When you earn a lot of money you can save a lot of money. No one is going to argue with that fact outright, but I think that a high income can force you into more spending traps than you might have expected. To be clear I am not talking about people who are trying to keep up with the joneses. I am talking about people who find themselves at a crossroads where they would not have spent money if they earned less.
Case in point… When I moved into my house more than a decade ago the local elementary school scored an 8 out of 10 rating. Now the same school is ranked a 6. Because we’ve lived in this neighborhood for a very long time we have met many different families of varying professions and incomes. Over the course of two years we met four families whose male children came home crying from school every day because they hated the academic environment. We heard nearly identical stories four times in a row, from four families who did not know one another. Three of those families moved in search of better schools. One family won the school lottery and moved their child to a different learning environment.
If we earned less money we may have sent our son to the local school. We may not have questioned that choice or maybe we would have questioned it, but realized we had no alternative other than a lottery selection, which my son may or may not have been won. (Those schools are not perfect either.) However, because we earn more we reviewed more options including A) Place him in the local school and wait to see what happens. B) Move to a better school district, C) Place my son in a private school that costs roughly $20,000 per year or D) move to a new state with a lower cost of living and amazing schools.
For the time being our families live too close to make option D a viable one. Job wise my husband and I are not tied to a particular location, but family-wise, well that’s a whole other story. So yes, technically, there is a solution that doesn’t involve spending money, but this wasn’t one we were willing to take while our parents are alive.
To be honest I wanted to choose option A. I want my son to grow up in a neighborhood with kids who attend the local school. I want him to ride his bike to and from their houses when he gets older and I want him to feel a part of the local community. I went to public school. My husband went to public school. Shouldn’t that be the end of the story?
In many places in the US public school is just as good if not better than private school. In the area I live in around Washington, DC this is not the case. I visited the local school multiple times and talked to administrators and teachers. I also spoke to parents who were relatively happy with that school, but after each conversation I walked away disappointed. I found myself asking, if I can afford a quality education for my children would I feel satisfied purposefully sending them to a subpar school?
So I was left with option B or C. To move to a better school district we would easily pay $200,000 or more for a new mortgage. To send my child to private school costs $20,000 with prices rising annually. After much debate we chose to send our son to private school. I know many other individuals and couples with high incomes who choose to do the same in my neighborhood.
I think it’s easy for someone who doesn’t earn a lot to say if I earned more I wouldn’t blow it, but I think the equation is not as simple as that. Yes it’s easy not to go on extravagant vacations or buy a new car every year, but when you earn more you will be faced with questions of how to spend the money you earn.
If you value education and you believe your child will not benefit from your local school system then you might be faced with moving to a more expensive district or paying a hefty private school tuition bill. This has nothing to do with “blowing” your money.
ESI recently referenced an email where a reader said “Those who have income levels that are better than most, but still act like suburban robots because of the yearly income are not interesting….No brainer. Hell I do better than that.”
Honestly, I think it’s easy to say what you would or would not do given a specific income, but I don’t think it’s as simple as that. I think that the more money you earn the more likely you are to review your options and make decisions based on a higher income.
This doesn’t mean buying a fancy car or moving to a giant house because you want to fill it full of crap you don’t need. This is about carefully listing and weighing options that those on a lower income might not have.
In a recent podcast Paula Pant said a parent might choose an ivy league college for its networking advantages. I don’t necessarily agree with the advice provided in that particular show, but if you have a high income it can certainly be a consideration. An ivy league university can cost hundreds of thousands more than a public college closer to home and while I would certainly urge my children to attend a state-run school I can see how those with higher incomes would consider more expensive alternatives.
The more money you earn the more opportunities you will find before you. While I’m sure some of those with high incomes “blow” their dough not all those who spend their money are pissing it away. I would bet that there many high wage earners who are simply choosing different routes because they have weighed the importance of those decisions on their future or their child’s future wellbeing. When you earn more you simply have more options to choose from and some of those options cost a pretty penny. That doesn’t mean the money is being frivolously thrown away.