General Question

Blackberry's avatar

How do some people make so much money?

Asked by Blackberry (29061 points ) April 18th, 2011

This sounds like a simple question, but I’d just like to have some things clarified. I’m not used to having a lot of money, I know how much I get paid a month, so it’s hard to understand how someone could make literally 10 times as much in the same month.

People that can afford $10,000 a month on a nice apartment in NYC, where are they working? The people that have degrees in very marketable areas like computer science, do they just get hired by some company and receive a huge check every two weeks? Are these jobs that anyone could get with the right degree and experience?

How do raises work for someone that has worked for the same company for 20 years? Is there one huge raise that allows them to go from $50,000 a year to $80,000 a year? Or is it a bunch of small raises over time?

Observing members: 0 Composing members: 0

26 Answers

aprilsimnel's avatar

People that can afford $10,000 a month on a nice apartment in NYC, where are they working?

Usually in finance; investment banks, hedge funds, etc. Or they are the director-level of some type of company. There are certain professions in media and fashion where people can make that kind of money.

How to get those type of jobs? MBA (in finance, at least) + work your way up + toot your own horn + create something/have a great idea + networking with influential people.

mcsnazzy's avatar

These people, the ones who have much money to blow have jobs that are in demand. Often times they work for companies that run huge corporations and they work their way up through promotions. Some are high influencers in the business world, others in finance. It is however important that they have a good education. The world of commerce pays very well but the degree of edication and intelligence that is required is much higher than any normal job. If you have a great education, you can get many jobs and soon you will be making 10, 000 a month as well. About the last question, it could be both. Many people get small raises, ans as they become more experienced in their jobs, they get better and they get a promotion. Other jobs are things in the arts such as singing, or painting that happen to explode with popularity and the person is soon signing with big companies and beign paid hundreds of thousands of dollars.

Neurotic_David's avatar

Building on @aprilsimnel‘s answer, you have to understand that yearly bonuses on Wall St. often average $500,000. If the person is any good as a trader, then they easily make a 7-figure bonus every single year.

It’s a loathsome industry (in my opinion) filled with miserable people doing miserable things, none of which makes them happy. But they do rake in the dough!

CaptainHarley's avatar

Keep in mind that about 10% of the people in ANY profession make about 80% of the money. It probably has to do with three things: focus, intensity, and perseverence.

Response moderated (Off-Topic)
MyNewtBoobs's avatar

They get to a position of power in which they can dictate where the money goes – ie, does it go into the salaries of the everyman, into investing back into the company, or into their own personal wallets? Often, it’s not so much hard work as being born into the right family, inheriting power, and connecting with and impressing the right people who can give them promotions.

dabbler's avatar

To put it in even more startling perspective, that average is misleading too (not inaccurate). the rank and file in Wall St firms might get bonus but way less than their mostly normal salaries. The rest of the bonus pie goes to folks at the top. In statistical jargon the ‘mean’ bonus, the bonus for the person half way down the list, is way less than that average. The useful statistic might the average for the senior executives, which would be orders of magnitude larger at some firms.

jaytkay's avatar

If they didn’t inherit it, the multi-millionaires I have known are extremely focused. They always use people and situations to their advantage. They don’t waste time or effort on anything if there is a more profitable alternative.

They are extremely smart about making money, but not always book smart. Some are, some aren’t.

The wealthiest ones I know either built a company or buy and sell real estate.

The next tier down (who are still rich), are finance executives, lawyers, doctors or in real estate.

Hobbes's avatar

“The wealthiest ones I know either built a company or buy and sell real estate.”

I think it’s telling that the wealthiest people are the ones who don’t produce anything at all.

I think it’s also worth pointing out that money =/= happiness, and that those who “use people and situations to their advantage” tend to actually become much less happy as a result. Even those who aren’t coldly manipulative tend to be so focused on their work and on the accumulation of pieces of green paper that they marginalize and forget about the things that actually matter in life.

