When someone such as an athlete, CEO, or actor is making millions of dollars per year, it is often easy for us to think of what we would do if we had that much money. We often feel that spending money on private jets, expensive yachts, or multiple homes throughout the country is wasteful and even a bit foolish. We also feel that there are better ways for the extravagantly rich to spend their money.
Of course, we are completely right.
Instead of buying a yacht, an athlete could set up football camps for youth in poorer neighborhoods. A CEO could avoid buying a private jet and instead invest the money into improving inner-city schools. An actor could just live in one home and use the money that she saved and her considerable influence to install solar panels that bring electricity to rural communities in Africa.
Every single person who earns millions of dollars per year could use their money to make a positive impact in the world.
Fortunately, there are many examples of wealthy people who are doing exactly this such as Mel Gibson, who gave away $6.8 million to a foundation, and Ndamukong Suh, who gave $2.6 million to his university. There are also numerous billionaires led by Bill and Melinda Gates and Warren Buffet who have pledged to give away more than half of their fortunes.
Although there are many examples of people who are setting up charitable foundations and using their wealth to give back to society, there are also numerous examples of people who use their wealth in hedonistic ways.
And, just like I said before, we often feel that there are better ways for the extravagantly rich to spend their money.
The 1%
Here in the United States, an income of $421,926 per year puts a family in the top 1% of all income earners according to data from 2015. Even though this much money doesn’t feel as extravagant as the athlete, CEO, or actor who is making millions of dollars per year, many people still feel that this is an extravagant amount of money.
Those of us who earn less than this threshold may feel that people who are in this top 1% should make sure they are finding good ways to give back to their communities, both on a local and a global level. Many people may even feel that ultra high income earners should be forced to give back through higher taxes.
An example of this is presidential candidate Elizabeth Warren, who proposed a 2% wealth tax on those who have net worth above $50 million. This tax would then be used to help people with student loan debt as well as to help students pay for college.
Whether you feel that the top 1% should be forced to give back through higher taxes or whether they should just give through charitable giving, you probably feel that a high income earner should give back to society.
Maybe the high income earner should give some of their time or maybe they should give some of their money. Either way, it makes sense for them to give back.
After all, for someone to earn an income that is in the top 1%, there may have been societal or infrastructure advantages that have helped them to get where they are and earn such a substantial living. Of course, most people would agree that the high income earner has worked hard to earn their substantial income. But at the same time, many would also agree that they probably had some help along the way.
Another way to look at “The 1%”
Over the past several years, the top 1% of all income earners in the United States have been vilified by many writers in the press as well as by people in our country. Many people feel that the top 1% shouldn’t buy so many extravagant things, especially when other people have so little. We have also seen the wage gap in the United States continue to grow over the past several years. As the top 1% are making more, many of us find that our wages are stagnant or even decreasing.
However, perhaps there is another way to look at the 1%. As a matter of fact, you and I may even be part of the 1%!
Out of everyone in the world, a salary of approximately $32,400 per year would put a wage earner in the top 1%.
We may often feel that the top 1% of income earners are out of touch with reality because of their high incomes. We may feel that they are not generous and we may even feel that we should take some of their wealth away.
However, if you are reading this, odds are that you are probably in the top 1%, or close to it, on a global basis.
Knowing this allows me to have a different perspective about my income and my wealth. As a high school teacher, I have seen my wages stagnate and even decline over the past several years. I have seen a higher cost of health insurance and more pressure being put on me to increase test scores and change the way that I do my job.
But I am part of the 1%!
Just by being born in the United States, being able to attend a safe school, and having parents who placed a premium on education and achievement, I have been given significant societal advantages compared to most people in the world.
I’m not trying to discount the value of hard work. As a matter of fact, I have always worked real hard to achieve at the top level of my peer group, whether it is in school or other parts of my life. You also have used hard work to get where you are today and this should not be discounted.
However, knowing that we are in the top 1% may allow us to notice all of the advantages that we have when compared to others. It probably is easier for us to “succeed” in life than it is for the majority of the people in the world.
Giving back
Since you and I are probably part of the 1%, it may make sense for us to think about giving back. Currently I think about giving back in a variety of ways. Some of these are:
- Helping family members.
- Giving our time.
- Giving money to our local community.
- Giving money to the global community.
Helping family members
When I think of helping family members, I am not exactly thinking about giving a loan to my brother-in-law. Instead, I am thinking about making sure that my kids have the same advantages that I’ve had while I was growing up.
Not only should we focus on making sure that our children have a strong education, but it also helps to spend as much time with them as possible. This will help to ensure that our values and work ethic are passed on to them. Although this may take away from the time that we spend working on businesses or other pursuits, spending time raising our children will be among the most enjoyable and satisfying time that we will spend in our lives.
Giving our time
The cool thing about giving our time is that we will receive a lot of benefits from volunteering. Whether we are coaching, helping to beautify a neighborhood park, or teaching new entrepreneurs about business, we will often get more out of volunteering than we put into it.
Giving money to our local community
Not only does it help to volunteer in our community, but monetary support is also needed to advance many of our local projects. Fortunately, we can tailor this giving around our hobbies and things that we love. If we are religious, then we can give money to our local church. If we love to run, then we can give some of our money to local running groups that encourage youth running. If we love to read, then we can donate books and funds to the local library system.
Just like volunteering our time, we will often find that we can derive a lot of satisfaction from giving to worthy, local causes.
Giving money to the global community
Although I currently do not do much of this, giving money to the global community can produce the biggest results. For instance, people in developing countries may have to travel for miles to find water to drink. Unfortunately, the water that they find may not even be safe. Although digging a well can be expensive, it can have a huge impact on the poorest of the poor.
Buying mosquito nets to help prevent malaria, donating money for solar panels, or giving glasses so that more people will be able to see properly are just some simple ways that we can impact a large group of people for a low amount of money. Often a small donation will significantly improve or even save many people’s lives.
We are the 1%
So … now that we know we are part of the 1%, perhaps there are things that we can do to ensure we are giving back and making the world a better place.
What are you doing to help make a change for the better? Let us know in the comments.
And thanks for reading!
~Nathan
Let’s keep living a great life … with the help of money. So what’s next?
- You can travel for free by using rewards credit cards.
- You can get motivated and get out of debt.
- You can check out the next post or the previous post and continue to learn.
But no matter what you decide to do, let’s leave the ordinary behind and take action today!
