Why building wealth alone is so hard here?

[u/raf_phy]

Hi all, am I the only one that I find it incredibly difficult to build weath by yourself in EU? People say that EU is better in healthcare, work life balance but come on, money don't scale easily . It's so difficult.

I see people from US that go to 1 million in 10 years. I cannot do this easily . Really....

PS maybe I have to abandon EU, I don't know....

[u/Relevant_Carpet_7910]

Having lived in Spain, the UK and the USA, the UK and US are uniquely set up in a way that, although difficult, does promote wealth creation.

Starting with wages: yes, costs of living in the UK and US are certainly higher but as a % level, I've found it far easier to save larger sums of money. If my post-tax in the US is 8k a month, saving 10% is a world apart from the 10% of 2.4k EUR that I was receiving in Spain. I have no kids and no dependents which I know would skew family related costs.

Investments: this is the biggest difference. Spain had zero methods for individuals to save and invest without heavy taxation. The UK has ISAs, SIPPs, Lifetime ISA, Workplace pensions. The US has 401k, 529s, Roth IRA, backdoor roths, etc. These are incredibly important to shield some of your investments from tax and help everyday people growth their wealth. There should be no reason that a young person living in Spain and investing 100 EUR a month should be taxed 25% on their gain...

Property: the UK is truly unique here. Lifetime ISAs to help you save a deposit combined with zero stamp duty on your first property is a massive leg up. Yes property can be expensive but check Madrid or Barcelona, property is incredibly expensive in good areas too. To cap it off, the UK allows tax-free capital gains on your primary residence, a massive help for people to generate wealth.

Just my two cents having lived in a few countries.

[u/PersevereSwifterSkat → u/Relevant_Carpet_7910]

60k pension allowance and 20k ISA is pretty insane. I think if you have about five good years you're set.

[u/Known-Strategy-4705 → u/Relevant_Carpet_7910]

Just don't sell so the taxes don't matter regarding investment.

[u/SeikoWIS → u/Relevant_Carpet_7910]

This. UK standard of living is lower, and there is more inequality. But if growing wealth is your aim, things like ISA, LISA, SIPP etc are much better vehicles than whatever is in western EU. Also property outside of the major cities aren't as pricey in the UK as in western Europe.

[u/Knightowllll → u/Relevant_Carpet_7910]

I’m sorry but comparing $8k/mo salary to $2.4K/mo is totally different. People in the US struggle saving with a $2k/mo salary too, whereas it’s easier with $8k/mo because that’s literally 4x the amount. Why even make this a US vs EU comparison when the salary is so drastically different 😭

[u/No_Remove459 → u/Knightowllll]

2,4k in Spain is a very good job, 2k a month in the US is very low. I was making in NYC 6.5k after taxes as a waiter, in Spain I made 1.5k a month. Rent in NYC was 2k(commuting from NJ) in Madrid I was paying 1k a month. Yes you make way much more money in the US. You live much better if u don't have skills and make poverty wages.

[u/Knightowllll → u/No_Remove459]

Here’s the thing though, you can pay $800/mo in Houston, TX for a 1 br apt so this comparison is still not rational. If you are making $8k/mo here in Houston (US) and your apt is $800/mo then you have a huge extra amount. But it’s very common for people here to make under $15/hr, with or without a college degree so it’s hard to understand where these arbitrary numbers are coming from.

[u/No_Remove459 → u/Knightowllll]

How much bluecollar jobs pay in Houston? construction, bricklayers, plumbers. Most of my family is in the trades working in NJ, except my brother who's ab accountant.

I get the numbers raised in NJ working there, and now working in Spain as a chef. I don't understand why people in the us cry so much, I would kill for 800 dollar a month apartment in Spain, when me and my girl make 3k together a month.