Do You Make a Lot of Money? Or Do You Just Think You Do?

This week I’m featuring guest posts from some of my best blogging friends while I take a small blogcation. Don’t run away - these are awesome posts from talented bloggers! Today’s post is from Bridget at Money After Graduation. She has recently adjusted her spending habits to live with a little, but is still seeking someone to proofread her blog post for times when she types “alot” instead of “a lot.”

(image source:

“A lot” is a relative term, it depends on a frame of reference for comparison. It is not to be confused with “Alot,” which is both a grammatical error I frequently make and the mythical beast pictured above.

What constitutes “a lot of money” depends on:

how much money you already have

how much money you need


your ability to reconcile your behaviour with basic math

Sometimes it’s easy to think you have a lot of money if you have a large amount saved or invested in assets. But the reality is that even if you own a million-dollar house, if your salary is only $20K you can’t live a million-dollar lifestyle.

It’s an even bigger problem if you are already trying to live a million-dollar lifestyle on a thousand- (or even hundred-) dollar income. However, there’s some forgiveness to be had here since cost of living is as much dictated by geography as your penchant for luxury goods. There’s a significant cost difference when you compare living in a small town to trying to claim some apartment space in an overcrowded city. Nevertheless, it’s easy to get swept up in what we “need” to buy even when we can’t afford it.

When it comes to debt, it’s easy to be accusatory and insist people were living beyond their means on purpose. But when some indebted people say “I just don’t know how this happened”, I kind of believe them. When people think they have or make more than they do, or when they don’t have a solid grasp of what’s an appropriate cost for a certain service or material good, they will spend accordingly.

From my own calculations, I only take home about 60% of my paycheque and the rest goes to things like income taxes, union dues and mandatory employer retirement plans. I did the math because I knew, deep down in my heart of hearts that I was spending like I made my gross income and not my net, and if I didn’t immediately change my behaviour, I was going to find myself in debt again and fast.

I think it’s pretty easy to think you make a lot of money, and much harder to actually make a lot of money.

So what can you do? Figure out how much you actually have and how much you actually make. This means taking stock of how much money is accessible to you, and how much is left over after other taxes and deductions from your regular pay. When it comes to finding how much you actually need, be realistic: you need a place to live, but you don’t need a 4,000 sq ft home with granite counter tops and an indoor pool. Keep track of what you spend and inform yourself so you can find the lowest price, especially on regular costs that can vary tremendously like car insurance or cellphone plans. Lastly, accept that when it comes to your income, you actually make less than you make. Figure out how much of your paycheque is actually yours after taxes and deductions, and adjust your behaviour to fit those numbers.

After all, it’s better to be happy with a little, then to spend your time trying to have Alot.

Every time you read one of these posts, a unicorn is born:

  1. How I Got Interested in Personal Finance


Do You Make a Lot of Money? Or Do You Just Think You Do?11 Comments

  1. Right now I take home about 65-70% of my gross pay. My budget is calculated on taking home about 60% so I have a little leeway when it comes to extra money. Helps with increasing the savings account. A friend of mine made the suggestion a while back to act like I don't get raises. I have done this for about a year now, my budget doesn't increase everytime I get a raise, I keep it the same, my expenses stay the same but the amount of money I bring home increases. I don't have to keep up with the Jones'. I'm used to living off of a certain income so there is no reason to adjust the budget when my income increases. Almost like an automatic savings account.

    • oh that's a good idea! Maybe I should plan with even less, because right now I'm maxing out my reduced take home pay and it gets pretty sparse by the end of the month =

  2. When I got my full-time job after finishing college, I thought I was rich. But, I quickly learned that paycheck doesn't go as far as you think. I didn't make dumb choices at this stage, luckily, but I always try to let others know to temper their expectations on how far that $50k salary will get them.

  3. I agree 100% when you say;
    Sometimes it’s easy to think you have a lot of money if you have a large amount saved or invested in assets. But the reality is that even if you own a million-dollar house, if your salary is only $20K you can’t live a million-dollar lifestyle.

    You know I post my numbers but I've never thought of myself having alot of money where someone who has a lot less would think this. I don't live in a million dollar home nor do I spend like I live in a $300,000 home. It's all about how much money you earn and how you are spending it. You know when you overhear people say , oh look at Jack our neighbour, he has a boat, cottage, 3 cars, pool and a hot tub he must be loaded. Loaded on credit card debt, line of credit maybe, who know's. Some people try to live that million dollar lifestyle on credit and it will bite them in the end.
    Great Post as always!

  4. Bridget, I completely agree with you. I think it's a good idea to always spend less than you make. An important lesson I learned from my parents. Even when they would go through hard times, they always had enough because they saved and were frugal when they had more money.

  5. Right now, I am saving about 70% of my biweekly paycheques! I've only been doing this for about 2 months and although its tight at times, it seems to be working. My goal is to be dedt free in a year (by next spring).

    Check out my latest post:…

  6. Yep! We were under the illusion that my 2nd "Steady" income was helping us when his income "fluctuated" but in reality every month I brought less than $100.00 after taxes, daycare, gas, extra food/prepackaged foods when I was too tired, and the time away from our kids. I broke the illusion, and although things are unstable again, my husband rededicated himself to not wait until he's asked for work - he ASKS for work.

    • It is very important to look at the "costs" involved in that second, third income, etc. Sometimes, having to pay for daycare, extra gas, second car, food on the go, appropriate work clothing, etc. can end up costing you MORE than the second job brings in. Not to mention if it throws you into a different tax bracket, it is a double whammy on the income.

  7. I'm part of a single income family and I just took a look at my husbands pay stub the other day and was flabbergasted at how much the deductions totaled. It came out to be like 40%. Then subtract all the bills…I'm still in shock

  8. I take home about 60% of my take home after taxes, benefits and commuting that comes out… We then auto-invest 35% of the take home and live off of the rest. It usually ends up with us living off of about 30% of gross or 65% of take home. We're pretty extreme for sure, but we live a very nice life and would like to retire (or semi-retire) young. Plus we are fortunate to have a good work ethic and attitude that leads to some pretty decent paychecks and don't know how long that will last (the paychecks, not the attitude, haha! I'll never be a jerk.)

    But we're savers by nature. Very, very fortunately so. Love the post.

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