$25,000 vs. $25,000,000

this is what a $25 million a year salary looks like versus a $25,000 a year salary about 20% of Americans live on this amount of money or less I want to show you the lifestyles of people who make this much money versus this much money and everything in between the reason I want to look at these differences is because of this graph it's going up which is a problem let's start with $25,000 a year all right so let's say my name is George I live in Atlanta Georgia I am single and I have no kids

and I'm looking for a job after some searching I found this job as a security guard at a TV studio in downtown Atlanta it'll pay me $12.50 an hour which is quite a bit more than the minimum wage of $725 an hour let's assume I work 40 hours a week and I work every week except two that I set aside for holidays sickness and vacation this means I make $25,000 a year at this level around 29% of Americans earn as much or less than me so how will I spend it this comes out to be

just over $2,000 a month that I have to spend I got to pay taxes that brings me down to $1,764 to live on this month to calculate this next part for this income and all of the incomes we're looking at I used some data from the US Bureau of Labor Statistics that shows that people in this income bracket spend about 41% of their pre-tax income on housing I've got about $800 50 for all my housing expenses that's nearly half my after tax budget I'll definitely be renting instead of owning a house at this budget a

lot of landlords these days require you to earn three times more the monthly rent so I'm probably going to need roommates if I'm going to get approved for an apartment all right let's look at Craigslist I really can't afford to live downtown so I'm going to look in the outskirts and I found this place right outside the city this is going to work and it's within my budget for rent and utilities so how am I going to get to my job which is in downtown Atlanta that's 20 minutes away from where I live and like

most American cities there's not great public transportation here so I'm going to need to have a car let's just say in this assumption and it's kind of a big assumption that I already have a car and let's assume it's this car it's 2004 Toyota salera that I got on Facebook Marketplace lower-income Americans spend more on their income for transportation than any other segment of the population the data we'll use says about 15% of pre-tax income is spent on transport so that's $313 for gas Insurance parking and saving up for maintenance and repairs we got to

be pretty careful about how much extra driving we do and hope that no big maintenance issues arise according to this BLS data I spend about 15% of my income on food that includes both groceries and eating out that's $313 a month for food a lot of people think that this income bracket just goes to McDonald's all of the time but the reality is the average order amount at McDonald's is between 7 and 8 8 so that will not get me through the month that will get me through 13 days worth of food so I got

to go to the grocery store unfortunately in most lower income areas in this country there aren't a ton of grocery stores and the ones that are available are much less likely to carry fresh produce or other nutritious food so I'm going to see what I can do by stocking up on beans and rice peanut butter and jelly Wonderbread Top Ramen freezer meals for fresh options I'll be looking at potatoes and some of the cheaper produce and no eating out or rarely occasionally on special occasions eating out if I do I'll be looking at the value

menu at a fast food restaurant I'll be looking for discounts checking every price in the convenience store okay but wait don't I get government assistance for food like food stamps so from my research I can see that to get government assistance I need my savings account to be less than $2,000 check my income needs to be lower than $1,578 and I make $25,000 so nope I don't qu Okay so we've covered our basic needs of housing food and transportation but I still have a lot of expenses we hear a lot about Healthcare being a massive

personal cost in the US but what does that actually look like Georgia's Medicaid website says that I qualify for government help but even with that I will be paying around 10% of my income on health related expenses like medicine doctor visits getting care that isn't covered by this government insurance this is one of the reasons why people in my income bracket live around 7 years less than the richest Americans after all these main expenses I'm left with a small amount of money for everything else and there's a lot more that I need to spend just

to live laundry internet connection cell phone conservatively that adds up to $105 not taking into account the overcharges and hidden fees like you're starting to see what's happening here this doesn't add up entertainment Fitness and travel just isn't feasible I have no emergency savings no rainy day fund and live in stress of an unexpected car repair a health emergency any of these unexpected charges could be a major setback I'm probably going to have to join the huge number of Americans that rely on debt to get through the month whether that's credit card debt or short-term

loans with high interest rates maybe I'll need to move back in with my parents or take on a second job maybe I'll start driving Uber or door Dash but what's clear is that my full-time job which pays much more than the minimum wage is still not enough to make it through the month I'm going to pause the video really quick I'm excited about the sponsor of today's video uh it's the first time they're sponsoring a video and it is headspace I started using headspace over a decade ago when I was at college and I was

first getting into meditation and I love it headspace is an app but it's also just a general guide for people who want to get into meditation but don't know how which is what I was 10 years ago when I was starting my journey of meditation first let me tell you why meditation is important in my life I find that um our minds are like muscles they're like they're like something that can be trained and reshaped meditation is kind of like exercise for that muscle it helps you retrain and reshape how your brain works and there's

no spiritual or religious requirement to any of this good meditation and mindfulness are simply a practice that brings more peace into your life headspace is a platform a community and a guide that teaches you how to do this it guides you through meditations the platform has a huge number of guided meditations it also has this really cool feature where in the morning it will prompt you to watch like a very peaceful thought-provoking video that will sort of ground you and give you perspective for the day all done in this like really beautiful animation aesthetic which

