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

Summary

The video script contrasts the lifestyles of individuals earning $25,000, $40,000, $100,000, $1 million, and $25 million per year in the U.S., highlighting the stark disparities in living conditions, expenses, and opportunities. It delves into the financial struggles of low-income earners, the modest comforts of middle-class jobs, the luxuries of the upper middle class, the opulence of the millionaire bracket, and the extravagant lifestyles of the ultra-wealthy, emphasizing the widening income inequality and its societal implications.

Takeaways

• 💼 The video compares the lifestyles of individuals earning $25,000, $40,000, $100,000, $1 million, and $25 million per year, highlighting the stark differences in living standards and financial capabilities.
• 🏠 Housing expenses consume a significant portion of income, with lower earners spending nearly half their after-tax income on rent and utilities, while the wealthy can afford mansions and additional properties.
• 🚗 Transportation costs are a major concern for lower earners, who spend a considerable percentage of their income on car-related expenses, whereas the wealthy can afford luxury cars and private flights.
• 🛒 Food expenses vary greatly, with lower earners shopping for basic and affordable items, while the wealthy can indulge in high-end meal services and fine dining without concern for cost.
• 💉 Healthcare is a significant financial burden for lower earners, who may not qualify for government assistance and must allocate a portion of their income to medical expenses, unlike the wealthy who enjoy comprehensive coverage and access to top-tier healthcare.
• 👨‍👧‍👦 The script emphasizes the divide between the rich and the poor, with lower earners facing challenges in affording basic needs and struggling with financial stress, while the wealthy enjoy a life of comfort and abundance.
• 📈 The wealth gap in the U.S. has been growing, with the top 1% holding a disproportionate amount of wealth, leading to social and economic disparities.
• 💼 The video illustrates the concept of 'time is money', showing how higher earners can afford to outsource time-consuming tasks, thus gaining more free time and reducing stress.
• 🏦 Investment and wealth accumulation are key aspects of the wealthy's financial strategy, with the potential for their assets to grow at a faster rate than those of lower earners.
• 🎓 The script suggests that social mobility in America is becoming more difficult, with the income gap making it harder for lower earners to improve their economic status.
• 🌐 The video calls for action to address economic inequality, suggesting that the current trend of wealth concentration could have negative implications for society and the economy.

Q & A

What is the main purpose of the video script?

The main purpose of the video script is to illustrate the differences in lifestyles and financial challenges faced by individuals with varying annual incomes, from $25,000 to $25 million a year.

What income bracket does George represent in the script?

George represents the income bracket of someone earning $25,000 a year, which is a level where around 29% of Americans earn as much or less.

How much of George's pre-tax income is spent on housing according to the script?

According to the script, George spends about 41% of his pre-tax income on housing.

What transportation does George use to get to his job in downtown Atlanta?

George uses a 2004 Toyota Solara that he got from Facebook marketplace to commute to his job in downtown Atlanta.

Why might someone earning $25,000 a year not qualify for government food assistance?

Someone in this income bracket might not qualify for government food assistance if their savings account is more than $2,000 and their income is above the threshold, which in the script is $19,578.

What is the median American income for a single earner according to the script?

According to the script, the median American income for a single earner is $40,000 a year.

How much does Tim, who earns $100,000 a year, spend on housing?

Tim spends around $2,700 per month on housing, which is about 32% of his income.

What is the approximate monthly income of someone earning $1 million a year after taxes?

After taxes, someone earning $1 million a year would have about $48,000 a month.

What is the main difference in the way the super-rich, like Robert, think about their wealth compared to others?

The super-rich, like Robert, think less about their yearly salary and more about their total net worth, including the value of all their assets.

How does the script describe the impact of wealth disparity on society?

The script describes wealth disparity as not only unfair but also detrimental to the economy, politics, and the well-being of millions of people living in poverty in the richest country in the world.

What historical trend does the script mention regarding wealth distribution in the United States?

The script mentions that a hundred years ago, the divide between the rich and the poor was stark, with the top 1% earning 20% of all income. This improved by the 1980s but has since worsened, with the top 1% again holding a disproportionate amount of wealth.

