Why You Will Never Be Rich
Does being rich make you happy? That’s the billion-dollar question, but most experts on the matter agree that having certain freedoms and securities that come with having lots of money does indeed improve our feeling of well-being. Psychologist Daniel Kahneman and economist Angus Deaton concluded that once you have an income of over $75,000 a year, you won’t necessarily get happier with even more cash, because it’s the safety net and opportunities afforded to people that really help maintain some level of happiness. A life of penury is often full of fears, set-backs, drudgery, and having to see all the time all the things you can’t have. But then something called the Easterlin paradox tells us while rich folks are happier than poor folks, rich countries are not necessarily happier than poor countries. Today we’ll explore this, in this episode of the Infographics Show, Why You Will Never Be Rich.
So, what are your chances of becoming rich? Before we answer that, we need to know how much money you need to be considered rich. This is obviously relative to every country, but one would think if you have a million dollars in your bank account, you can say you are rich. However, it seems people don’t always think this way. In 2013, a report by investment bank UBS stated that only 28 percent of people with $1-$5 million thought they were rich. Even more surprising was that only three out of five people with more than $5 million thought they were rich. The report focused on assets, not cash in hand. Still, who would have thought with over five million bucks in assets, many people wouldn’t consider themselves rich.
It would be quite confusing to talk about relative wealth in every country, so let’s stick with the United States. There we have the mega-rich, the 563 billionaires, but we also have a lot of just plain old rich. As for millionaires in the country, a World Health report told us there were 4.8 million of them in 2016. Many of those may not consider themselves rich, but many of us would say they are doing pretty well. The U.S. Census Bureau states that median net worth of a 35-year-old in the USA is about $35,000. It goes up with age, and from 55-64 it’s almost $150,000. It peaks at 65-69 at just under $195,000. We couldn’t say these people are rich. Even the top 10 percent might not be considered rich. The Internal Revenue Service reports that the average household income for the top 10 percent of U.S. earners is $295,845. For the top five percent, it’s $350,870. The average for the top one percent is well over one million dollars. For argument’s sake, let us say that if you are in that top five percent you are rich, never mind what you think of yourself.
How hard is it to get into that bracket? It’s actually quite hard, given that money often begets money, and unfortunately breaking out of poverty is no easy task. There is an old saying that goes, “The rich get richer and the poor get poorer.” But what does this mean?
For starters, most people who earn the big money have a university education. As you’ll know from our other money-focused shows, many tech entrepreneurs drop out of university, but most of them grew up in affluent families where they were afforded all kinds of comforts and opportunities poor people are not. In Malcolm Gladwell’s book, “Outliers”, he points out that there are no self-made millionaires. Most people were helped with luck on the way, and often this luck meant supportive parents, good schooling, and having fostered in them that they can do anything they want.
You’ll also know from watching our other shows that there is a direct affect on how much money you have, to how far you go in education. Statistics differ depending on what you read, but it’s thought that around 30 percent of Americans over the age of 25 have a bachelor’s or master’s degree. The Atlantic tells us that more than 70 percent of those that went to the top universities came from America’s wealthiest families. These guys will no doubt have no problems paying off their student debt, if they had student debt. In 2017, Forbes reported that the Class of 2016 had $37,172 in student loan debt. If you are not from a wealthy family, then you are already struggling just when you get going.
So, how do you get rich when you come from meagre beginnings, given that you might have had only a basic education or that your education became a financial albatross around your head. Still, back in 2012, a Gallup poll revealed that 28% of Americans expected to get rich at a time in their lives. That’s positivity for you, but this is a country full of natural born American dreamers. Many will be disappointed, especially if we realize that about 60 percent of American wealth is inherited. That means that those hoping to get into the five percent already have to contend with those already in the five percent. It seems they are not making much headway either. An article in Evonomics tells us that “The rich are getting richer, faster.” At the same time, the poor and middle classes are not going anywhere fast. “Because wealth begets more wealth, it’s a self-perpetuating picture,” said the economics website.
Wealthy households usually hang on to their wealth, whereas less wealthy households face all manner of dilemmas. In 2017, CNBC wrote that the average American family owes $8,377, and that means you’ll be paying off interest on that. Rich folks buy their goods outright for the most part, and so as a poor person you are continually being faced with borrowing fees.
When you are struggling to pay for things outright, you are prey not only to lenders but to the system. Did any of you watch John Oliver on Last Week Tonight when he showed how many Americans actually end up in jail for municipal violations. That’s right, when you can’t pay a parking ticket, things can just pile up. As Time magazine pointed out, when you are wealthy, a violation is no big deal, but when you are poor “tickets can wreck your life.” For not paying immediately, additional fees arrive, and then if you can’t pay the fine you, could be locked up. If you ever need a lawyer and you are poor, you won’t be able to hire yourself someone totally dedicated to you, which is one reason why rich people can get away with things.
We could say the same about medical treatment. If you live hand to mouth and can’t afford insurance, but need medical attention, that bill could ruin your life. Being sick could take all the money you’d saved to send your child to college. Being sick, physically or mentally, could be on the cards given you might not be able to afford nutritious, naturally grown foods for every meal. Poor and sick in America is an endless money pit. One health journal stated that in the USA, 38.2 percent of poor people are in “fair or poor” health, compared to 12.3 percent of the affluent.
One millennial writing about how “screwed” his generation is, wrote in an article featured on Highline, “My rent consumes nearly half my income, I haven’t had a steady job since Pluto was a planet and my savings are dwindling faster than the ice caps the baby boomers melted.” This is a generation that is growing up when all the media is telling them the robots are coming and automation will take all the jobs. If you’re rich, it’s likely you’ll find those niche jobs, or your family will own the company that employs the robots. This is a generation that has around 30 percent more student debt than its parents did, and those are the ones fortunate enough to have gone to college. People born in this generation are also half as likely as their parents ever to own a house.
The American Dream may just be a myth, as money doesn’t always trickle down and swimming upstream isn’t as easy as people may have once thought. Researchers at the University of Illinois found in 2015 that, “The United States is faced with record levels of income inequality and one of the lowest rates of actual social mobility among industrial nations.” It seems for the most part you are what you are born to be, and that means the rich stay rich and most of you will not be part of that club.
Or, do you disagree? Please let us know in the comments why you will be different and why you will definitely be rich! Also, be sure to check out our other video called 10 Surprisingly High Paying Jobs!