What is Good Money?


What is good money? It’s a question I wonder often. I’m abnormally interested in income and wealth distribution.

Who has how much? Where do they live? How did they get it? I find the economics and social impact of wealth disparity fascinating, and love to investigate the cut-offs for the 1% or the 0.01% in wealth and income.

For example, this is one of my favorite income comparison calculators. It tells me there are approximately 285,000 white females between the ages of 25 and 34 with a bachelors degree or higher. And their median salary is $53,000 per year.

Screen Shot 2015-02-08 at 2.05.15 PM
The median income of Canadians with my demographic characteristics

In the US, to be part of the 1% club you have to earn $136,000 if you’re age 31 & under. The 0.01% club starts at $303,000 for that same age group.

Get older and it gets harder. 47 to 51-year-olds are running the hardest competition at $346,000 and $1.2 million for the 1% and 0.01%, respectively. But income is different than wealth, and apparently who’s on top changes on a dime.

In Canada, the 1% club has an income threshold of $191,000 — but there’s some geography at play. I live in Calgary, Alberta which has the highest concentration of millionaires in the country.

Statistically, the 1% club should be 1% — as in 1 in every 100 people.

In Calgary, 1 in 30 people belong to the 1%.

And it’s obvious. Even with low oil prices making major dents in income and wealth amongst Calgary’s elite, the fact that money is everywhere is still visible.

The city is full of luxury sports cars, condos, retail stores, and many of my female friends sport engagement rings with diamonds that resemble small skating rinks. Forget keeping up with the Joneses, I’ll never catch them in the first place. They’re on another planet of super wealthy that I visit for dinner parties (which isn’t so bad, to be honest).

The abundance of wealth has skewed my perspective of it. It’s easy to mistake an abundance of credit card debt for actual money, and at the end of the day, I have no idea if someone financed their new BMW or if they paid with cash because either is equally likely.

When a friend told me her husband made “good money” I thought, “well, obviously he’s earning at least $130,000 per year, maybe as high as $150,000” to which he scoffed and said, “you mean more like $80,000 or $90,000”.

What is good money? 

Wealthy 1-percenters aside, what is the upper middle class? Who is the top 20% or 30%? What do they make? How much do they have?

Wikipedia says the top 25% in the USA earn only $77,500 per year. That’s nearly the cutoff to make it into the top 10% in Canada, which is an income of only $80,400.

Which leads to a side tangent within my own head that goes something like:

  • Why is my perspective skewed?
  • Is it because my family had so little money when I was growing up that I understood everyone was “rich”?
  • Is it because I’ve been reading personal finance blogs for years so I assume everyone is stockpiling cash behind them and always looking for ways to increase their income?
  • Is it because too many of my friends became dentists and doctors and engineers and all saw six-figures by 30?
  • Is it because I live in Alberta and saw 19-year-old kids with no educations and skills get thrown $90,000 to work up north?
  • Is it because of my inherent dissatisfaction with my income, regardless of what number it actually is?

Where do you spend good money?

By the time it occurred to me that a salary of say, $6 million per year, would translate to an income of $500,000 per month, I found the sum too disorienting to really compute, because what the hell would you even do with that?

Most CEOs in Alberta make more than that, which makes it all the weirder. After you buy your mansion and your car, what do you do with the rest? And so my fascination with high-income earners feeds itself even more.

Because there’s a dark side to unequal wealth distribution, and Calgary leads Canada in that regard as well. Where there are big salaries, there are also big gaps between those that earn them and those that can never hope to. The top 10% of Calgary’s families earned 37x more than those at the bottom, and it’s a widening gap. I’m all for the freedom to earn as much as you dare to work for, but am skeptical that billions can be good for anyone. Economic mobility is key to a healthy society, and Calgary (and Canada in general) is snuffing it out.

When it comes to saving money, what is a good rule of thumb?

A good rule of thumb for saving money is to always set aside at least 10% of your income for savings and investments.

You have to be investing at least 10% of everything you earn. This is the only way to ensure long-term financial security and a comfortable retirement.

“Good money” might simply mean more than your friends

Apparently, one of the shortcuts to feeling unsatisfied with your life is to move into a neighborhood where everyone can afford more than you. How you perceive your income and wealth has little to do with its actual number, but really depends on how you compare to others around you.

