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I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Sw

I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Swedish living conditions and salaries as an example as that's where I live but they are close to most European/western countries. We have a frugal grocery store cashier who makes $2000 USD/month after taxes. We have a high level executive in a medium-sized company who makes $5000 USD/month after taxes. The grocery worked lives like a student (student loan/benefits in Sweden is about $1000 USD/mo) and saves the rest on the stock market (assuming average yearly yield with reinvested dividends at 8.5%), efficiently saving $1000USD/month for future non linear income. The cashier plans to stop working early at 55, at a net worth of about $2 900 000 USD. This allows for a safe withdrawal rate at about $10 000 USD/month. At this level travling/vacation expenses isn't a problem for the cashier. Housing probably does but they can most likely live comfortably even if they decide to rent. They can also easily increase monthly spending allowance by 10% if they decide to continue working half time. At the same time our executive have been burning through every pay-check, and have effectively no net worth at the same age, sure there's plenty enough to lease a nice car, don't care about restaurants bills but more expensive traveling will still be a setback and vacation time per year is certainly limited as income is still linear to time spent. So in this example we have a cashier ending up as a multi millionear set for life at 55 with no need to work a day more and a high level executive who'd be back at 0 without the job and a strictly linear income. Sure salary increase does matter, but in the long run underspending matters more. With a longterm plan it's possible to become a multi millionaire with an entry level job, for instance there's a famous Swedish railroad worker who recently passed away who ended up with somewhere around $17 000 000 USD net worth at the time of his death, and achieved this by living under his expenses with a low salary and investing the rest, he initially turned to the stock market because he couldn't afford a house in his youth. Not Jay-Z levels for sure but well beyond what most people would consider very wealthy.

