Even if you make a lot of money, you probably earn less than you think you do

I think the widespread idea that you can’t get ahead unless you make $200,000 a year stems from the fact that when you’re making $50,000 a year, $200,000 seems like an unfathomable amount of money. A million? That’s an absurd figure you’ll never see. <br><br>In reality, when you make that kind of money, it doesn’t feel like you make that much more than you used to. After all, $200,000 a year is not actually $200,000 a year. You lose up to half that money to taxes (federal, state, and local), then you lose a pretty big chunk to benefits (health care, 401(k), etc.), then you lose another pretty big chunk to mandatory expenses (like a house you need to live in, a car, insurance, food, and probably the costs of raising children). <br><br>If you live in a blue state, have a family, and a job that requires a commute, you realistically need to make at least $250,000 a year to take home $100,000 a year. <br><br>What’s left after that you can use to invest or save, maybe go on a few vacations a year. You can’t go out and buy a new house every time you get bored, and you can’t fly first class wherever you want to go whenever you want. You’ll still be surprised by how fast that “disposable” money goes. <br><br>From my observations, the people who really make a lot of money either own the company they work at (and even then they have to pay salaries), or they live in a low-tax area, or they don’t have a family and live very frugally. The rest of us may make more money than we used to, but at the end of the day it doesn’t feel like we’re swimming in cash.