And that’s one of the double-edged swords of cities like Calgary: it’s an attractive place for jobs and high wages, but if you’re going to be a modest earner, it can be kind of a downer.

RELATED: Why You’ll Never Be Rich – The American Dream Is Dead

Now that oil prices have fallen, it looks like all that glitters is not black gold. Many of my friends that had moved here for the MBA program are talking about heading home after graduation, the hope of cracking the top 10% in Canada’s incomes evaporating in the wake of company layoffs and hiring freezes. The ultra-rich on the other hand, aren’t fired, they’re maybe taking a modest pay cut.

And I am still looking at the numbers, trying to find out where I stand.

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20 Comments. Leave new

  • I’m fascinated by this as well. Since I live in an area of the country that has a very poor economy and high unemployment, and that I’m making more than the national average, I’m acutely aware of the fact that I make a good wage. So much so that I feel trapped by my current salary to an extent.

    All I know is that I make enough to be comfortable. Would I like to earn a bit more? Sure I’d love to have a bit more “breathing room” but I already have more of that than the average person, so I’m not complaining. I’m just going with it for now.

    • I’ve found my appetite for “more” is probably limitless… which is problematic haha

      In Calgary I perceive myself as an average earner, though I might be slightly above average for my age group. I can’t actually get a good handle of where I stand… especially now that oil has tanked and there have been massive layoffs everywhere. Comparatively, I might be in an excellent position because my job is not at risk.

  • A lot of the folks that I know consider what I make to be good money. I make more than a lot of the people I know outside of work. But being a single woman who lives alone things can be pretty tight at times. Right now I hover around the median you mentioned at the beginning of your post.

  • Location, location, location. My parents were teachers in Southwestern Ontario. They were not millionaires but compared to the hundreds of people who lost their jobs working in the automotive industry a decade ago, they sure looked like it. Housing is still so cheap there that all arguments for renting go out of the window. I now have friends who are also teachers, but in Toronto. They receive a relatively similar pay (minus inflation and annual raises from the last 10 years, etc), but housing and renting are roughly two to three times more expensive (if not more, depending on the location in TO). Definetly not the richest people in Toronto.

    I live in a public service town and do relatively well, but houses here are at least twice as much as where my family lives, so it doesn’t matter that I make “so much more” because housing is “so much more expensive”. I would be poor in Calgary but wealthy in many other areas in Canada for the same pay.

    • Agreed. I’m average (IMO) for Calgary but anywhere else in Canada I’d probably be considered wealthy.

      It’s kind of weird when you think about it because aside from housing, everything else is the same. A car costs the same whether you live in a big city or a small town, as does bread or milk etc. So except for home ownership my dollar would essentially go the same distance if I lived anywhere else… except if everyone around was making less, my spending would look like excess.

      It’s interesting dynamics.. that’s why I love investigating it so much haha

      • Is this true in Canada? Because in my experience this hasn’t been the case in the US. I’ve lived in large cities, suburbs and states without a major metro and have found that it was ridiculously expensive to live in a state with a smaller population, even if you weren’t living in the middle of nowhere. Because there were fewer people to spread costs across, utilities and insurance (health as well as everything else) were astronomical. Food too, because of the transportation costs.

        In the US I think you get the best bang for your buck if you live in the mid-outer suburbs of a city, or in a small city itself. That way you can get less expensive housing and enough people to spread costs across.

  • Is everything on your page referencing CAD (Canadian Dollar) or USD? It’s hard to compare across country lines when $1 USD = $1.25 CAD

    • No, the dip is more recent than those stats, so the comparison still stands. A lot of these numbers above are from when the dollars were nearly on par (2010 through 2013 — and even most of 2014 was at at $1.05 USD/CAD)

      But to answer your question, in this post the Canadian numbers are in CAD, the US numbers are in USD.

      There are more wealthy people in America, but the middle and lower classes enjoy a higher quality of life in Canada, so it’s much more complex than currency value.

      • Thanks for the response! It is definitely more complex. I think it’s hard to generalize and say that middle/lower classes in the States have a lower quality of life than that of Canadians as there are so many regional differences in both countries.