bronco21016 7y ago
I think you’re both right. The combination of multiplying income while also saving more and more of that income is the key to jumping wealth levels. It’s certainly possible to live a comfortable life on the cashiers plan but if the executive spent just half of their career living like the cashier then he would quickly pass up the cashier on the wealth ladder.
arkh 7y ago
> grocery store cashier who makes $2000 USD/month after taxes Not "close" to most European/western countries. You may be really disconnected from normal people revenues. > assuming average yearly yield with reinvested dividends at 8.5% That's a big assumption. > At this level travling/vacation expenses isn't a problem for the cashier Inflation over 30 years then 20 more years of retirement may change this.
- esotericn 7y ago
  He's specifically talking about the Swedish perspective where the income distribution is much flatter. In the UK it'd be more like $1K for the cashier and $10K for the exec rather than 2 and 5.
  - arkh 7y ago
    From their post about the $2k salary after taxes: > but they are close to most European/western countries
- account73466 7y ago
  >> Not "close" to most European/western countries. You may be really disconnected from normal people revenues. He was specific - Sweden. Just divide all numbers by some factor if you prefer.
account73466 7y ago
>> a cashier ending up as a multi millionear set for life at 55 Except that the most interesting part of life is over
- greedo 7y ago
  As someone at that age, I think this is completely incorrect, not to mention ageism. Dismissing the last 30% of your life as un-interesting is something I'd expect from someone without much life experience.
  - account73466 7y ago
    You take it out of the context and then accuse me of pushing ageism, well done! The context is that we compare a life where i) you save one third of your income and then start to flash money when you are 55, and ii) you spend one third (or less) of your income on things that matter like finding significant other, having a family, making trips with your friends and family. You cannot avoid spending 1/3 of your income without it affecting your life style. In extreme case, one can end up becoming a millionaire no one gives a fuck about.
    - pathseeker 7y ago
      >You cannot avoid spending 1/3 of your income without it affecting your life style. Yet people live super-fulfilling lives with families making $50k annually. Find a job clearing $75k and you'll be golden.
    - greedo 7y ago
      You don't provide any context in your attempt at a wry comment, and then you compound it by not only reinforcing the ageism, but adding in classism as well. You're defining the cashier by their job/role, as well as how they spend their money on saving for retirement. Textbook classism. My anecdotal reply would be that I've made it to this golden age, I've earned far less than the average, saved more than the average, and still have a wonderful, interesting life ahead of me. I've married, raised a family, and had memorable trips with them. Your last sentence is really indicative of how you view wealth and money; for many, becoming a millionaire is about stability and being able to provide for your loved ones, not to become someone that people "give a fuck about."
kevinqiu1 7y ago
I think the problem is in America the frugal clerk makes 3000/month, a white collar professional makes 8000/month and a high level executive makes 14000/month after taxes. And I wonder if I'm being too stingy with our executive here...
- microcolonel 7y ago
  You made a pretty massive leap from white collar professional to high level executive. What about mid-level executives, specialized independent contractors, tradesmen, and the rest? You also discount the risk premium of the high level executive position, where often your income is zero or negative some of the years you are an executive.
- AlexanderNull 7y ago
  Way too stingy. Engineers here make $14,000 - $33,000 / month, average is closer to the bottom of that though. Those engineers have executives too.
  - pc86 7y ago
    Where is "here?" The average engineer salary (even if you say software dev only) in the US is absolutely not $170k/yr, it's closer to half that.[0] And $400k/yr is dentist-level money. I'm not saying nobody makes that, lots of devs (in absolute terms) do, but it's about as helpful as saying "businesspeople make $40M-$40B a year" when the vast majority of them make $65k/yr as a middle manager. [0] https://www.google.com/search?q=median+software+engineer+salary https://www.google.com/search?q=median+software+engineer+sal...
leetcrew 7y ago
does a swedish exec really make just $5000/month post tax? that's not much more than I net at my first software gig out of college (and not in SF or NYC).
- iso1631 7y ago
  According to wikipedia, average salary in Sweden is $2700 post tax ($3500 pre tax)
  - hultner 7y ago
    Sounds a bit high but could be right considering that median is usually a fair bit lower since the extremes being up the average quite a bit. However checking this years tax tables put our monthly $3500 pre-tax salary at $2600 take home (but this varies a bit from city to city).
- teekert 7y ago
  Where I live (the Netherlands) that means bout 10.000 pre-tax. And that is quite a lot, it is like a group manager (i.e. 50 people to manage) in a medium to large size company. Executive level is probably more. But not a lot.