I'm super into for me headspace took meditation out of like the new age kind of like hippie spirituality and into like a very accessible very grounded guided approach and by the way mindfulness meditation has like a very very strong basis of scientific evidence to be very effective in promoting a healthy mind and even treating things like depression and anxiety something I've actually thought about making a whole video on Studies have shown that using headspace for 30 days can reduce your stress by 32% for now I want to tell you that headspace is offering 60 days

it's like 2 months for free to anyone who uses my link it's down in the description there's also a QR code here on screen so go try headspace out for free for 60 days see if it's it's a helpful addition to your life thank you headspace for sponsoring today's video supporting our journalism and with that let's get on to the next income tier all right now let's see what we can do with $40,000 a year now my name is Simon I am the representative of the median American Income of a single earner I make $40,000

a year as an event coordinator at a country club in Atlanta my $40,000 salary gives me just over $33,000 a month after federal and state taxes I'm left with just under $2,700 [Music] using that same data set my budget for housing is $1,133 I'm kind of feeling this one-bedroom house let's say between rent for this house and my utilities I'm paying $133 for my monthly housing expenses the country club is kind of far from my house and because there's no public transportation I'm going to need a car I saved up and purchased this 2011 Subaru

Forester on Facebook Marketplace I got it for $4,500 so like George I spend about $136 a month just on gas to get to my job this leaves me with a little over $400 for everything else guys got to eat what am I going to do for food according to the BLS data someone like me spends around $467 a month on food I typically spend about $100 a week on groceries and can use the rest on a dinner out or two I've got a Kroger grocery store 4 minutes away from my house and at this point

I'm definitely cognizant of every price on these shelves I'm using coupons trying to get the best deal but I have leeway to spend a little bit more on maybe a decent cut of meat or some fresh produce maybe I buy organic every once in a while I can comfortably feed myself if I'm smart about how I spend and I don't eat out too much this income level is right on the threshold where employers start to sponsor your health care plan they start to subsidize it that's a thing here in America and luckily my employer does

but even still I spend $300 a month on Health Medicine out of pocket doctors pre- deductible expenses and now I get to pay for a gym I signed up for this lowcost gym for 10 bucks a month so after covering these basic needs I have $231 left for everything else all of my other Essentials laundry cell phone internet brings me down to $126 I will try to put some of this away for an emergency or a trip put it into a savings account with a good interest rate so it will grow over time but to

be honest I'm probably going to spend this on entertainment like I want to go out and have fun I want to go to a movie I want to subscribe to Hulu and Netflix I might buy a book might go out with some friends and after all of that I end up around zero so all in all I'm doing better than George but not that much better I've got some money left over at the end of the month but an emergency expense would still leave me in debt all right let's up this to 100 Grand a

year and see what our budget looks like okay now I'm Tim and I just found this job in sales it makes me $100,000 a year I'm officially in the six figures I make four times more than George and double the median income that Simon makes I'm now near the top 10% of earners in this country my salary gives me 8,333 every month 2,200 of that is going to go to taxes and I'm left with just over 6 grand in this income bracket you see that people spend around 30% of their income on housing until recently

this salary would have been more than enough to buy a house but these days not so much but for the case of our assumption let's assume that I Tim have been saving for 10 years and I'm finally ready to purchase my first home Zillow is telling me that I can afford a house that's around $314,000 I'm going to buy this nice one-bedroom townhouse in Atlanta it's got these nice wood floors all of this natural light oh wait no looks like there's a condo fee $426 per month probably for that fancy workout room okay we're going

to have to keep looking okay I found one it's a one-bedroom condo it's got a fireplace access to a pool and a fitness room it's in a pretty good location and it's just under $260,000 with the condo fee I'll be paying around $2,700 per month which is about 32% of my income for housing I get to spend more on housing than George and Simon make in a month oh and by the way I will have to cough up $22,000 which is my whole savings for a 5% down payment and closing cost to make this house

