12/2/2011 12:38 PM ET|
What the 1% know about money
The very rich may indeed be different from you and me, if we lack some fundamental understanding of money and how to manage it. Here's what we can learn from them.
Making sweeping generalizations about any group of people is tricky. The poor aren't all alike. Neither are the rich.
But there is a set of attitudes, assumptions and values that seems to be more prevalent among the wealthiest families than among the general population. I turned to some experts who specialize in advising the rich, including one who's an heiress, for some insights on what high-net-worth people know about money.
Again, these ideas aren't the exclusive property of the rich; nor are they universally held among the 1% families that hold about 40% of our nation's wealth. But they can provide some food for thought for the rest of us to chew on.
Education is important
Many Americans question the value of a college education. The wealthy typically don't. (Read "Should your kid skip college?")
"They not only have their kids go to college, but they want them to go to the elite schools," said Linda Davis Taylor, the CEO of Clifford Swan Investment Counsel, a Pasadena, Calif., wealth advisory firm. "They want their kids to maintain the social and culture position that these families have worked so hard to achieve. . . . They want that continued access to power and influence."
(Taylor has particular insight into this phenomenon: She's the chairwoman of the board of Scripps College in Claremont, Calif., and before she joined Clifford Swan she was the dean of admissions at Claremont McKenna College. She has also worked for Amherst College in Massachusetts and Emory University in the Atlanta area.)
There are exceptions, of course. Myra Salzer, who runs the Wealth Conservancy in Boulder, Colo., said some of her clients include wealthy Texas ranching families that value business acumen and hands-on know-how over formal degrees. The black sheep of another family she knows is a surgeon; he's disdained because he chose medicine over participating in the family business.
Still, the exceptions more than prove the rule.
"There are some (wealthy) families that don't value education, but that is really rare," said therapist Thayer Willis, the author of "The Dark Side of Wealth" and an heir to the Georgia-Pacific fortune. "It's really considered to be one of those things that you do."
What can the rest of us learn from this? You may not be able to get your kids into Harvard, but make sure they get at least some post-secondary education. Well-paying jobs that don't require college degrees are fast disappearing, and the unemployment rate for those with only a high school diploma is twice that of those who have a college degree. Economists tell us that a college degree will be all but essential for those who hope to remain in the middle class, let alone advance economically.
Rich is relative
Elsewhere in the top 1%, there's actually a fairly wide variation in wealth. About 1.4 million households qualified as the top 1% of taxpayers, according to 2009 Internal Revenue Service statistics, the latest available. The minimum adjusted gross income needed to qualify was $343,927, while the average income of the top 1% was just under $1 million.
But even people with million-dollar annual incomes and multimillion-dollar net worths don't necessarily define themselves as wealthy.
"If you ask them 'Are you rich?' or 'Are you filthy rich?' they don't think that they are," Salzer said. "They can always point to someone who is richer than they are."
What can the rest of us learn from this? Perspective. As humans, we tend to compare ourselves with those who are better off -- even if many, many people are far worse off. Folks at the bottom of the economic ladder in the U.S. are wealthier than most people in developing nations where access to clean water or sufficient food aren't givens. According to the World Bank Development Group, 85% of the world's population has an income of less than $2,200 a year. If you want to see where you stand vis-à-vis the rest of the world, check out the Global Rich List.
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You poor mistreated fool. You think making it in this world is all luck? I believe that you make your own luck. You make your own success. You get knocked down and YOU pick YOURSELF up. When did it become necessary for Govt to make everything happen for you. Quit crying and fend for yourself. Knowbody said that success in anything was easy. Just grow a pair and try. if it doesn't work the 1st time then try it again, and again, and again. Instead of occupying Wall Street, try occupying some self worth.
If someone got to the 1% or better honestly, legally, without special access (like politicians), and by treating their employees (if any) decent then we should applaud them. The occupy people should also make this clear lest they be associated with communism.
People are fed up with corruption, cronyism, favoritism by governement and a government that does not represent or protect the interests middle class in any way shape or form.
And I agree, it's really the 0.001% we are talking about (and the filthy politicians that aspire to the 0.001%).
If you watched 60 mins last night you would have seen that despite the wall street debacle and the following 7 TRILLION DOLLAR bailout, there has not been ONE federal case brought against any CEO despite truckloads of evidence and the Sorbanes Oxley legislation specifically implemented to prevent fraud. What does this tell you about our government!
Other than your use of the word stupid I was overjoyed to hear what you had to say and loved how you summed it up , "Now, you want the real secret to getting rich? It's simple. Spend less than you make. the end...".
I may have added work hard, invest at least 10% of what you make, make everything last for as long as possible, hang with successful or aspiring people, and last but not least don't expect a free lunch from anybody. Not to mention, always vote for small government!
I think 8 tracks faded a bit quicker than you remember???