  - hultner 7y ago
    Same in Sweden, about 10k pre tax to take home 5k. I looked up median salaries for CEOs in Sweden last year which was $7600 pre-tax where only service and the industrial sector is over that, industrial is the highest with $9150 pre-tax, that is at the CEO level, putting your take home salary with tax bracket 34 at about 5k/month, so it's probably a bit high for a high level executive at a mid-sized company.
    - pc86 7y ago
      Where is the incentive then? The difference in skill, responsibility, stress, workplace demands, etc between a cashier and a CEO are nuts. How do people do that for a few grand every month?
AlexanderNull 7y ago
No family? Also if we were talking about the US (which the article was) then you have to factor in healthcare, average of $200 a month for the insurance IF it's sponsored (mostly covered) by their employer. If the grocery worker is living in any major city then rent is bare minimum of $600 a month for the privilege of living with at least 2 other flatmates or around $1000 for a pretty small apartment. So this person's already out half their monthly income. Let's say transportation costs are low and that this person only takes the bus to get everywhere, that's an extra $100 a month (assuming lack of adequate transportation doesn't also ending up costing them their job due to frequent late starts). Now this person also has to pay at least some utilities depending on where they're living so a rough estimate would be around $120 a month for that. Now we look at food, average grocery costs per person in the US is $220 a month. This person also needs clothing obviously, if they go on the super low side they could get by on ~$100 a month over all. If this is it for their spartan life style, meaning no cell phone, no internet, no eating out, no leisure activities that cost money, no hobbies, no children, no trips to the doctor (where medical deductibles kick in), no car, no netflix etc. This person has potentially $460 a month to save. That's 100% best case scenario living a lifestyle that basically consists of going to work, going home, eating food, sleeping on the floor of their apartment (we didn't budget for furnishings but w/e it's better for the back) using the public library and walks around the park for sole avenues of entertainment. ALSO: THERE'S NO KIDS IN THIS SCENARIO. Some of those estimates I lowballed also (like food as that's average cost of groceries for people who also get calories from eating out at restaurants) so this is really not a realistic estimate here. In reality though there's plenty of hidden costs that this person will incur and even assuming they do manage to stay kidsless they'll be lucky to put away $100 a month giving them a best case scenario of $250k in savings by 55. Not terrible for them, but not enough to retire on in the US when you think of medical expenses incurred later on in life.
- SketchySeaBeast 7y ago
  And don't forget about almighty inflation.
  - hultner 7y ago
    The interest is based on average OMXSGI adjusted for inflation.
kangnkodos 7y ago
My guess is that it would be almost impossible to save 1K/month if your take home pay is only $2K/month. There are minimum requirements for food, shelter, transportation, etc. A pre-tax yearly salary living wage to cover the minimum in the US would be $45K - $68K depending on location. Let's look at a low end, low cost of living state. $45K pre-tax translates to about $3K per month take home pay. Which means that if you had $3K per month take home, you would just be covering the basics for a family. If you are trying to get by on $2K per month, you're already making some difficult trade-offs to survive. So, I don't think it's realistic to say someone with $2K per month take home pay can save $1K per month.
- zulln 7y ago
  What is the monthly budget of the average student? I would certainly guess under $2k.
  - hultner 7y ago
    That's my thought, but maybe students in the US struggle to keep a $2k budget?
    - leetcrew 7y ago
      I really doubt it. $2k was my monthly budget after I graduated and got a job. I wasn't really making any attempt to control my spending. I bought nice alcohol and ordered dinner and/or bought lunch every day. most US students are trying to spend a lot less. if they work 10-20 hrs a week they're probably not even making $1k before taxes.
- hultner 7y ago
  $3K net after taxes monthly is certainly high income in Sweden (almost second bracket of extra high income state tax). Most engineers here make around $3k pretax out of school. Your living wage example would be high income middle class in Sweden. I ran the numbers quickly for $ 68k/year you'd be in the top 3% earners all ages in the entire country enough to put you well beyond the public pension roof, on the edge to put you into the highest ultra high earner tax bracket (70k). So I guess a poor person in the US would be part of the ultra rich in Sweden and I'd be poor beyond salvation in your country, living on ~1.5k/mo while bootstrapping my company.
dirtyaura 7y ago
Being frugal and saving everything for 30 healthier years of your life to be able to spend money only when your body seriously starts to fail you. I’m not sure why people see that an attractive way of spending their life.

