{"id":274,"date":"2021-09-13T11:00:00","date_gmt":"2021-09-13T11:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/is-being-rich-a-curse-the-trap-of-extreme-wealth\/"},"modified":"2025-09-05T16:55:46","modified_gmt":"2025-09-05T16:55:46","slug":"is-being-rich-a-curse-the-trap-of-extreme-wealth","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/is-being-rich-a-curse-the-trap-of-extreme-wealth\/","title":{"rendered":"The Trap of Extreme Wealth"},"content":{"rendered":"
\n

While the title of this post is admittedly ridiculous, I had a conversation the other night that I can\u2019t get out of my head. <\/p>\n

(Disclaimer: This article has a bit of a preamble, but it\u2019s worth the read for the context. Stick with me, Karen, we\u2019ll be at our final destination soon.)<\/em><\/p>\n

Now, I\u2019ll promise you one thing: I won\u2019t cite that one study that says \u2013 after $75,000 per year \u2013 happiness begins to level off (the ole\u2019 diminishing returns case for salary). Tell that to someone who lives in the Bay Area, and they\u2019ll stomp on you with their Allbirds.<\/p>\n

No, I don\u2019t believe it can be that simple \u2013 but I do think there\u2019s a point at which having more money can actually backfire.<\/p>\n

\u201cThe more you own, the more owns you.\u201d<\/h2>\n

I had an English teacher in high school who was as brilliant as she was intimidating.<\/p>\n

One day in class, she off-handedly remarked: \u201cThe more you own, the more owns you.\u201d <\/p>\n

I scoffed. Clearly this woman doesn\u2019t own Uggs or a Dooney & Bourke handbag<\/em>, my 15-year-old self remarked, making a mental note of yet another midwest middle class status symbol I needed to add to my list. <\/p>\n

But still \u2013 the sentiment stuck with me. The more you own, the more owns you.<\/em><\/p>\n

I\u2019ve written about this phenomenon in the past; the way that, surprisingly, having nice things can actually make your life worse<\/a> in some ways if they frequently cause you to inconvenience yourself in order to protect or preserve them. Anyone who\u2019s ever gotten a new car knows the stress associated with parking in a busy parking lot or driving in bad weather. <\/p>\n

What happens when you take this to the extreme?<\/p>\n

The freedom of financial independence math<\/h2>\n

The polar opposite of this effect is the freedom of realizing you don\u2019t need all that much (materially) to live a really good life. <\/p>\n

Most people who\u2019ve found (and committed to) financial independence know this: When you start cutting back on your discretionary spending, your life often (surprisingly) doesn\u2019t get any worse. In some ways, it actually gets better.<\/p>\n

While this can manifest itself in a Marie Kondo-like escapade of cutting expenses, the truth remains:<\/p>\n

\n

Within reason, having less \u2013 not more \u2013 leads to contentment and freedom. <\/p>\n<\/blockquote>\n

This realization (and the math that supports it, the 4% rule that states once you have 25x your annual expenses invested, you become work-optional) has completely transformed my perception of money. <\/p>\n

A million bucks used to sound like a summer house in Aspen and a moderately sized boat.<\/p>\n

Now, it sounds like literal freedom<\/em> from ever needing<\/em> to work again.<\/p>\n

Why? Because I know that $40,000 per year (4% of $1M) is more than enough to support me, even if I\u2019m spending somewhat freely. <\/p>\n

It\u2019s not very often that I\u2019m reminded that not everyone feels this way because I\u2019ve carefully constructed my own echo chamber of FI minds who agree.<\/p>\n

Why being ultra rich might be a curse<\/h2>\n

So imagine you\u2019re me, strolling through life, feeling confident that $1M is the magic number. Sure, that\u2019s a lot of money, but if you stare at enough compound interest charts and find ways to become a high earner, you learn quickly that it\u2019s actually quite attainable. <\/p>\n

Then imagine you meet someone wealthy \u2013 like, very<\/em> wealthy \u2013 whom you respect, and you get the opportunity to pick their brain about money.<\/p>\n

Obviously, I\u2019m not going to share any personal details about this person so as to protect their identity (because remember, I respect them \u2013 and the point of this piece isn\u2019t to rag on them or their choices), but this conversation was too enlightening to keep to myself.<\/p>\n

Conservatively, I\u2019d say this person is worth about $10M, and they aren\u2019t much older than I am.<\/p>\n

I asked them the question I always ask hyper-wealthy people:<\/p>\n

\u201cWhat does it feel like to never worry about money?\u201d <\/p>\n

They were surprised. <\/p>\n

\u201cWhat do you mean?\u201d they asked.<\/p>\n

Now I\u2019m surprised.<\/p>\n

\u201cWell, I mean,\u201d I stammered, \u201cI just feel like\u2026 at that point\u2026 what, $10M? How could you ever feel concern while swiping your credit card? Like\u2026\u201d Okay, Katie, get it together: <\/em>\u201cWhat I\u2019m saying is, I feel like there\u2019s no way you go to restaurants and look at the prices on the menu. What is that like?\u201d <\/p>\n