purchase thanks to my good credit I can qualify for a good car loan that allows me to buy this beauty a $50,000 BMW it'll cost me $754 a month for 5 years and it will leave me with $579 every month to spend on gas repairs and insurance I'm even starting to be able to afford to bring it to a professional car wash place get it detailed every couple months I am upper middle class now so I only have to pay 11% of my income on food per month just to feed myself I get to eat

out a lot more lately when I'm at the grocery store I get to peruse the fresh and nutritious food much more abundantly I can buy nice meat and Nice produce I'm not overly concerned about the prices and lately since meal delivery apps have become more common I'm ordering door Dash like once or twice a week I'm starting to be able to use money to save myself time and stress my job pays for a lot of my health insurance and yet I still pay $500 a month on health medicine and these kind of expensive supplements I've

been buying I'm able to save money at this point so that A Minor Medical Emergency is isn't a huge deal but the doctors I do go to have to be covered by my insurance plan I can't go out of network it' be too expensive to pay out of pocket with all my big expenses covered I still have $665 to cover Wi-Fi unlimited data on my phone and since laundry and a gym are in my apartment I actually don't need to use much cash for that so even after all of these Essentials I have money to

save and invest and even still I have cash left over to go out with friends every few months I'm able to save up enough to go on vacation my work pays me even when I'm taking time off so I don't need to worry about that I do have to strategically choose my travel locations to make sure that they're affordable because I chose a cheaper place I'm able to enjoy drinks and food while I'm there when I come home I do have to save and scr for a couple of months to recer eight but it's not

too stressful not bad and in fact much better than the vast majority of Americans all right now let's up this to a million dollar a year and see what our budget starts to look like hi my name is Noah I am a junior managing director at a big private Equity Fund I'm in finance I'm looking for a man in finance I work 70 hours a week I make big deals they're very important and I am earning $1 million a year that is $83,000 a month after taxes it's more like $48,000 a month in one month

I'm making double what George makes in an entire year in 3 years I'll make more than he makes in an entire lifetime I've got some serious money to work with here like I'm officially among the top 1% of income earners in this country and I'm very lucky because my income and wealth are increasing at a faster rate than everyone else's and we'll see why in just a second making this much money I can get a really nice house by spending 28% of my income which means I can afford around a $2.6 million house wow this

one's kind of nice this five bedroom five b home in this quiet Atlanta suburb man it is nice here look at this kitchen oh and this this beautiful yard out here I might pick up croquet and it even comes with this little friend hey bud I've always wanted my own taxad dermy Fox this house is going to cost me around $199,000 every month for the mortgage and other expenses like house cleaners that come once a week to clean my entire house and do my laundry my yard is maintained by a local landscaping company I'm spending

16% of my income on Transportation which means a little over $113,000 a month on everything cars and planes instead of owning a car I lease one in 3year periods so that I can always be driving the newest fanciest car like this rivan it's going to cost me about 1,000 bucks a month all in I can totally afford that I'm also taking a lot of taxis lately because I can afford it and I can afford a private driver here and there though I don't have a full-time private driver I can hop on a flight too whenever

I want and when I fly internationally I even splurge on business class still pretty expensive but I've got all of these airline miles that I've racked up from of my work travel that I actually get upgraded for free often and now I'm actually pretty hungry so let's talk about food my budget for food has ballooned based on the BLS data I could technically afford to spend $8,000 on food every month but I'm not sure that's totally common among this incom bracket there's not a ton of good data on like the 1centers so I estimate that

somebody in this bracket is spending more like $3,500 per month on food which is still a lot I'm officially deep in the don't look at food prices don't shop for my own groceries don't worry about ordering takeout whenever I want kind of rich I can pay 20 bucks for a salad I can pay $16 for a smoothie I could even drop $300 per person on a nice restaurant and not really be too stressed about it now I can't afford a private Chef yet but I have opted for a high-end meal service that delivers dinners to

my house I have to work a lot the difference is that per hour my hours are much more financially valuable George Simon and Tim all had to spend a lot of their hours cooking and cleaning and traveling around but I can just pay to get a lot of that time back I could technically afford to spend $4,000 a month on health but again we estimate that it's a little bit lower more like $2,500 which would still mean a totally different healthc care world I can go to any doctor I can pay for a therapist out

of pocket I can easily afford to see a specialist for any kind of preventative care Physical Therapy elective surgeries even stuff that isn't in covered by my very good insurance I can pay for it I can pay out of pocket and it's not too crazy for me and even even though I have a gym in my house because I converted one of the many rooms into a gym I actually pay for another nice gym membership at this luxury spa and gym so that I can use their hot tub in SAA I also get in on

