One of the things that annoyed me about some advice for working women is the insistence that if you were making more than 100K you should just buy all the things that make life easier, with an underlying current of it being ridiculous if you didn’t. The person giving this advice, of course, has a husband who makes substantially more than 100K on top of her own 100K+ income.
During our brief time when DH and I were both employed full-time and we were making upper-middle-class $$ (remember all those irritating posts on “what should we do with this extra money now that we’ve maxed out our 401K” etc.), it became really easy to see why when you’re making that much it is easy to believe that just spending money is the solution. When you’re making upper-middle-class incomes for long enough (and don’t go crazy with spending on really big ticket items) you really can just say yes to everything. You don’t have to worry about having a large precautionary cushion because in the case of an emergency, next month’s income will refill the gap, or maybe the month after that. The answer is always, “yes, we can afford that — even if the roof falls in tomorrow, we’ll be fine.”
But now we’re back to having a comfortably middle-class income on my income alone. Technically we’re in the long unpaid summer, so we have 0 income, but even with DH employed I saved up for the unpaid summer in case he lost his job (and in this case we saved a bit more than that because we knew there was going to be a layoff… and we, you know, had extra money after maxing out retirement). And now if we want to spend randomly large amounts of money on something, we have to think about it. We can have some of the things but not all the things.
So… we could get a new car, that’s in our emergency fund (recall mine is 12 years old and has been having regular issues, DH’s is 11 years old but seems fine), but we couldn’t do that and renovate the kitchen, unless we wanted to sell stocks, at which point we’d be depleting our secondary emergency fund. So, technically, we could have both, but potentially sacrificing our future security for wants. And since we spend close to my take-home pay when I have income, it would take a while to replenish our emergency funds without cutting back. We could buy a refrigerator even though the old one isn’t broken and/or I could see a dermatologist to get skin-tags removed and/or hire a personal trainer and/or have someone else fix our sprinkler system and/or eat out every day and etc. etc. etc. on top of all the things we already spend money on but we can’t do all of those things without dipping into savings or cutting down on our tax-advantaged savings. We have to make choices that involve money, not just time or desire.
We have to think about where on the need/want spectrum something is. And thinking about that takes effort. It’s easiest to default to “no” unless something is important or the cost truly is low. And yes, sometimes it is worth it to pay for help– DC2 is still in daycare even with DH laid off. But that doesn’t mean that decisions are obvious and easy.
This is true even if we’re still spending a little bit under what we earn, because we can’t predict emergency expenses in the future. When the gap between earnings and spending is really large, the emergencies aren’t that important. When the gap is small, those emergencies could set you back, so ironically, you need a larger emergency fund when you earn less than when you earn more (assuming similar spending). And it’s harder to refill that emergency fund with a smaller gap, meaning you have to cut back more on spending when you’ve got an emergency. But most likely, the spending that you’re cutting back on is stuff you wanted less than any new thing or service that you think you might want but haven’t purchased yet.
So no, I’m not saying that people making 100K shouldn’t buy things that make their lives easier. Just that when you’re making 2 or more times 100K, it’s nothing to say “are you crazy, why wouldn’t you buy that?” Purchasing “that” is a bagatelle in comparison to income. But when you make less, you have to prioritize and not just on really expensive luxuries.
I’m also not saying that 100K is nothing! It’s a comfortable income in most of the country (yes, you probably do need a bit more to comfortably support a family in some coastal cities, though probably not as much as most people who complain will tell you) that pays for all of your needs, lots of retirement savings, and lots of wants. But not all the wants.