They nodded in understanding, then quickly shook their head no.<\/p>\n

\u201cNo, I mean, I still worry about money. I worry about money all the time.\u201d <\/p>\n

I stared in disbelief. <\/p>\n

For context, a net worth of $10M means you could safely withdraw $400,000 per year and never run out of money. It is \u2013 by all definitions \u2013 a shit ton of money. <\/p>\n

\u201c\u2026how? Why?\u201d I asked, \u201cThat\u2019s a safe withdrawal rate of, like, mental math interlude<\/strong> $400,000 per year. How could that not be enough?\u201d<\/p>\n

(Remember, I spend $36,000 per year, so that\u2019s more than 10x my spending, a number I truly couldn\u2019t comprehend.)<\/p>\n

\u201cYou know how much you need per year <\/em>to never worry about money again? $2.5M.\u201d They said.<\/p>\n

Let\u2019s take a quick pause<\/h2>\n

$2.5M per year is the 4% safe withdrawal result of owning about $62M worth of investments.<\/p>\n

Put another way, once you have a cool $62M, you can withdraw $2.5M per year.<\/p>\n

Meanwhile, if I had $2.5M in general<\/em>, I\u2019d be at financial independence two times over. <\/p>\n

When you grow accustomed to a lifestyle that costs $2M per year, it\u2019s hard to go back<\/h2>\n

And to be fair, this person wasn\u2019t indicating that they currently<\/em> make or spend $2M per year \u2013 as evidenced by the fact that they noted that\u2019s the point at which they\u2019d stop worrying about money.<\/p>\n

But can you imagine having an income from your investments alone worth $400,000 per year and still worrying about money \u201call of the time\u201d?<\/p>\n

That\u2019s the point at the conversation that I looked at them and said, <\/p>\n

\u201cYou still worry about money, being worth $10M? Then what\u2019s the point?<\/strong>\u201d <\/p>\n

What\u2019s the point of being objectively rich as f*** if money is still a giant stressor? <\/p>\n

Isn\u2019t the entire point of amassing a ton of wealth to never have to think about it again?<\/p>\n

Does the target just keep further away?<\/h2>\n

To some much, much smaller extent, I can empathize and relate \u2013 I remember when I thought that once I had $100,000 I\u2019d feel calmer. Then it was $250,000. Now it\u2019s $500,000 (and spoiler alert, I know deep down that once I hit $500,000, I\u2019ll only feel even more determined to get to $750,000).<\/p>\n

Was this person just experiencing this same phenomenon on a grander scale? (Okay, a much<\/em> grander scale \u2013 I know you rolled your eyes when you read my relatively poor ass saying I could relate.)<\/p>\n

Maybe being ultra rich is<\/em> a trap \u2013 the more you grow accustomed to flying private, 5-star vacations, and expensive meals, it becomes your new baseline (I\u2019ve talked about this in the past; how it\u2019s hard to reverse your lifestyle creep<\/a> once your lifestyle starts inflating unless you\u2019re forced to). <\/p>\n

The bottom line<\/h2>\n

If being ultra rich just means the baseline that you require to live a happy, good life keeps inflating higher and higher, then it stands to reason that you\u2019re eventually just strapped to a golden treadmill with Cartier handcuffs. <\/p>\n

If I require $40,000 per year to feel just as happy<\/em> and enjoy my life just as much<\/em> as someone who needs $2M per year to feel that way, am I the one who\u2019s winning?<\/h3>\n

Maybe \u201cwinning\u201d is the wrong term \u2013 maybe the correct term here is free.<\/em><\/p>\n<\/div>\n

\n
\n

You may also like these posts:<\/h2>\n
    \n
  1. \n

    Why Spending Less Matters More than Earning More<\/a><\/p>\n<\/li>\n

  2. \n

    A Little Lifestyle Creep is OK \u2013 But Be Careful, It\u2019s Hard to Go Backwards<\/a><\/p>\n<\/li>\n

  3. \n

    Confessions of a Reformed Materialist: Eliminating My Shopping Budget<\/a><\/p>\n<\/li>\n

  4. \n

    Getting Clear on Your Lifestyle Upgrade<\/a><\/p>\n<\/li>\n<\/ol>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    While the title of this post is admittedly ridiculous, I had a conversation the other night that I can\u2019t get out of my head. (Disclaimer: This article has a bit of a preamble, but it\u2019s worth the read for the context. Stick with me, Karen, we\u2019ll be at our final destination soon.) Now, I\u2019ll promise […]<\/p>\n","protected":false},"author":178814,"featured_media":2413,"comment_status":"closed","ping_status":"open","sticky":false,"template":"si-template-single-post-income.php","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[40],"class_list":["post-274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spending-and-saving","tag-income"],"yoast_head":"\nThe Trap of Extreme Wealth - Money with Katie<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moneywithkatie.com\/is-being-rich-a-curse-the-trap-of-extreme-wealth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Trap of Extreme Wealth - Money with Katie\" \/>\n<meta property=\"og:description\" content=\"While the title of this post is admittedly ridiculous, I had a conversation the other night that I can\u2019t get out of my head. 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