        It is cool to see how much the currency fluctuates though..which is just largely based on government intervention on both sides. I just looked at the past 25 years of history and I expected the exchange rates to be more stable than they have been, but it’s really all over the place. I thought our economies would be more intertwined than and thus be more stable.

        I always thought about this when I would watch House Hunters or Property Virgins on HGTV as they would frequently look at properties in Toronto…I live in the Chicago Metro area and I think it’s pretty close comparison looking at property values +/- the currency difference.

  • I consider good money to be enough to have a happy life, so I’d hope it would be way less than needed to be in the 1%!

    I also love looking a these calculators and stats. It’s nice to see the real stats separate from your group of friends. (our circle of friends has a lot of lawyers/accountants/engineers too)

  • I live in downtown Toronto and I see that around 30% of cars on the street are luxury cars. That make me wonder how the heck are they able to afford those cars? Based on
    http://besmartrich.com/2014/10/25/much-money-makes-richer-half/ I am richer than 50% of the people in US in 45-54 age group. It is irony.

  • I agree with you -to me, “good money” is north of $100K. Between $75-100K its “decent”. However, I do think a lot of people are in the $75-100K area think they are making “good” money but spend like they are making “great” money (i.e. buying luxury cars, taking annual trips to the tropics, buying designer clothing…) and as a result, a lot of debt is accumulated. I know someone who leased an Audi – but then got into a fender bender and didn’t get around to fixing it for like 3 months – because that’s how long it took her to scrape together the $500 for the deductible. Yikes!

    • Yep, exactly. Sometimes having a “decent” $80,000 salary just lets people afford tons of minimum payments, not the actual costs of luxury goods.

      I’d love an Audi right now but even my decent money isn’t enough to buy it =p … and we’re waiting for our rust bucket 86′ Mercedes Benz to die haha

  • I think “good money” means that you can buy whatever you want at the grocery store without checking the price, and you can go out to eat sometimes (but you still try not to, because it isn’t a good value!).

    And you do this while maxing out a 401k + Roth and having positive cash flow/savings. So, whatever that number is. I can tell you it is some number north of ~$75k for a singleton in the LA area. But I think it might be less than $200k for a couple in the bay area, despite what you might read in news articles.

  • I find your views on Calgary wealth interesting. I was born and raised there to parents also born and raised in Calgary, and like your significant other I would call $75,000+ A good salary, if not fantastic! Less than two years ago I accepted a job at the U of C where my bosses often told me (and believed) the almost $45,000 I was making (in a position that required a masters or phd degree) was really great money, and I was the among the highest paid – which was true for the building I worked in. I found this salary really hard to make ends meet as a single mom. Most people I know in Calgary are in this range.

    • That’s really odd. With secretaries of oil & gas companies demanding salaries north of $70K, it’s weird to think anyone would call $45,000 “good money” in Calgary (though academia is not the same as industry). Granted, these days are over with the price of oil where it’s at now!

      • Wow. I knew riggers salaries were inflated, but it kinda makes sense as some are risking thier lives and limbs. Downtown Calgary is a different world!

        I had coworkers and we would argue for months if $45,000 was a good salary for a good life here, and I was in the minority that thought it was too low to be able to afford housing, healthy food, health care and retirement savings. Other places in Alberta and Canada, I would say yes, but not the top expensive-wise (Calgary, Vancouver, Toronto…). But perhaps different strokes for different folks?

        • I think Calgarians have a love affair with credit too… everyone seems to think of their life in the context of a monthly payment, so I imagine $45K goes further than we (as PF interested people) would ever feel comfortable taking it.

          I also find it’s the bonus structure of oil & gas that really brings up the spending power. I think people will often have lower salaries but then their bonuses are so ridic it brings their actual income way, way up. My fiancé works in O&G and his bonuses and stock options add up to more than 20% of his salary — but if you asked him how much he made, he would only say his salary and that would be neglecting 1/5 to 1/4 of his pay =p

  • According to the calculator (specifying age and educational background), I’m making somewhat above the average salary for all females. However, when I put in one of my ethnicities, I see a significant drop in salary. Then when I select my other ethnicity, I see a significant increase in salary. I find that interesting/sad/disturbing all at the same time.


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