Comparing Incomes – Location

Compared with other nations, developed countries are the best places to live for anyone who wants an equal opportunity to become successful. Yet some people in these countries like Canada and the US are still upset about income inequality, a lack of proper health care, education, and a poor standard of living for the minority, despite the fact that the same problems exist everywhere else in the world but much worse. I think it’s all relative. People generally compare themselves with their friends, families, and neighbors. Of course they never feel like they make enough, because there will always be someone they know who makes more than them. Maybe they should try comparing their income to the national median instead. The typical Canadian living alone only makes about $30K a year.

img source: cdn.runt-of-the-web.com

I try not to compare my finances with others. But in reality, my quality of life depends on the wealth of others around me. The reason I don’t feel rich is because I live in one of the most unaffordable cities in North America. In the 4 years that I’ve been saving and investing, I have built up a net worth around $100K. By the time I’m 30 years old I plan to reach $400K. The average household net worth here is over half a million dollars. So $400K wont buy me a lot here. Once I pay off my mortgage, I will have enough money left over to maybe provide 10 years of living expenses for myself.

But what if I moved to Florida, and had the same $400K. Well I can get a 2 bedroom condo with similar amenities as my current home, and similar strata fees (HOA) for just $100K. Since I won’t have a mortgage, my yearly expenses should be below $15K. This is because my total living expenses now, minus my current mortgage is below $15K a year. Plus isn’t everything in the US cheaper? Which means I can invest my remaining $300K into inflation protected securities (i bonds perhaps) which will take me 20 years to use up.

Even better, I can take my $400K and move to somewhere like Mexico or China where the average salary is less than half of what the average Canadian or American makes. I can go for 30 years or more without running out of money. Of course I can always go broke buying luxuries, anywhere in the world, but as for basic living expenses, the less fortunate people are around me, the richer I will feel. That’s why we’re lead to compare our lives to others, not just other people, but other people in our immediate surroundings. Sounds kind of shallow and narcissistic but is this just a part of human nature?

Macleans has an income comparison calculator.
If you’re making more than $30K then you’re probably already making more than most Canadians. What I plan to do one day is move to a smaller city when I retire, where my money can go further. In short, want to feel rich? Don’t live in expensive places.