Outlines

00:00

💼 The Reality of Income Disparity in America

This paragraph introduces the stark contrast between the lifestyles of individuals earning $25 million a year versus those making $25,000 annually. It highlights the significant percentage of Americans living on or below $25,000, and the challenges they face, such as housing, transportation, and food expenses. The narrative follows George, a security guard in Atlanta, who struggles to make ends meet despite earning more than minimum wage. The paragraph emphasizes the limited options available to lower-income individuals and the lack of access to government assistance due to strict eligibility criteria.

05:01

📈 The Struggle to Get By on Median Income

The second paragraph delves into the life of Simon, who earns the median income of $40,000 a year as an event coordinator. It outlines the modest improvements in lifestyle compared to George, including slightly more flexibility in housing, transportation, and food choices. However, Simon still faces financial constraints, with limited room for discretionary spending and a constant need to budget carefully. The paragraph underscores the challenges of achieving financial stability even at the median income level, where unexpected expenses can quickly lead to debt.

10:02

🏡 A Glimpse into the Upper Middle Class Lifestyle

In the third paragraph, the story of Tim, who earns $100,000 a year in sales, is explored. This income level places him in the upper middle class and near the top 10% of earners in the country. Tim's narrative showcases a significant leap in living standards, with the ability to afford a home, a new car, and a more varied diet. Despite higher expenses, including a mortgage and car payments, Tim has disposable income for savings and leisure activities. The paragraph illustrates the benefits of reaching a higher income bracket, including increased financial security and a better quality of life.

15:04

🚀 The Affluence of Earning a Million Dollars a Year

The fourth paragraph introduces Noah, a junior managing director in finance with an annual income of $1 million. This level of income allows for a luxurious lifestyle, with the ability to afford high-end housing, a BMW, and a variety of food options. Noah's story highlights the capacity to save and invest, as well as the financial freedom to enjoy leisure activities without worrying about expenses. The paragraph emphasizes the significant difference in living standards between the top 1% and the rest of the population, and the ability to maintain a comfortable lifestyle even with high expenses.

20:07

🌐 Life at the Pinnacle of Wealth: The $25 Million年薪

This paragraph examines the life of Robert, who earns an astonishing $25 million a year, placing him among the global elite. Robert's wealth enables a lifestyle of opulence, with the ability to own multiple luxurious homes, charter private flights, and employ a full staff including a personal chef, trainer, and doctor. The narrative discusses the concept of net worth over salary and the tax advantages that come with much of the income being in stocks. It also touches on the philanthropic activities of the ultra-wealthy and their access to exclusive clubs and experiences, illustrating the vast gulf between the richest and the rest of society.

25:09

🌍 The Chasm Between the Rich and the Poor in America

The final paragraph provides a broader perspective on the growing income inequality in the United States. It discusses the historical context of wealth distribution and the recent trend of increasing disparity. The paragraph emphasizes the challenges faced by lower-income individuals, such as George, who struggle with basic needs and have limited social mobility. It concludes with a call to action for policymakers to address this growing divide, highlighting the negative impacts on the economy, politics, and society as a whole.

Keywords

💡Income Disparity

Income disparity refers to the significant differences in income levels among various groups in society. In the video, this concept is central as it explores how different annual salaries, ranging from $25,000 to $25 million, impact the lifestyles and financial decisions of individuals. The script illustrates this by comparing the living conditions and expenses of people earning at different income levels, highlighting the stark contrast in their abilities to afford basic necessities and luxuries.

💡Minimum Wage

The minimum wage is the lowest hourly, daily, or monthly remuneration that employers are required to pay workers. In the context of the video, it is mentioned as $7.25 an hour, and the script uses this as a baseline to discuss how higher wages, such as $12.50 an hour, can still result in a challenging financial situation for workers like George, who earns $25,000 a year.

💡Housing Expenses

Housing expenses encompass the costs associated with having a place to live, including rent, utilities, and sometimes mortgage payments. The video emphasizes the proportion of income that goes towards housing, with lower-income individuals like George spending nearly half their after-tax budget on it. This highlights the financial strain faced by those with limited incomes and the trade-offs they must make in other areas of their budget.

💡Transportation Costs

Transportation costs refer to the expenses incurred for commuting to work or other daily activities. The script illustrates how these costs can be a significant portion of a low-income individual's budget, with George spending 15% of his pre-tax income on transportation. This includes not only fuel but also insurance, maintenance, and parking fees, which can be a major financial burden for those earning less.