their personal trainers who are really great I recently signed up for this fancy doctor's office where I pay a monthly fee and I never have to wait more than 10 minutes in the waiting room remember my time is extremely valuable and this is one reason why my life expectancy is way up here I'm probably going to live seven or 8 years longer than George laundry cell phone bills Wi-Fi these are all negligible costs for me I'm left with at least $110,000 and it could be way more if I reduced some of these assumptions like spending

thousands of dollars every month on food for just me so what do I do with all this leftover money well I do have a semi- complicated Investment Portfolio that I love to talk about my money is in the stock market 247 growing compounding into more and more wealth it allows my wealth to grow much faster than those who don't have extra money to invest I go on vacations though they do get interrupted by work my job is very important for international trips I do sometimes splurge on business class tickets so I can lay down on

the flight what's interesting though is that even at this crazy income bracket people can still blow their money every month trying to keep up with their expanding lifestyle but let's be clear they're living unrecognizable lives to the previous income tiers we've talked about so let's see what happens next all right now let's see what happens when we turn this into $25 million year which is an amount of money that some people in this country actually make every year let's see what their budget looks like my name is Robert you'll never hear about me because I

am the owner of a highly successful National Car Wash chain or maybe I'm the CEO of Zillow or Chevron or maybe I'm a pretty famous celebrity and I make $25 million a year Noah was already in the top 1% of income earners but now I am truly in the ranks of the global Elite and we need to pause and talk about how rich people people think about their wealth at this point we have to start to rethink money because people at this income bracket think less about their yearly salary and more about the total value

of all of the stuff they own their net worth most of my pay is in stocks not cash I spend money knowing that I have all of these assets that I could sell if needed even if it doesn't come to me in a paycheck every month which is actually really great because I'm not taxed on this stuff unless I sell it for cash and even then I'm taxed at like 15 to 20% which means that in a lot of years my tax rate will be less than Tim who makes $100,000 I'm paying less of my

income in taxes than he is this is very good for my net worth so let's see what I can buy now given my gargantuan income I could technically afford this house it has a pool it's got this really cool statue and this Garden that looks like it's straight out of Princess Diaries I don't want to be a princess but because I'm planning to buy my summer house in Italy this year I'm going to go with something a little bit more modest like this one I really like this house the door knob in the shape of

someone's hand the animal print details the golf room I love this golf room I mean what can I say I'm Robert I'm an eccentric boy this house has a pool it's got a gym it's got this wooden tub which is something I never thought I needed but I absolutely do what you'll start to see with this house and everything else in this income bracket is how it allows me to physically isolate myself from the concerns that most people have I don't have to think about crime homelessness noise pollution I can live surrounded only by people

who are wealthy like me getting around is really easy for me I've got a couple of cars I rotate driving them every once in a while except for this one this one I don't drive because it's an antique and I just like to look at it oh and did I mention I have a full-time driver I pay him $51,000 a year he whisks me around from important meeting to important meeting I'm spending two times what George makes in a year to pay for this and it's totally worth it because it saves me time when I

travel he drives me right onto the runway where I jump into a private jet now I don't own this jet yet but I do Charter private flights like when I need to fly from Atlanta to New York cost me about $27,000 for this 2hour flight I can easily do that 27 Grand feels to me what $43 feels like to Simon I'll pay that for a nice private jet now I don't fly private all of the time I do fly commercial if I'm going on vacation to Paris I'll be flying first class obviously I have a

separate security checkpoint my own lounge and when I get on the plane I get one of those little cabins all to myself by the way this ticket cost me $31,000 when I get to Paris I usually book The Penthouse in one of my favorite hotels I have Hotel staff available at any moment do I cook no I do not cook I enter grocery stores only when I feel like it would be fun fun to feel like a regular person for a moment hey Chef do you want to cut this up for her and yet magically

when I open my refrigerator everything I need is in there it's all been fully designed by my nutritionist purchased by my house manager prepared by my personal chef and yes you can see I have a whole staff of people who help me manage my life my house manager is really good at just making this all disappear like the Landscaping gets done the pool gets cleaned and a bunch of other stuff that I don't even know I'm sure all of this costs a lot of money but honestly I've never even thought about it I've got my

friends over and our personal chef is putting together a beautiful meal and he's even doing the wine pairing tonight selected from my collection of quirky cult Wines in my temperature controlled seller I don't pay attention to prices for food or wine except when knowing the price of this bottle for example helps confirm how rare and special it is I think we spent $116,000 on this bottle or this other one that I splurged on for $150,000 I go out to restaurants but it's a little different than the rest of the world I have connections that allow

