People that make >$300k per year: What do you do with your money?

I own a business and make north of 1M annually. I hear the groans...I know I’m very fortunate. I live in a low cost west coast city and have no debt, old cars, and send the kids to public school. I have plenty left over each year. Not coming from money, I didn’t know what to do with leftovers either. So, I educated myself and learned that there are several buckets I can put money in.

First, I fill my business bucket - I keep cash or cash equivalents on hand in case I have to loan it to my business. This is a lot of money (to me) that has to stay out of the stock market.

Second, I fill my retirement bucket. I max my retirement plans and sock away money in non retirement accounts. Healthy mix of funds in there.

Third, I fill my kids bucket, which contains their college funds and some money I plan to leave to them someday.

Fourth, I fill a family bucket to take care of health care and some living expenses of elderly parents. Cash here too because short time horizon.

Fifth, I fill my side business bucket. I have one side business. This bucket is cash needed to operate that business.

Sixth, I fill a charity bucket. Yearly charitable contributions plus savings for more substantial gifts someday.

The size of each bucket and assets in each depends on your priorities. I make my business buckets the biggest, because using my extra $ to invest in my businesses produces more income for me down the road. And, like sport, it’s fun to compete.

Whatever you do, don’t start thinking you “deserve” a nice standard of living and spending like there’s no tomorrow. Be frugal. Save, invest, repeat.

-Back of the pack at HS state champs guy.

Mostly invest it. You need money to make money. Once you have basic long-term financial security taken care of (however you define it)-- the rest is simply looking for new opportunities to make money.

I once heard a line about how a factory foreman could always tell which of his workers were living below their means-- had paid off their houses, owned their cars, etc. In particular, he never saw fear in their eyes when work issues were being discussed.

I never wanted to look at anyone with fear in my eyes. I lived below my means for some time, and I crossed my personal no-fear threshold in 2012. Now my money goes to things that interest me. There's a lot going on in the world and I like the challenge of finding new opportunities.

The number wrote:

Why would he be paying 44% of his income to taxes when the highest income tax bracket is 39.6% and that only applies to income over $418,400? His federal income tax will be more like 27% of his income.

Add in payroll tax, real estate tax, sales tax, meals tax, fees to operate your car, send a kid to school, or go fishing, taxes on every item or service you buy built into the price, and he, like everyone who is not uber rich, is paying over half his income in taxes.

People talk about school districts when it comes to real estate because this is one of the biggest drivers in resale value - when you are investing in family-type housing. If you are making a sizable investment (which a house usually is), make sure you understand the schools. We are talking about financial success - not academic!

skooled in the distrikt wrote:

i love everyone talking about school districts school districts.

you realize genetics and parenting mean much more for intelligence and success after high school than school districts, no?

keep running on your wheels

peasant stock wrote:

Mostly invest it. You need money to make money. Once you have basic long-term financial security taken care of (however you define it)-- the rest is simply looking for new opportunities to make money.

I once heard a line about how a factory foreman could always tell which of his workers were living below their means-- had paid off their houses, owned their cars, etc. In particular, he never saw fear in their eyes when work issues were being discussed.

I never wanted to look at anyone with fear in my eyes. I lived below my means for some time, and I crossed my personal no-fear threshold in 2012. Now my money goes to things that interest me. There's a lot going on in the world and I like the challenge of finding new opportunities.

good stuff. Create an investment portfolio that you could live off when the 'contract' ends. Make yourself independently wealthy, so you don't depend on checks from somewhere else to live. Do that quickly. Then you won't have the fear so many people living paycheck to paycheck have.

On the spending side, just try to keep fixed expenses down. You can google 'financial planning ratios' to get a sense of how muhc you should be spending on housing, etc. The big tickets are your problem, not the avocado toast.

Ok, I'll go too.

36 years old, married with 2 kids. Wife doesn't work. Live in expensive northeastern city. I work as a professional (think medicine/finance/tech).

Salary is $196k, bonus is 25%, and with stock options and grants each year I think my 2017 W-2 should be just north of $300k.

We own a condo and pay a mortgage of about $3500/month (this includes condo fees). We have about 50% equity in the unit, and I'd value it roughly at $1.2m.

Obviously 401(k) is maxed, and once we hit the $18k limit we put the rest of what we had been saving into an IRA.

We contribute about $1k/month to a down payment fund that we'll use when we buy our next house in the burbs (along with the equity we have in our condo).

I put another ~$500 to $1k/month in a 529 account for each kid. Each is under age 8.

We have no debt, 1 car that's 8 years old. Our credit card bill is maybe $3000/month which we always pay off. This consists of food, clothes, stuff for the kids, etc. We definitely do not spend frivolously.

If we wanted to we could blow money on expensive sh*t like high end clothes, jewelry, lavish vacations, etc. etc. We choose not to in order to make sure our finances are stable going forward.

By the way my dad was a carpenter and mother worked as a school nurse so none of this was inherited.

None of what was inherited?

Meaning, I did not get any help from my parents for a downpayment on my first house, etc. They took out loans and paid for my undergrad education (which was heavily subsidized by the school via grants, financial aid, etc.) and then I paid for all my grad school. I was about $150k in debt with student loans when I graduated and paid them off super aggressively over about 4 years.

Point being, not everyone who earns that much money came from a family like the Rockefellers.

I live in TX so moderate cost of living, no state income tax.

House is worth approx. 600K but property taxes are high, bummer.

I make 380K a year.

I'm a physician who works in biotech.

All the world's a stage wrote:

I live in TX so moderate cost of living, no state income tax.

House is worth approx. 600K but property taxes are high, bummer.

I make 380K a year.

I'm a physician who works in biotech.