bronco21016 7y ago

I think you’re both right. The combination of multiplying income while also saving more and more of that income is the key to jumping wealth levels. It’s certainly possible to live a comfortable life on the cashiers plan but if the executive spent just half of their career living like the cashier then he would quickly pass up the cashier on the wealth ladder.

arkh 7y ago

> grocery store cashier who makes $2000 USD/month after taxes Not "close" to most European/western countries. You may be really disconnected from normal people revenues. > assuming average yearly yield with reinvested dividends at 8.5% That's a big assumption. > At this level travling/vacation expenses isn't a problem for the cashier Inflation over 30 years then 20 more years of retirement may change this.

esotericn 7y ago
He's specifically talking about the Swedish perspective where the income distribution is much flatter. In the UK it'd be more like $1K for the cashier and $10K for the exec rather than 2 and 5.
- arkh 7y ago
  From their post about the $2k salary after taxes: > but they are close to most European/western countries
account73466 7y ago
>> Not "close" to most European/western countries. You may be really disconnected from normal people revenues. He was specific - Sweden. Just divide all numbers by some factor if you prefer.

account73466 7y ago

>> a cashier ending up as a multi millionear set for life at 55 Except that the most interesting part of life is over

greedo 7y ago
As someone at that age, I think this is completely incorrect, not to mention ageism. Dismissing the last 30% of your life as un-interesting is something I'd expect from someone without much life experience.
- account73466 7y ago
  You take it out of the context and then accuse me of pushing ageism, well done! The context is that we compare a life where i) you save one third of your income and then start to flash money when you are 55, and ii) you spend one third (or less) of your income on things that matter like finding significant other, having a family, making trips with your friends and family. You cannot avoid spending 1/3 of your income without it affecting your life style. In extreme case, one can end up becoming a millionaire no one gives a fuck about.
  - pathseeker 7y ago
    >You cannot avoid spending 1/3 of your income without it affecting your life style. Yet people live super-fulfilling lives with families making $50k annually. Find a job clearing $75k and you'll be golden.
  - greedo 7y ago
    You don't provide any context in your attempt at a wry comment, and then you compound it by not only reinforcing the ageism, but adding in classism as well. You're defining the cashier by their job/role, as well as how they spend their money on saving for retirement. Textbook classism. My anecdotal reply would be that I've made it to this golden age, I've earned far less than the average, saved more than the average, and still have a wonderful, interesting life ahead of me. I've married, raised a family, and had memorable trips with them. Your last sentence is really indicative of how you view wealth and money; for many, becoming a millionaire is about stability and being able to provide for your loved ones, not to become someone that people "give a fuck about."

kevinqiu1 7y ago

I think the problem is in America the frugal clerk makes 3000/month, a white collar professional makes 8000/month and a high level executive makes 14000/month after taxes. And I wonder if I'm being too stingy with our executive here...

microcolonel 7y ago
You made a pretty massive leap from white collar professional to high level executive. What about mid-level executives, specialized independent contractors, tradesmen, and the rest? You also discount the risk premium of the high level executive position, where often your income is zero or negative some of the years you are an executive.
AlexanderNull 7y ago
Way too stingy. Engineers here make $14,000 - $33,000 / month, average is closer to the bottom of that though. Those engineers have executives too.
- pc86 7y ago
  Where is "here?" The average engineer salary (even if you say software dev only) in the US is absolutely not $170k/yr, it's closer to half that.[0] And $400k/yr is dentist-level money. I'm not saying nobody makes that, lots of devs (in absolute terms) do, but it's about as helpful as saying "businesspeople make $40M-$40B a year" when the vast majority of them make $65k/yr as a middle manager. [0] https://www.google.com/search?q=median+software+engineer+salary https://www.google.com/search?q=median+software+engineer+sal...

leetcrew 7y ago

does a swedish exec really make just $5000/month post tax? that's not much more than I net at my first software gig out of college (and not in SF or NYC).

iso1631 7y ago
According to wikipedia, average salary in Sweden is $2700 post tax ($3500 pre tax)
- hultner 7y ago
  Sounds a bit high but could be right considering that median is usually a fair bit lower since the extremes being up the average quite a bit. However checking this years tax tables put our monthly $3500 pre-tax salary at $2600 take home (but this varies a bit from city to city).
teekert 7y ago
Where I live (the Netherlands) that means bout 10.000 pre-tax. And that is quite a lot, it is like a group manager (i.e. 50 people to manage) in a medium to large size company. Executive level is probably more. But not a lot.
- hultner 7y ago
  Same in Sweden, about 10k pre tax to take home 5k. I looked up median salaries for CEOs in Sweden last year which was $7600 pre-tax where only service and the industrial sector is over that, industrial is the highest with $9150 pre-tax, that is at the CEO level, putting your take home salary with tax bracket 34 at about 5k/month, so it's probably a bit high for a high level executive at a mid-sized company.
  - pc86 7y ago
    Where is the incentive then? The difference in skill, responsibility, stress, workplace demands, etc between a cashier and a CEO are nuts. How do people do that for a few grand every month?

