Are You Richer Than You Thought or Poorer Than You Feared?
Can I start off by being blunt? How rich are you? Let me put it another way; how rich do you think you are?
We all have different perspectives on this matter, depending upon our upbringings and experiences so it might be worth looking at some ways of working out if you are richer than you thought or poorer than you feared.
For a start, I am willing to be that you are probably better off than at least 900 million people. No, really. You are. These are the people around the planet who live on a little over a dollar a day. Just think about that for a second. 900 million who scrape by on around one single dollar a day. Let’s raise the bar a bit and see if you can fit into the top 20% of the world’s population. Do you live on more than $10 a day? You do? Well done, you are officially part of the richest 20% part of the global population. In terms of the US, the average household gets by on $55 dollars a day. Hang on though; you couldn’t possibly be in the top 1% of the world’s biggest earners, could you? The top 1% sounds like a really exclusive club so how much do you need to earn to get in? $1 million a year? $200,000? No. All you need to earn, according to World Bank figures, is $34,000. Did you make it into this rich club?
Do you own your home? In the US the home ownership rate is 65.4% according to 2012 figures. Of course, owning your own house doesn’t automatically make you rich, just as not owning one doesn’t make you poor. However, if you have build up equity on this asset then you have a form of savings which almost 35% of households don’t have in the US. In other countries the ownership rates vary widely, from 97% in Bulgaria and Lithuania to a surprisingly low 48% in Germany (this is a more recent figure from the one on the earlier link, by the way). I am sure the figures are lower in other countries not on this list. All round the world people dream of owning their own house, so if you already do this then you are probably financially better off than you think. Unless you can’t afford the mortgage, of course.
This is the most crucial part of all though, isn’t it? How much money do you owe? If you owe a lot of money then it doesn’t really matter how much you earn, as you will still struggle financially. For a starting point, we can see that the average household in the US has a credit card bill of $15,112. On average, an American will owe $47,000 between all their debts. That is a hell of a lot of money and is higher than the average annual salary across the country. While debt figures in the US have gone down in recent years, across in the UK the average debt is shooting up. Brits now owe an average £54,178 if we include mortgages. That is a staggering $88,505.In fact, some sources suggest that personal debt in the UK has doubled in the last 10 years. This has led to properties being seized by banks at an alarming – just as in the US in recent years. In the UK a property is taken back by the bank every 17 minutes 4 seconds. If you can handle your mortgage but consider yourself to be poor then this is something to bear in mind.
Do you feel any richer or poorer than you had thought after looking at these figures?