The wealth/happiness thing: why does it not occur to anyone that it may be happy people "get" wealth more than unhappy people? All these articles refer to happiness and money like one happens AFTER the other. It could be that these people are more "happy" in their lives and success comes to them b/c of the way they approach life. And the people who are miserable and poor approach life as such and sort of secure their failure.
It's not that people sit around unhappy, get rich, and are then happy.
That’s where the 1% rich differ. They put a lot of emphasis on learning what to do with their money once they have it – investments, properties, etc. They put it back into things that will just make them more money!
There is no real trick to increasing your wealth. Live within your means. Take a portion of what you earn, forego the flat screen TV, and invest is something that will appreciate rather than depreciate, This is nothing that anyone in the 99% can't learn to do, perhaps on a smaller scale, but to their financial benefit nonetheless.
Educate yourself, get advice, teach your kids. Sounds pretty basic to me. Nothing illegal about any of it. Now there's a concept; rich people got rich by being smart. You'd think that would inspire people to at least finish high school, but no, the rich obviously got that way by stealing from the poor. Geez, get real.
The only thing I would add to this article is "live within your means." As Shakespeare put it: Neither a lender nor a borrower be.
Dear Mr. Market Shill,
I think you need to do a little bit more reading and research before you make comments like "Most of the Rich did NOT EARN their wealth." If you actually looked at the numbers and statistics you would actually find that the majority of millionares in this country are FIRST GENERATION. They did not inherit their wealth, they worked hard, invented something, or invested wisely to EARN their wealth. Most also understand the concept of budgeting and not spending outside of their means which many Americans seem to simply not understand. Debt does not equal wealth. Don't be angry, envious, and/or bitter if you are not there with them but instead think like a rich person and become one.
Most of what you said was valid. One statement was simply stupid. you said the standard of living has not increased for the American worker for 30 years. Beyond Stupid! 30 years ago who had a cell phone? A computer? I mean come on! Microwaves and central air weren't in half the homes. FM radio was a new thing still. 8-track tapes were still common 30 years ago. For the average American, the standard of living improved more in the last 30 years than in all of American history before these last 30 years. Anyone that says otherwise is either insane or a liar. Can't even remotely compare the standard of living then to now. But it costs more to live IF you have all the toys.
Now, you want the real secret to getting rich? It's simple. Spend less than you make. the end. Politicians are the same as they have been throughout history. It isn't their fault. YOU elected them. wanna see the problem with America? Are you in debt? Then look in the mirror.
There is an old saying, "Turning $100,000 into $1,000,000 is a lot of hard work, turning $100 million into $200 million is inevitable." There is a lot to read into that.
Ultimately its not the 10% or the 1% that deserve close scrutiny, its the 0.1 or even 0.01%. These are not folks that would even bother to talk to the author of this article. They are the few hundreds of people that buy and sell congresscritters and have their minions write laws to favor them. These are not Horatio Alger bootstrap stories, their wealth was provided overwhelmingly by connections, ancestral or not.
They are the reason that for 30 years the American worker has failed to increase their standard of living, the housing bubble tanked the global economy, and we offer our coming generations less of a future than any time previous in our history.
These folks are not to be admired for these "accomplishments."
Abraham Lincoln said it well, in his address to Congress, 150 years ago today:
It is the effect to place capital on an equal footing with, if not above, labor, in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them, and drive them to it without their consent. Having proceeded thus far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.
“Now, there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.
“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights."
When America gets back to the footing we lost with respect for labor, and past the looting of the nation by an entrenched, undeserving aristocracy, lets have that discussion of admirable traits again. Abraham Lincoln was admirable. Paris Hilton, Jack Welch, and the Koch Brothers, not so much.
A few years ago I came into a lot of money and because of the type of person that I am, I helped everyone and everyone helped themselves to me. Today I have very little disposable money left, none of the people that I helped are with me today either; however, I am not poor by any means. I get 2 incomes, have made sure I had no debt except for my house payment and with adequate health care, and am healthy, I still contribute to my charity, help my neighbors, help my family and at the end of the month I still have a little left over. I am blessed and I am richer by far than those who took from me, because God never sleeps, and he keeps me going. I am never in need at the end of the month and there I go again, helping someone else. I will never be rich as in money in this life, but I am far from poor.
I'm a 1 %er, maybe even .05 %er. I've read through these comments and most are way off base. I didn't attend Harvard, Yale or even an Ivy League school. I didn't inherit money and actually grew up poor in a trailer park in VA. My mother didn't graduate HS and my father was in the military as an enlisted man. I am a saver. There are plenty of people making 100k but spending 120K. I have a modest house, a Kia that's paid off and no real toys. I pay an **** load in taxes and charities. I employ over 500 employees and pay them what the market has set for the different occupations. Education and hard work are the keys to success for anyone. Luck does play a part and has played a part for me. I'm lucky that I was born in the US, that I had a good family, my parents believed in true education, and that I met my wife.(Divorce will definitely cost you.)
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