AlexanderNull 7y ago

No family? Also if we were talking about the US (which the article was) then you have to factor in healthcare, average of $200 a month for the insurance IF it's sponsored (mostly covered) by their employer. If the grocery worker is living in any major city then rent is bare minimum of $600 a month for the privilege of living with at least 2 other flatmates or around $1000 for a pretty small apartment. So this person's already out half their monthly income. Let's say transportation costs are low and that this person only takes the bus to get everywhere, that's an extra $100 a month (assuming lack of adequate transportation doesn't also ending up costing them their job due to frequent late starts). Now this person also has to pay at least some utilities depending on where they're living so a rough estimate would be around $120 a month for that. Now we look at food, average grocery costs per person in the US is $220 a month. This person also needs clothing obviously, if they go on the super low side they could get by on ~$100 a month over all. If this is it for their spartan life style, meaning no cell phone, no internet, no eating out, no leisure activities that cost money, no hobbies, no children, no trips to the doctor (where medical deductibles kick in), no car, no netflix etc. This person has potentially $460 a month to save. That's 100% best case scenario living a lifestyle that basically consists of going to work, going home, eating food, sleeping on the floor of their apartment (we didn't budget for furnishings but w/e it's better for the back) using the public library and walks around the park for sole avenues of entertainment. ALSO: THERE'S NO KIDS IN THIS SCENARIO. Some of those estimates I lowballed also (like food as that's average cost of groceries for people who also get calories from eating out at restaurants) so this is really not a realistic estimate here. In reality though there's plenty of hidden costs that this person will incur and even assuming they do manage to stay kidsless they'll be lucky to put away $100 a month giving them a best case scenario of $250k in savings by 55. Not terrible for them, but not enough to retire on in the US when you think of medical expenses incurred later on in life.

SketchySeaBeast 7y ago
And don't forget about almighty inflation.
- hultner 7y ago
  The interest is based on average OMXSGI adjusted for inflation.

kangnkodos 7y ago

My guess is that it would be almost impossible to save 1K/month if your take home pay is only $2K/month. There are minimum requirements for food, shelter, transportation, etc. A pre-tax yearly salary living wage to cover the minimum in the US would be $45K - $68K depending on location. Let's look at a low end, low cost of living state. $45K pre-tax translates to about $3K per month take home pay. Which means that if you had $3K per month take home, you would just be covering the basics for a family. If you are trying to get by on $2K per month, you're already making some difficult trade-offs to survive. So, I don't think it's realistic to say someone with $2K per month take home pay can save $1K per month.

zulln 7y ago
What is the monthly budget of the average student? I would certainly guess under $2k.
- hultner 7y ago
  That's my thought, but maybe students in the US struggle to keep a $2k budget?
  - leetcrew 7y ago
    I really doubt it. $2k was my monthly budget after I graduated and got a job. I wasn't really making any attempt to control my spending. I bought nice alcohol and ordered dinner and/or bought lunch every day. most US students are trying to spend a lot less. if they work 10-20 hrs a week they're probably not even making $1k before taxes.
hultner 7y ago
$3K net after taxes monthly is certainly high income in Sweden (almost second bracket of extra high income state tax). Most engineers here make around $3k pretax out of school. Your living wage example would be high income middle class in Sweden. I ran the numbers quickly for $ 68k/year you'd be in the top 3% earners all ages in the entire country enough to put you well beyond the public pension roof, on the edge to put you into the highest ultra high earner tax bracket (70k). So I guess a poor person in the US would be part of the ultra rich in Sweden and I'd be poor beyond salvation in your country, living on ~1.5k/mo while bootstrapping my company.

dirtyaura 7y ago

Being frugal and saving everything for 30 healthier years of your life to be able to spend money only when your body seriously starts to fail you. I’m not sure why people see that an attractive way of spending their life.