Real income divide

[greypiggi]

I am puzzled here. 500k asset onwards is considered as Middle Upper class. A BTO 4 or 5 room flats(you know build by who) can exceed this amount easily. Maybe 1.5M onwards in encumbrance free assets will be considered as 20 % Middle Upper class; relatively speaking with regard to our properties prices and high costs of living. Of course 30K/month earning should be in Middle Upper class income.

I meant net worth. Most people who own that 500K HDB flat prob still have a mortgage loan. But i guess we can always shift downwards and have middle class range up to 800K in net worth and from there on is upper middle until 10M.

I think readers will note that upper middle is very broad. Some 9.2M worth range for networth. Perhaps for social examination it will be worthewhile to further sub-divide this group. Maybe into Upper middle and lower upper? Say 800K - 5M and 5M to 10M? The lifestyle is rather different between these 2 ranges.

[Temperament]

"Maybe into Upper middle and lower upper?"
Yes it's not easy to differentiate. Besides what's enough is different for everyone of us.

[KopiKat]

Regarding your point about relative wealth, it's very true and I had read up on this before. Apparently, if you stay in a well-off area which has fine dining outlets and everyone owns a car, you'd feel compelled to spend the same amount to maintain the same social strata (even if it was for show). So people who live in swanky condos end up spending much more than if they hung around in mass-market ones, and so on. It's the emotional knock-on effect.

So the idea to build weath is to live not just below your means, but also in a neighbourhood which has a much lower social strata and spending ability than yourself. If you hang around people who don't own cars, take public transport, don't buy branded stuff and just own one HDB flat, then you won't feel pressurized to spend.

Ultimately, it depends on whether you are what Warren Buffett termed as an "inner-scorecard" or "outer-scorecard" person. If you are strongly "inner-scorecard" like Warren Buffett, then you wouldn't care less what others think of you (in terms of appearing to be wealthy). But, if you are strongly "outer-scorecard", then, very likely, you're spending every single penny of your income (perhaps even draw on credit card debts) to appear rich!

[greypiggi]

i think most people are outer scorecard. This is not my theory btw, it is borne by many psychology experiements and there is whole book written by an economist who is in the House of Lords. I think the book is called Happiness.

MusicWhiz, but i would also argue that hanging around people who do not spend will also, in many cases, limit your earning drive. So while you may be happier since there is less comparison, you would also push yourself less. That is why many wealthy people advocate making friends with even wealthier people. The pressure may be there but you actually learn more money making habits and push harder. Whether that is a good thing is another story....

[Jared Seah]

I think most of us are drawn naturally to "outer scorecard" as we need to make ourselves "desirable" to the opposite sex too. Peacocking! Choose me! Choose me! LOL! (Sigmund Freud)

Even "inner scorecard" persons care what people thinks of them (spouse, children, close friends) - it's just that they are more selective and more personal (not society's mass market yardstick) on who and what's important to them.

[Musicwhiz]

i think most people are outer scorecard. This is not my theory btw, it is borne by many psychology experiements and there is whole book written by an economist who is in the House of Lords. I think the book is called Happiness.

MusicWhiz, but i would also argue that hanging around people who do not spend will also, in many cases, limit your earning drive. So while you may be happier since there is less comparison, you would also push yourself less. That is why many wealthy people advocate making friends with even wealthier people. The pressure may be there but you actually learn more money making habits and push harder. Whether that is a good thing is another story....

Hi KopiKat, Jared and Greypiggi.

Yep thanks for all your input and feedback. That's quite fascinating to me - inner and outer scorecard. I guess for myself I am somewhat of a hybrid - I do not care what others think of me if I do not know them, but I would want those who are close to me (i.e. parents, siblings, wife) to feel proud of me. Hence I do mirror my achievements and financial status to people who are more successful in order to "push" myself harder, yet I live in an area where people spend relatively less (HDB heartlanders). So I am trying to get the best of both worlds so to speak - the drive to earn more and learn more from those richer than me (online people or gurus), yet maintain a relatively simple lifestyle.