JLeslie's avatar

Excluding business owners, just talking “desk” jobs, people who make $200k or more a year usually have masters level degrees, and work really hard at what they do. They are in industries that make large profits and are growing. The don’t just walk out of college and make that money. Some come out with their bachelors, make $30k-$50k getting small raises in general, moving up in a company. After about three years, with some decent history and accomplishments in you work history, if your company isn’t moving you along, you can usually seek out a new job with a different company and get a nice salary boost, around 10%. Then as you move up it will be necessary to get your masters to go higher in the corporation. It used to be companies would pay the tuition, not sure if that still happens. But, it is tough working full time, and going to school.

The other way is to do your masters immediately after your bachelors. Most industries start at $50k I’d say.

One key thing is to have a mentor who helps guide you in your career.

Anyway, once you get to Director level, bonuses get bigger. VP and higher nice salary, nice bonus, many times the company pays for health insurance in full, life insurance, and more. The more you make the more perks you get, it seems a little unfair really.

Some sales jobs are big earners. Wall Street is one, medical equipment sales does well, and there are others.

JLeslie's avatar

Oh, and almost no one goes from $50,000 to $80,000 a year in salary (although a bonus during a good year might be pretty hefty. But, it would not be surprising for someone earning $150,000 to get a new job for $170,000 to make a move, and might get a sign on bonus of $40,000 in the first year.

jaytkay's avatar

@jaytkay The wealthiest ones I know either built a company or buy and sell real estate.

@Hobbes I think it’s telling that the wealthiest people are the ones who don’t produce anything at all

The people who build companies make things happen and employ all us sluggards who aren’t so energetic. I say that earnestly, I am not kidding.

Sometimes the real estate people are just swapping deeds. But they also can be developers, putting up buildings and creating neighborhoods.

augustlan's avatar

The only really wealthy people I’ve known were in real estate investment. The people who are quite comfortable but not really rich often start their career at a decent salary, and change companies several times in the first 10 or so years, moving up at each step along the way.

Keep in mind, too, that salaries and cost of living are relative. A $10,000.00/month apartment in NYC would go for far, far less in another area. The salaries and the cost of living are extremely high in some areas, much lower in others.

DominicX's avatar

As an example, my dad became wealthy through investments (venture capital). That’s not how he started out, of course. He originally worked for a couple smaller companies that were backed by venture capital and became acquainted with venture capitalists and eventually became one himself. And when he invested in things that became big, well, you can guess what happened. I know several people (parents of people I know) who make around the same amount as my dad and they have done essentially the same thing.

I also know another wealthy family whose breadwinner started at the bottom of a computer company (was hired soon after college) and worked his way up to vice president over the years. Of course, being near Silicon Valley, it’s all about computer companies and venture capital here :\

dabbler's avatar

Here’s an interesting average : In 2009 the top twenty-five hedge fund managers made a combined $25 billion. That’s an average of a billion each. What a hedge fund accomplishes, besides leeching resources from the fine hard-working folks being defended fairly above in the thread for making things happen, is hard to identify. After one of the earlier depressions, not ‘29, private equity trusts were made illegal. But somehow now we have hedge funds which function largely the same ways.

Hobbes's avatar

@jaytkay

True, I didn’t mean to say that they don’t do anything, what I meant is that they don’t actually make anything. Also, I’d argue that most high-paid executives didn’t build their company from the ground up. A few did, but the rags-to-riches, by-your-own-bootstraps story is a load of horse crap in my opinion. Or at least it generally only works out for white males.

jaytkay's avatar

@Hobbes

OK, the people I know who created companies didn’t make something like Henry Ford or even Bill Gates. They work in retail and finance.

Yes, they are mostly males. I don’t deny that white males have an inherent advantage in the US.

But I have worked with/for wealthy people of a few ethnicities. Irish-, Greek, Indian-, Lebanese-, African-, Norwegian-, Italian, Croatian-, Korean- and Brazilian- Americans. (those are just the first few I could reel off).

gailcalled's avatar

Here’s how my paternal grandfather went from rags to riches. He arrived in the US at age 18, in 1888, speaking five languages but no English. He went on to sell eye glasses from a goat cart (calling himself Professor Finkel) and then started a used men’s clothing in a store on lower Broadway.

Then in 1894 he and two friends patented this. Gramps had been apprenticed to a locksmith in his little Lithuanian schtetl and had an aptitude for it, it seems.

