Do you know where you stand?

Sometimes, to motivate you to improve your life, you need to compare yourself to others. This gives you some perspective. Gives you something to aim for… I want to be as rich as Bill Gates, and I want to be as good of an investor as Warren Buffet.

Fat chance.

Dreaming about what you would do if you were Warren Buffett, Bill Gates, etc., isn’t going to help you. In Fact, it is probably not very healthy to do so. But where you can get some perspective and motivation is to look to your peers. Ok. That may also be hard as many people don’t like divulging their personal incomes and financial situation, sometimes not even to their partners.

Which by the way, would solve a lot of issues. It would probably solve the gender pay gap. If everyone knew exactly what everyone else at a job was earning, then it would be obvious who is being paid fairly, and who is eating all the free lunch.

Anyway, the best way to compare where you stand is to look at statistical data. Here in NZ, the average household income is $107,000 per year.

Let’s go back to school for a bit. The average, or in school the mean, is the sum of all the items divided by the number of items.  When you think about this, it is not a good measure to compare to. Say you take the average income of several people. Let’s say Gareth earns 1 million, your neighbour Steve earns 70k, and Sally down the road earns 100k. You earn 44k. The average of the four of you is $303,500, but nobody earns anything like that.

So the average is not a good measure. That is why income statistics are normally given in medians. From the above example, the median is $85,000. That is much closer to what the group earns.

The median income in NZ is $48,000 per year. And the median household income for 2017 is $85,000.

So where do you sit?

If the typical Kiwi household earns $85,000, then I figure if we earn more than this we should be saving and investing all the excess. Given that the majority of Kiwi households get by on $85k. But do we do this?

Our household income is slightly north of the median at $130,000, so there should be at least $45k invested and saved. 

What are my numbers?

Last year was before I really started to take growing my passive income seriously. But we still managed to save and invest $75k. Albeit, the majority of the saved money when to pay the mortgage. Leaving us a $55k in expenses, which in my opinion is still too much. For 2018 I hope to change this and really ramp up the savings.

What I am really ranting on about is that sometimes you can measure up where you are against the masses. It can give you a good feeling, or it can make you work harder. Either way, you need to know that the masses are not trying to save and grow a passive income. So you need to act differently to them.

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