class millionaires' who have to keep working (and working very hard) in order to fund big houses, private education for their children and tropical holidays.

This article got me thinking about a trait I frequently see when people receive a salary increase or a bonus. These are people who live within their means at their current level of income but magically increase their expenditure the second more money is coming into the bank each month. Every pay rise results in a bigger mortgage, more exotic holidays or a newer car on the driveway.

I have spent a few hours this week reading The 4 Hour Workweek by Tim Ferris and he explains the importance of relative wealth. Stop thinking about the headline figure of how much you earn and start thinking about the difference between your income and expenditure. Start thinking about what it takes to maintain your lifestyle and how can achieve this in less time rather than work just as hard to earn more and then spend more.

Being a millionaire these days is still quite an achievement (assuming you are measuring wealth in Pounds Sterling and not Zimbabwean Dollars). Understanding exactly how much you need to earn to maintain your lifestyle both today and in the future is even more impressive.