Not Rich Yet | Managing higher incomes

CAT | Uncategorized

There is an article on the New York Times online, telling stories of people who have posted their net worth on blogs and in particular on NetworthIQ.

Here are some interesting excerpts from the article:

The net-worth number, as Kincer found, is more appealing when you have someone else’s to compare it with. We tend to have an intense curiosity about our neighbors and friends, especially those who seem to earn about what we do but spend a lot more. Do they skimp on retirement savings or their children’s college funds? Are they not burdened by student loans? Do they have a trust fund? Have they simply maxed out every credit card they can get their hands on? There’s no way to answer these questions without seeing a breakdown of net worth.

So it should come as no great surprise that the curious are turning up at NetworthIQ to see what other people’s money really looks like. “This was our way of making money a little more social,” said Todd Kalhar, one of the founding executive partners at NetworthIQ, which is now part of Strands, an online-media company whosemoneyStrands site competes with Mint. “People had been talking about stocks forever. We wanted to add a bit more context. The guy talking about stocks might have been bankrupt 10 times.”

And …

Grant often wonders about the people who are far ahead of her in the NetworthIQ standings. Did they get lucky? Are they lottery winners? Or did they get smart about money before she did? She tries not to beat herself up over it. “For people with the same income as me but higher net worth, it tells me that I can get there, too. It just takes discipline,” she says. “I know it has only been a couple of months now, but I kind of feel like I’ve made a life change.”

She admits that some of her pleasure is fueled as much by competition as self-satisfaction. “I’m not that far off from the person right above me” on the NetworthIQ list, she says. “I can probably catch them this month. And maybe next month I can get to the next one.”

That attitude is familiar to Michael McBride, an economics professor at the University of California, Irvine. “We crave information, not just to outdo others but to know how we ourselves are doing,” says McBride, who has studied how people’s well-being is affected when they compare their incomes against those of others. “When I pass out tests, the first thing students want to know is what the mean was. They don’t know how to interpret their score unless they know how well others did.”

That attitude is familiar to Michael McBride, an economics professor at the University of California, Irvine. “We crave information, not just to outdo others but to know how we ourselves are doing,” says McBride, who has studied how people’s well-being is affected when they compare their incomes against those of others. “When I pass out tests, the first thing students want to know is what the mean was. They don’t know how to interpret their score unless they know how well others did.”

I have been a NetworthIQ user for 3-4 years now, but keep a private profile. That means I track my networth but no-one else can see it. I do however enjoy reading other peoples profiles and following their net worth evolution for the very reasons described in the article.

How do you feel about going open kimono and revealing your finances – either anonymously or with your real name?

No tags

May/10

2

Motivation for this blog

I have been an active reader and commenter on various personal finance blog for several years now.

However, I always felt that the topics discussed on those blogs typically missed the issues that my wife and I wrestle with given our somewhat higher-than-average incomes.

We aren’t interested in making our own laundry detergent or clipping coupons to save a few $ here and there, instead we want to move the needle in a much more meaningful way by optimizing the way we manage our income.

Lacking other useful sites to discuss these issues, I decided to start a blog to share what I have learned the hard way and explore new issues with you as they emerge.

I suspect this blog will appeal most to individuals with professional or entrepreneurial backgrounds (doctors, lawyers, bankers etc.), who make enough money to one day really regret mistakes they make now, but are too early on in their careers to have amassed a fortune that would justify the attention of private wealth managers and other professionals.

However, I hope the blog will also have a broader appeal than just the sweet-spot described above, and provide helpful insights for a broader population.

No tags

Copyright © 2010 by NotRichYet.com
All rights reserved

Theme modified from jQ 2.5 by Devolux