The not-so-secret life of billionaires

I got a kick out of Kevin Roose’s feature in the New York Times on “Living Like a Billionaire, if Only For a Day.” The idea is that he would fly on a private jet, visit various private clubs, be chauffeured around and wear a nice watch. As he notes, we are “obsessed with the lives of the ultrarich.”

Obsessed we may be, but I think we also have a lot of misconceptions about the lives of high-net worth individuals. I was reminded of this during the Super Bowl commercials about some $1 million giveaway, that featured people jumping in what seemed like a pool of gold. The average millionaire in this country is quite likely to be a 60-something person with a professional job who’s saved and invested his whole life. Judging by my reader demographics, let’s say your parents or your parents’ friends. Do they have gold in their bathtubs? Probably not.

Obviously, $1 billion is a different matter. But again, we often get bad impressions. Roose dresses up in a smashing suit…to find his partner on the private jet is in casual clothes. Awkward!

The part of Roose’s piece I found most believable, though, from interviews I’ve done of high-net worth individuals is this: “One thing I’ve noticed so far is that when you’re a billionaire, you’re never alone.” There’s also the maddening, and corresponding, matter of time poverty. Here’s how this happens.

A billion dollars has to be well cared for. You can’t just go deposit it in the local Citibank. You’ll need private banking services. But even if you try to outsource most of the official money management to an existing firm, you’ll want your own people to keep an eye on it. You don’t want to wind up like Bernie Madoff’s victims! So you get your own lawyer and accountant at least, probably on payroll since it’s most efficient.

But that means you have a payroll, and you’re managing that. You outsource that to a manager, but that’s another person who’s around.

The same thing happens in your personal life. You get a couple of residences, because why not? You’re worth north of $1 billion, it’s not like having a $10 million California beach house and a $15 million penthouse in Manhattan and a ski chalet in Vail makes a big dent in your net worth. You like to ski! But someone has to manage these various properties. So then you have caretakers and landscapers and maids and so forth on the payroll. Decisions must be made. Your business or household manager can handle a lot of this, but occasionally you get involved (“really? I didn’t know my company was having an event for all the VPs at my ski place…”) So there are people around you, asking questions.

Even in your family life this happens. Let’s say our billionaire has school-aged kids around. Even if the primary parent in this family really wants to “raise her kids herself,” something will happen like one kid wants to go to lacrosse practice at the same time another has swim lessons. Is she going to say no because she can’t drive them both at the same time? Doubtful. So then there are other caregivers driving people around, helping out with bedtimes while our billionaire is traveling. When he comes home, his impression is that there’s always people at the main house too.

So there’s always something to manage, and since even the mightiest among us has no more than 24 hours a day, there’s always a sense of being short on time. That’s why, when Roose visits the $13,000/year gym, this scene happens: “Let’s go, champ,” Mr. Sitaras said, after I suit up leisurely in the locker room. “No wasted time in here.”

No wasted time. Because time is money, and if you’re worth $1 billion, time is worth a lot of money. But you can see how these various stresses — while nice to have — might contribute to the finding that moment-by-moment happiness doesn’t rise past an income of $75,000. Overall life satisfaction, yes. One can imagine our billionaire is very proud of the life and the institutions he’s built. But right now he’s mad that his workout session has run a little long because he’s got a plane to catch to go visit those VPs at his place in Vail.

(photo courtesy flickr user miggslives)

10 thoughts on “The not-so-secret life of billionaires

  1. It is very expensive to be rich…. for example if you win the lottery at least half goes to taxes.. my overpriced accountant actually sends out an email at lottery time saying hey this is all you’d need if you did win… and it is also very expensive to try to build wealth for example as a business owner which is why so many small business owners take issue with romney’s 15% tax bracket… he does probably pay a lot in accounting to get it… which is ridiculous as are obama’s increase in audits of small business owners… is it really a good use of government’s time to ask a small business owner to spend $10,000 when they don’t have an accountant on staff so the IRS can ask for $2500 more in taxes… hell no but it happens all the time… you can hire a travel nanny… but then you’d have to manage them which isn’t necessarily easier than leaving the kids home with grandma or daddy while you travel.. more emotionally painful to do it the poor man’s way but not necessarily easier to do it the imagined rich man’s way either… 1% of women owned businesses in the us sell more than $1 million so usually it is like women thinking about jesus.. the idea is that it is a man’s thing this being rich or righteous and we do need to change that… as god and wealth shouldn’t be just for men!

    1. @Cara- quite an insight: “it is very expensive to be rich.” Just think — will your plumber ever cut you a deal?

  2. Great insight to remind us all of how valuable time is… No matter how rich one becomes, you can’t pay someone else to workout for you…

  3. Maybe this isn’t what you intended, but it comes across as somehow we should be *pitying* the “poor billionaire” who has all this work to do to manage his/her expensive lifestyle. I can’t seem to summon that pity.

  4. I think somehow I would manage.

    Also… Despite the explanation here, I’m not really getting a correlation = causation thing going here. Someone with a billion dollars could live a perfectly calm life taking that billion dollars, putting it in US treasuries, living on the interest and not worrying about optimizing and maximizing anything.

    They choose to do all the things that require all the management. And that probably has something to do with how they got the money in the first place.

    1. @NicoleandMaggie- yes, I’m sure we’d all manage. And we wouldn’t refuse the money if it came to us. But my point was more that, no matter how much money you have, you still have to resist the temptation to fill your life and time with stuff if you want to have a calm life. And I imagine the temptation is harder when you have the means to bring a lot of things into your life. And sometimes bringing stuff into your life isn’t bad — think about the Bill & Melinda Gates Foundation, for instance. I’m sure being the chair of that is time consuming, but is probably more worthwhile than letting the money sit there.

  5. Like other commenters have mentioned, this is about choices. I know a couple, who are not billionnaires, not sure about the definition of ultrarich, but thet are certainly high net worth individuals. They both hold demanding, (and rewarding) high-paying corporate jobs and have had some additional income sources. They have only one full time “staff”, a non-live-in nanny. While both of their children are in middle school, they continue to pay her a full time salary even though they know it means she spends most of those hours in their empty home watching TV. It provides them with the security of having someone available for the occasional sick day, late arrival or even an overnight stay. They own a far-away vacation home in a very upscale community that has services for non-resident owners. The wife very carefully uses her time on her core competencies only – being excellent at her job and being a thoughtful, involved parent. Everything they own is high quality but they do not have more than they need. Not surprisingly, she maintains an ideal weight, dresses impeccably, her house is immaculate, and all members of the family seem very content. She does not need to read a blog or any other self help material to “learn” any of these practices. She was fortunate enough to inherit this way of life either through nature or nurture (probably both) and makes it all look very easy. They use the money as a tool to do the things they want to do and do not let is add clutter of any sort. I have been witness to her focus and common sense for many years. I wish that I had paid closer attention and learned some of her ways sooner.

  6. Tell you what, I’ll take the time-stress-people management headaches of a billionaire over a poor working stiff any day!

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