me to get into the private back room of whatever restaurant I want okay this is insane and while these costs are very feasible for someone who makes $25 million not everyone who earns this much money lives like this in fact a lot of super rich people are incredibly Frugal making their High earnings that much more impactful because they can get rich much faster but what we see with Robert is that you actually could spend this much money on food and housing given your income and many do so in addition to my nutritionist and Chef I

have a personal trainer and health coach who comes to my house every day and guides me through my workout he even travels with me to keep me exercising while I'm on the road I have a private doctor who is on call who comes to my house I pay her 20 grand a year just to be on call she's available and she'll come do whatever I need like a quick steroid shot to my bum knee before or I play a game of tennis My Health Care is mostly preventative I get all the scans and tests and

routines done to ensure that I'm in tiptop shape I can afford any surgery or healthc care routine or procedure that I want and last year I fully replaced all of my front teeth with veneers it only cost me $28,000 and remember $28,000 for me is what it feels like when Tim spends $112 or what George feels like spending $28 not nothing but not a huge deal Even after spending on all of this I still have lots of money that my Financial Manager funnels into sophisticated investment portfolios that just keep on growing investing can be really

fun for me at this point I'll just take 30 grand here and there to buy collector's items that I'm into a couple weeks ago I paid $5,000 for this authentic World War II helmet this piece of art cost me 50 Grand but it's a great investment because the artist is actually going to be the next big thing so this stuff is fun but it also contributes to my net worth because all of this retains and grows in value and my clever accountant has recently mentioned that he found a way to occasionally sell this stuff and

get a nice tax break on the profits now listen I make a meaningful difference in my community with philanthropy like I'm donating a half a million dollars to my family Foundation which is promoting education in the city funneling money and assets into this Foundation allows me to get some really nice tax breaks helps me avoid capital gains tax and it gives me a buzz of feeling like I'm a generous millionaire I even donated a few hundred, to my nephew's private school last year they didn't really need the money but now they're putting my name at

the top of their donor list which is like really great and even after all of this I've got tons of left over income I'm easily able to cover the mortgage on my secondary property in Lake Como it's only $30,000 a month and the views here are just chef's kiss I mean look at it one of my favorite Parts about this level of wealth is how much access I now have to obscure Elite clubs like this one in New York called core I had to pay 50 grand for an Initiation fee and then $117,000 annually but

it allows me to rub shoulders with really important people and yes there are echelons above me that someday maybe I'll reach but I'm still existing on a fully different plane than most every single person in the world almost every stressor that you can think of I can pay away and the ones that I can't pay away like heartbreak grief and social anxiety I won't be able to pay pay that away at any level of wealth I am protected financially from just about any emergency that could occur in my life and so long as I manage

my finances responsibly I will never experience life below this level of wealth the difference between these levels of income is kind of hard to Fathom if you're in the $25 million Camp you make more in 1 hour than George makes in 6 months in just 1 8 hour workday you're making more than George makes in 4 years 100 years ago the Divide between the rich and the poor was incredibly Stark in this country the top 1% would bring home 20% of all of the income but then look what happened we kind of fixed it we

taxed the super rich the workingclass organized and Rose up fighting for fair pay and by the 1980s it was more like 10% of the income went to the top 1% but Watch What Happens Next we're going back back up and we're leaving people like George in a trap it's not hard to see why someone like George would have lost faith in our government and our institutions and the concept of an American Dream the system is not working for George each cost leads to another cost creating a poverty trap with no chance of getting out expensive

housing far from work means a car a car means maintenance and insurance and fuel which means less money for food and Healthcare he makes too much for government assistance on any of this how is George supposed to have the time the money or even the brain space to think about school or improving his skills his social Mobility is limited we often think about America as this land of opportunity if you work hard you can move up but the data shows us that that just isn't the case anymore for someone like George or for the tens

of millions of Americans like him the Gap is getting wider and it's getting harder to close and that's bad not just bad because it's unfair but it's bad for our economy it's bad for our politics and it's bad for the 44 million people who live in the richest country in the world but don't have enough food every day the people who only have access to credit via predatory lenders the people whose lives are rocked when they get a $25 overdraft fee or who can't afford an oil change it's time for the people in charge in

this country to do what they did a 100 years ago and reverse this curve before it becomes too late top 1% hold nearly 10 times more we weth than the bottom 50% combined a staggering $5 trillion in wealth is set to be passed on without a dime of taxes Oxfam is warning this accumulation of wealth in the hands of so few could exacerbate political divides cause corruption and impact economic growth worldwide [Music]