He and one of the other friends then started the Finkel Umbrella Frame Company in an inexpensive and unprepossing area near the Bronx Whitestone bridge.

After he got rich, he still drank schnaps and ate salami for breakfast, drank beer with my 11-year old cousin Alan and
developed a need to look like Erich von Stroheim. Here

The picture is old but Gramps is in riding jodhpurs, high leather boots, and sitting in the yard of his Victorian mansion in the Bronx with his Russian Wolfhound.
Endless more details if you’re interested (and I can’t imagine why you would be.)

Nullo's avatar

Generally speaking, people are paid according to their importance and value to the company. Coffee-fetchers are paid a pittance because they’re easy to find. Department managers are paid more because they aren’t as common, have more specialized skills, and might be hired away by another company if they aren’t satisfied with their present employer. And so on. Towards the top, it switches from a value-based payment to a “because we can”-based payment.
Universities, especially those with research facilities may pay faculty well in order to keep them around. One researcher that I’ve heard of earns around 600k, but at the same time works the equivalent of about three high-pressure jobs. It’s a wonder that he’s not dead yet, but eh.
Nobody working in a Sam’s Club makes an especially huge amount of money, except for the store manager and those in his immediate proximity. All of the managers receive annual bonuses based on the amount of money that they’ve been able to save in their departments (in the store manager’s case, that’s savings in the store overall, possibly including the individual departments’ savings) – probably relative to the previous year’s expenses.

naivete's avatar

Hard work and lots of school, usually.
In my family, there are a lot of people in the medical field.
I know someone who earns $60,000+ (CAD) a month working as a doctor in urology.
Pretty insane for someone who only supports a wife and one child.

mazingerz88's avatar

This answer could be the most vague but I figured there are only 7 ways for you to legally accumulate great wealth here in America.

1. You inherited it.
2. You won the lottery.
3. You are a highly paid talent. ( think Hollywood celebrities, Wall Street exec, politicians )
4. You founded a great company. ( including church ministry founders )
5. You successfully invested in stocks and other trading instruments.
6. You came up with the next great invention.
7. You married into it.

As for my own chances, I’m learning how to do # 5 since as far as the rest goes, no dice.

CaptainHarley's avatar

@gailcalled

Tried to view your photo, but… “Oops! You don’t have permission to view this photo.”

gailcalled's avatar

@CaptainHarley: If you’re still interested, try this
I believe that I fixed the problem. Sorry

MRSHINYSHOES's avatar

Yes, they do. And the ironic thing is that these same people don’t know how to spend or save it!

Hypocrisy_Central's avatar

People were able to make that much money because they were entrepreneurs. I think was J. D. Rockefeller that said ”You will never be rich working for someone else, you have to be in business for yourself” People want to toss around degree, degree, degree look at those who really make the bucks and many didn’t have degrees, Gates, Jobs, Branson, to name a few. The reason many here in the US will never be rich is because they do not have the audacity to be rich and they buy into the bamboozle kool aid society ladles out to them; get good grades, go to college, get a degree and you will get a good job. A degree is only good enough to tell the person who has the money how much they should pay you. The degree is not money, it is not income. Most believe getting a job (*j*ust *o*ver *b*roke) is how they are going to make their mark? So long as someone else controls your earning capability you are no more than a wage slave trading sweat for dollars, and hoping you don’t have to sweat too much.

Those who are rich and wealthy done so by real estate, and not an agent, owning, buying, developing, etc., they invented something they were able to get patented, they were brokers of real estate or other money streams, including stocks and bonds but they were all working for themselves or pretty close to it. Those guys in the fancy penthouses didn’t do so driving screws on the assembly line. That guy that started Subway did so with one location and grew it into a franchise.

“I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.”
John D. Rockefeller

When you can master that you have won more than half the battle.

Hobbes's avatar

The problem is, going into business for yourself takes a lot of capital and is very risky, so not everyone is in a position to do it, especially people who are already struggling to put food on the table. Furthermore, though making 1% off of other people’s efforts can get you money, you’re not actually creating or contributing anything of value.

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther