It's hard to tell now days because people are into conspicuous consumption. Like you may drive an Acura and they drive a MBZ right? But you may Max out your retirement and savings and they're saving nothing. I think until you see where their kids go to college you may not be able to easily tell.
this post was submitted on 05 Mar 2025
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Look at where their kids go to school. The rich never skimp on that.
You are renting their second house, but they don't make enough money off the rent payments and still have to work an actual job to support their family.
You’re the same age but they’re retired.
I think they'd be a lot more than slightly more successful than me.
It depends a lot on your age, and how much more modestly you're willing to live, and whether you plan on leaving anything to anyone.
Having kids is a huge factor. Not only does it destroy 2 decades of potential savings, plus another potential decade's worth it you put them through college for even 4 years - money which could supplement your retirement income; but also most parents want to leave something to their spawn, and are unwilling to burn down whatever capital investments to $0.
Childless couples (and the perpetually single) have many more options for early retirement.
People have different priorities. Someone may have just bought a $500 designer shirt, while I bought a $500 comic book. Hard to tell by looking.
Is the house paid off?
Even rich people don't do that.
Although we now know the metaphor is flawed, I don't have a better one: people are like goldfish*: their spending increases to match their income. You make $100,000/y and buy a $300,000 house with a mortgage. The average person who makes $1,000,000 isn't going to buy a $300,000; they buy a $3,000,000 and still need a mortgage. If they make $30,000,000, they'll still take a mortgage because they also want to buy that G500 Gulfstream and a megayacht.
Maybe when you get into the billionaire range, they're just paying cash. But the "just slightly" folks aren't paying cash; they're buying more expensive houses.
A paid-off house is just a house someone's lived in, continuously, for 30 years.
Good point, but misses the brief. We're talking normal people who are doing well, not mega yacht rich.
I think I got the point; I was using the mega rich to illustrate the point. Someone slightly better off than you is still likely to increase their spending proportionally, rather than living at the same level and spending their money more wisely. For example, instead of buying the cheaper house and paying it off, they're more likely to just buy a more expensive house. I was suggesting that having a house paid-off is less a sign of being more well-off than a sign of self-control and a good use of the funds they have. In other words, you could have your house paid off if you were willing to live in a much cheaper house.
Another example: my wife and I both came out of college with debt: school loans and credit card balances. One of the few fiscally responsible things we've done were to aggressively pay down those debts first. We lived as cheaply as we could and funneled all our excess cash into paying off debt. Actually, we do that with our car purchases, too; we always pay down the principal on car loans aggressively. It's not like we're otherwise fiscally responsible people; we just both hate debt, and paying interest. Consequently, in over 20 years we haven't had a credit card balances or payed CC interest. When we buy new cars, we get 0- interest-for-X-years loans and make sure we pay it off before interest kicks in. The only thing we do pay interest on - the only debt we have - is a home mortgage: we're not going that well off, and we've never lived in one place long enough to pay it off. But if we were willing to live more modestly and focus on paying down the mortgage instead of going on vacation, we could be entirely debt-free.
Unless your economic circumstances are dire - that is, of you're middle-class or up - there are few reasons you can't live debt-free. Terminal illness. Lots of kids, or aging parents, to support. It's just that most people choose to spend money on comfort and convenience.
Incidentally, this is the foundation of the fight over avocado toast and Starbucks. It's not a single Starbucks; it's not even daily Starbucks. It's a indication of a broader lifestyle decision; it's a reflection of how you prioritize spending. If you buy Starbucks, you're also likely to spend your surplus income on other frivolities, rather than, say, paying down the credit card debt, or your car loan, or whatever. No, giving up Starbucks isn't going to make you rich; giving up all of your conveniences, your weekly bar visits, your ski trips with friends, your Apple TV, Netflix, and Amazon Prime subscriptions - it all adds up. The avocado toast is just a reflection of someone's priorities, and a pretty reliable measure that their priority isn't to save money or pay down their debt.
I want to reiterate: I'm not claiming superiority. It's only been our mutual hatred of interest and debt that has driven us to make lifestyle sacrifices so that we never build up debt. We're not rationally fiscally responsible, only emotionally.
Well assuming you're not "financially successful" and talking about wealth classes that make their money from working, then by comparison they don't do anything differently when their paycheck arrives, or even know what day exactly they get their paycheck. If someone is living above their means or otherwise financially at risk, they're paying close attention to the numbers in their accounts. More subtly, they might say something like "I just got paid, let's go out for dinner" or "I'll buy those tickets on Tuesday" when there's no reason they shouldn't just get them now for whatever it is.
This, and if they're a friend, not pausing to think before a shared activity that would make you consider finances. A weekend/weeklong trip, concert tickets to a costly performer/seats, trying a new more expensive restaurant for lunch, etc. Even if they aren't interested that time, the explanations say that openly or they address the cost in time, not money.
This, and not knowing the price of basic things.
They seem to be at exactly the same level. But they have more savings. At least, given the average savings most people have, that would be enough.
If they have a better computer or phone than you.
Edit: (but only if it's one or two generations apart)
They might also prioritize technology over Gildan garments with expensive words on them. Seriously everyone thought I was ultra super rich with my Surface Headphones and Fire Emblem Fates Limited Edition New Nintendo 3DS XL but I wasn't, I just didn't spend that money on two pairs of sneakers with a basketball man's silhouette on them.