💡Food Insecurity

Food insecurity describes a situation where individuals lack consistent access to enough food for an active, healthy life. The video script discusses how individuals on lower incomes, like George, must carefully budget for food, often resorting to cheaper, less nutritious options due to financial constraints. This concept is crucial in understanding the challenges faced by those with limited financial resources in accessing adequate nutrition.

💡Government Assistance

Government assistance refers to the various forms of support provided by the state to its citizens, such as food stamps or Medicaid. In the video, it is mentioned that George does not qualify for food assistance due to his income and savings, demonstrating the limitations of social safety nets and how they may not reach everyone in need.

💡Healthcare Costs

Healthcare costs encompass the expenses related to medical treatment, including insurance premiums, co-payments, and out-of-pocket expenses. The script highlights how even with government assistance, individuals like George still face significant healthcare costs, which can be a major financial strain and contribute to health disparities among income groups.

💡Debt

Debt is an amount of money borrowed by one party from another, with an obligation to repay it. In the video, the concept of debt is discussed in relation to how individuals like George may rely on credit cards or short-term loans to cover unexpected expenses or meet basic needs, illustrating the cycle of debt that can be difficult to escape for those with low incomes.

💡Investment Portfolio

An investment portfolio is a collection of financial assets such as stocks, bonds, and cash equivalents held by an investor. The video script mentions how individuals with higher incomes, like Noah, can afford to have a sophisticated investment portfolio, which allows their wealth to grow at a faster rate than those who do not have extra money to invest. This highlights the compounding effect of wealth accumulation among the affluent.

💡Philanthropy

Philanthropy is the act of promoting the welfare of others, typically through the donation of money to good causes. In the video, Robert's philanthropic activities, such as donating to his family foundation and a private school, are discussed. This illustrates how wealth can be used not only for personal benefit but also for contributing to societal improvement and securing tax benefits.

💡Social Mobility

Social mobility refers to the ability of individuals to move between different social classes, typically from a lower to a higher class. The video script suggests that for people like George, social mobility is limited due to the widening income gap and the challenges associated with escaping poverty. This concept is crucial in understanding the systemic barriers that prevent economic advancement for certain segments of the population.

Highlights

A $25 million annual salary offers a significantly different lifestyle compared to a $25,000 annual salary, highlighting the vast income disparity in America.

Approximately 20% of Americans live on $25,000 or less per year, which is a critical income level for understanding financial disparities.

Earning $25,000 annually often means living paycheck to paycheck with limited options for housing, transportation, and food.

The necessity of a car for many low-income workers contributes to significant expenses that can strain a tight budget.

Lower income individuals often spend a higher percentage of their income on transportation due to limited public transit options.

Access to healthy and fresh food options is often limited for those with lower incomes, impacting dietary choices and health.

Government assistance programs have strict eligibility criteria, and many just above the poverty line do not qualify for support.

Healthcare costs are a significant burden for lower-income individuals, even with government assistance programs like Medicaid.

The median American income of $40,000 provides a modest improvement in lifestyle but still comes with financial constraints.

Making $100,000 a year offers greater financial comfort, allowing for home ownership and a more varied diet.

Even with a six-figure income, significant expenses like housing and healthcare can consume a large portion of one's salary.

An annual income of $1 million provides a luxurious lifestyle with the ability to afford high-end homes, cars, and personalized services.

The top 1% of earners have access to financial investments and assets that can significantly increase their wealth over time.

Earning $25 million a year positions an individual among the global elite with a focus on net worth and asset accumulation.

The ultra-wealthy often have unique ways of thinking about money, with a focus on assets rather than salary, and tax strategies that can minimize their tax rates.

Philanthropy and community contributions can provide tax benefits for the wealthy while also addressing social issues.

The growing income inequality in the U.S. is not only a social issue but also poses risks to economic growth and political stability.

The divide between the rich and the poor has been widening, creating a challenging environment for social mobility and economic equality.

Transcripts

- 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 wanna show you the lifestyles of people

who make this much money versus this much money

and everything in between.

The reason I wanna 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 $7.25 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 gotta 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 $850 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 than monthly rent.

So I'm probably gonna need roommates

if I'm gonna get approved for an apartment.