On Jared's peacocking theory, yep I do agree but for me as a male I never had the desire to flaunt wealth/status just to appear attractive to females (I feel it's rather fake and shows me off as arrogant). But apparently, a female friend who attended a dating service told me of many, many such men. It's like a tagline to them - when they meet a female they will boast (not so subtly) about their car, jobs and wealth/status.

Maybe that's why I am further down the desirability scale . Not willing to spend and also socially immobile. LOL!

[greypiggi]

I am super outward scorecard...

i have been benchmarking myself against others since uni days and i am at this stage now...late thirties... and i am pretty tired. And yes, I find myself only ok on the happy scale once i compare with the new peers that i now know. So i have been telling myself to take it easy.. slow down.. enjoy family life.. travel... smell the roses and remember to be content and compare against people less fortunate. So far it only sort of works because until the day I completely stop my current job, i am immersed in a competitive environment.

Just to give an idea of how crazy it can get. When i first started, i just focus on myself and doing well in my work as an entrepreneur. Not much benchmarking since i was earnign even less than a fresh grad in a startup. By late 20s, business work, so I benchmark against peers who by then are doing quite ok in banking/govt. I recall being amazed when I read that civil servant guys can earn $300K when they are 32! And i think secretly i felt great stress and was envious.

Then business did even better. When I hit 31-32, was making the same as an AO as take home. I think this period the best... just got some money, hit my 1M networth goal -- so happiest. Have not changed benchmark group yet. Then 2 years more, business grew even more. And believe it or not, i started to benchmark against all my peers who are in banking, top consultants and amazingly can challenge them. You would think i would be satisfied..

Story not ended.... had a major liquidity event, business grew even more. Peer group has expanded to business types, inheritors... so now i benchmark against perm secs, CEOs, businessman, ministers. Mostly much older guys. That is why i know silly facts like there are 17M USD millionaires worldwide and about 1M of them are decamillionares (more than 10). Can even tell you that of these about 10K probably reside in SG. I even start to look at forbes SG 100 and wonder what it will take to get there. BTW, this was triggered by 1 business guy who actually keeps track.... but he got chance to actually enter...Crazy world right?

If i were to plot my happiness over years, I would say it is steadily improving graph until now with an exponential increasing part from 31 to 34 or so. But i think the chart may decline if i allow this constant scorecarding to affect my health and mental wellbeing. So hence i am writing here... skiving off from work and trying to just talk it all out...... It would be good to go back to the old days and just play hard under the sun!

[KopiKat]

For those who are not familiar with the meaning of Warren Buffett's "score-card" definition, here's an extract I found from the internet (which is also similar to what I remembered reading in his autobiography "The Snowball"),

Focus on the "Inner Scorecard": Buffett once asked: "If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or [would you rather] be thought of as the world's worst investor when you were actually the best?" If you picked the latter, you have an "inner scorecard," meaning you'll be able to ignore Wall Street's "profit-now" mentality to focus on long-term results.

Note that Warren Buffett classifies himself as highly "inner scorecard" even though he's one of the richest man in the world.

[greypiggi]

For those who are not familiar with the meaning of Warren Buffett's "score-card" definition, here's an extract I found from the internet (which is also similar to what I remembered reading in his autobiography "The Snowball"),

Focus on the "Inner Scorecard": Buffett once asked: "If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or [would you rather] be thought of as the world's worst investor when you were actually the best?" If you picked the latter, you have an "inner scorecard," meaning you'll be able to ignore Wall Street's "profit-now" mentality to focus on long-term results.

Note that Warren Buffett classifies himself as highly "inner scorecard" even though he's one of the richest man in the world.

Opps! By that definition, I am internal scorecard. Thanks for clarifying. So I am just hyper competitive then with a disregard for what others think.

[karlmarx]

...

Opps! By that definition, I am internal scorecard. Thanks for clarifying. So I am just hyper competitive then with a disregard for what others think.

if you are unable to 'take it easy.. slow down.. enjoy family life.. travel... smell the roses', because you're 'immersed in a competitive environment', it becomes unlikely that you are able to 'disregard for what others think'.

i think you were right the first time.