- 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, 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 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 that Headspace is offering 60 days. 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 of 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 of 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 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)

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

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