All right, let's look at Craigslist.

I really can't afford to live downtown,

so I'm gonna look in the outskirts,

and I found this place right outside the city.

This is gonna work and it's within my budget

for rent and utilities.

So how am I gonna 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 gonna 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 a 2004 Toyota Solara

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 transportation.

So that's $313 for gas, insurance, parking,

and saving up for maintenance and repairs.

We gotta 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 the time,

but the reality is,

the average order amount at McDonald's is between 7 and $8.

So that will not get me through the month.

That will get me through 13 days worth of food.

So I gotta 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 gonna see what I can do

by stocking up on beans and rice, peanut butter and jelly,

Wonder Bread, 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 19,578,

and I make $25,000.

So nope, I don't qualify.

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 seven 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 gonna 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 DoorDash.

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 gonna pause the video really quick.

I'm excited about the sponsor of today's video.

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 our minds are like muscles.

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,

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 really beautiful animation aesthetic,

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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 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 wanna tell you

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It's like two months for free to anyone who uses my link.

It's down in the description.

There's also QR code here on screen.

So go try Headspace out for free for 60 days,

see if 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 onto 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 $3,000 a month.

After federal and state taxes,

I'm left with just under $2,700.

Using that same data set, my budget for housing is $1,133.

I'm kind of filling this one bedroom house.

Let's say between rent for this house and my utilities,

I'm paying 1,133 for my monthly housing expenses.

The country club is kind of far from my house,

and because there's no public transportation,

I'm gonna 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.

Guy's gotta eat.

What am I gonna 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 four 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 healthcare 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 low cost 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'll grow over time.

But to be honest,

I'm probably gonna spend this on entertainment.

Like I want to go out and have fun.

I wanna 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 gonna go to taxes,

and I'm left with just over six grand.

In this income bracket, you see that people spend

around 30% of their income on housing.

Until recently, this salary would've 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 gonna 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 gonna have to keep looking.

(upbeat music)

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 $20,000,

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 five 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 DoorDash 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 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 would 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 scrounge for a couple of months to recuperate,

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 dollars 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 three 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 kinda nice.

This five bedroom,

five bathroom home in this quiet Atlanta suburb.

Man, it is nice here.

Look at this kitchen.

Oh, and 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 taxidermy fox.

This house is gonna cost me around $19,000 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 $13,000 a month on everything,

cars and planes.

Instead of owning a car, I lease one in three year periods

so that I can always be driving the newest fanciest car.

Like this Rivian,

it's gonna cost me about a thousand 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 all 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 income bracket.

There's not a ton of good data on the one percenters.

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 could 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 healthcare 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 uncovered 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 though I have a gym in my house

because I converted one of the mini 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 and sauna.

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 room.

Remember, my time is extremely valuable,

and this is one reason why my life expectancy

is way up here.

I'm probably gonna live seven

or eight years longer than George.

Laundry, cell phone bills, Wi-Fi,

these are all negligible costs for me.

I'm left with at least $10,000,

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,

24/7, 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 a 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 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.

(upbeat music)

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 gonna go with something a little bit more modest

like this one.

(upbeat music)

I really like this house.

The doorknob 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 two-hour 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 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 costs 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

to feel like a regular person for a moment.

- Hey chef, do you wanna 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 cellar.

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 $16,000 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 I play a game of tennis.

My healthcare is mostly preventative.

I get all the scans and tests and routines done

to ensure that I'm in tip top shape.

I can afford any surgery or healthcare 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 collectors items that I'm into.

A couple weeks ago I paid $5,000

for this authentic World War II helmet.

This piece of art costs me 50 grand,

but it's a great investment because the artist

is actually gonna 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 thousand dollars

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 leftover 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 the Core.

I had to pay 50 grand for an initiation fee

and then $17,000 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 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,

it's kind of hard to fathom.

If you're in the $25 million camp,

you make more in one hour than George makes in six months.

In just one eight-hour workday,

you're making more than George makes in four years.

A hundred 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 kinda fixed it.

We taxed the super rich.

The working class 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.

(soft tense music)

We're going 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 hundred years ago

and reverse this curve before it becomes too late.

- [Newscaster] Top 1% hold nearly 10 times more wealth

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.

(dramatic music)