"380K a year?!?" You physicians are loaded, but your profession complains so much these days! Lol.

bump

Sure, I'll go. Mid 30s, married, two kids. Grew up poor, paid my way through college.

Today $800k per year cash salary plus a few million a year of performance comp (in finance).

Have two houses, primary residence worth $3.5M with a $1.2M mortgage ($6k monthly payment) and a second vacation home worth $1.5M owned outright, which we don't rent and leave empty when we're not there. Other investment assets of mid seven figures.

It costs a lot to maintain two houses ($40k in property taxes per year combined), put the kids in private school, eat at amazing restaurants, vacation in Hawaii and Europe, drive luxury cars, etc. Our net "burn" is $30k per month.

It's a good life, but I'm not any happier than I was 15 years ago when I made $60k at my first job out of school. And I'm a mediocre runner struggling to break 20 mins for 5k.

What do you do for work?

Like I said, finance/investing, but I don't want to share any more than that.

AKA muppeteer.

I always get a kick out of how secretive some people are on here about their occupations.

HmmmTrollMeNot wrote:

To the guy reporting $580k, If you have that level of money then you are sending your kids to private school.

...

I find it hard to believe that one could have the intellect often necessary to earn $580k but not see the schooling issue; therefore i conclude you a. don't have that level of income or b. you are a virtue signalling contrarian, which is common among high income self praising urbanites.

No.

Look-- $580k is within the range of many working professionals like dentists, lawyers, and doctors.

You can be successful in these professions without having been born rich or attending an Ivy league school.

Instead, you can be successful in these professions with a smattering of intelligence and an excess of diligence.

Sending kids to private school does not necessarily make it more likely that they will be diligent. There are a lot of useless rich kids out there.

If you are a hard worker, you may be concerend that your kids become infected by private school entitlement.

My husband and I have a combined income of about $200k. No kids yet but one on the way (and I am already scared we will be broke.) I grew up pretty poor, my husband's family is fairly wealthy- but they don't live like it. For example, his mom washes ziploc bags to be re-used. I think the most important thing he has gotten from his family is financial knowledge. My family does not have money so we had no need to know about it.

My husband is an engineer/manager in a large company and I work PRN in healthcare for several companies.

We own three cars- inherited one from a family member who passed. My husband's primary car is a 2002 Honda Civic with 170k miles that will literally fall apart before he gets a new one. I drive a 2012 Mazda 3. No car payments, just insurance and taxes which probably end up being about $2k a year for all three.

We have a 15 year mortgage on a house that cost $315k. Mortgage/taxes/insurance about $2k a month. We live in a popular neighborhood in a growing southeastern city that has made it onto several of the "best cities" lists in the last year. We bought the house 2 years ago and I'm confident we could sell it for around $400k right now. Cost of living is fairly cheap. Our house is in a good school district so our kid will go to public school.

I have a medical problem that requires several visits to a specialist a year- we probably spend about $3-4k a year on medical stuff and will definitely hit the out of pocket max this year ($6700) now that I'm pregnant.

My husband maxes out his 401k each year and I save a big chunk of my primary job's paycheck in a 401k and max out a Roth IRA.

My husband did not have student loans (his grandparents paid for college provided they maintain a GPA above 3.5 and did not have kids while in college- no joke), and I had about $30k in loans which I have paid off after working for 15 years.

In addition to the car my husband inherited, he did inherit about $100k from the same family member- which he put directly into a 529 plan.

Our credit card bill is usually about $2500 a month, which we pay off every month.

We take one nice vacation a year that costs about $5k.

Paying off student loans quickly will help a lot in the long run. Once you've paid them off, the money you're taking for loans now can be put into savings and you won't notice a change in your lifestyle. Keep living like you're a broke student for a few more years. Drive a crappy car and live in a shitty apartment. Sometimes I miss the few years after college where I was working a meaningless job but only had my student loan payment and rent to worry about.

I still get sticker shock when I get a doctor's bill for $500 or we have a repair done to our house for $1500. I think that comes from growing up with no money and every single unexpected expense was a major problem/argument between my parents. I still stress out about how much our mortgage is and spending money on vacation. I thought going to a financial planner would make me understand that we DO have the funds to pay for these things, but even after seeing it all on paper I still don't think so. I check our bank accounts regularly to make sure we have enough money to pay for things. I am constantly fearful of declaring bankruptcy like my parents did when I was little. I feel like we are being frivolous most of the time with the money we do spend. It's probably the most un-rational fear I have.

I wrote a moderately lengthy post, but i feel uncomfortable even discussing this anonymously, so i'm not disclosing much except to say this.

My wife and I are in our late fifties, have a pretty good combined income, and are now worth a lot. That's mostly from stock market gains.

We live very average existence, though we do live in one of the more expensive cities and in a good neighborhood. The house is average as is everything we own. Son is in public high school. We take the usual kind of vacations.

Only my wife and I know what we are worth, and we are in awe. We don't need to work anymore but still do. My high school age son has no idea, and it's kind of funny. He would be really, royally pissed if he knew. LOL.

I still tend to be frugal. Mostly, though, i feel that the money isn't going to get me anything that matters, and it's not something you talk about or flaunt. So what does it matter besides warding off the bill collector?

I find the whole thing more than a little bit strange. Our needs are met and the things we like don't come with a large price tag.

Someday i hope to leave a good sum to charity in that it bothers me about the inequality in this country and worldwide. But i don't want to do that until i know we aren't going to get hit with some huge health care bills later in life. For now, we do the usual level of charitable giving and do volunteering each month.

People that flaunt their wealth - i find that wasteful when there is so much suffering that could be helped with money.

These days, I like to work on staying healthy and improving my running. I also like the stock market. I like grunge music, running, being with my family. I honestly can't think of much of anything that's worth a sh1t that's worth buying.