September 17, 2018
Many years ago, when I was a student at Emory University, I was an avid reader of Harper’s Magazine, a snooty New York literary and culture magazine that has been around since the 1850’s. I was a big fan of editor Lewis Lapham because of his impeccable vocabulary and acerbic wit. I remember one article that explored the requirements to be a member of the “upper class.” Several ideas were bandied about including money, education, and the variety of cheeses in your fridge. As I recall, there was extra credit for Brie. As a young man, I had the education, the vocabulary, and the Brie. Garnering the money? That would take a while longer. Mr. Lapham had a considerable head start, as his great-grandfather was one of the founders of Texaco. I’m still playing catch-up.
Fast forward to today and defining wealth remains a subjective topic. Charles Schwab sends out an annual survey that assesses, among other things, how Americans feel about wealth. The survey goes out to 1,000 “demographically representative” Americans aged 21 to 75. Somewhat surprisingly, when asked for their personal definition of wealth, two of the top three answers didn’t involve money: living stress-free (28%); and loving relationships with friends and family (17%). About half of the respondents agreed that saving and investing are the ways to achieve wealth over time. Another 40% identified hard work as the key to building wealth. In the short-run, they identified several things that give a feeling of wealth in their everyday lives: spending time with family (62%); having time to myself (55%); owning a home (49%); subscription services like movie/TV and music streaming (33%); having a gym membership or personal trainer (17%).
Just focusing on the dollars, the participants believed it takes $1.4 million on average to feel financially comfortable and $2.4 million to be truly wealthy. There is a fair amount of disparity among age groups with Baby Boomers saying it takes $2.7 million to be truly wealthy vs. Millennials who say it takes $2.0 million. The Millennials are more optimistic with 64% saying they will be wealthy at some point in their lives vs. 22% for the Baby Boomers. This makes sense. With a longer runway and a shorter hurdle, who wouldn’t be more optimistic?
One factor that wasn’t mentioned is luck. In our line of work, we hear lots of stories of how wealth was gained, and occasionally how it was lost. When listening to these stories I’m struck by how often I hear the word luck. Many times, it’s being in the right place at the right time. It may be that someone could afford to take a crazy risk and it paid off. In any case, there seems to be a lot of truth in the old saying, “The harder I work, the luckier I get.” And there’s more to wealth than money.
Now if someone could invent a creamy soft Brie that won’t raise cholesterol levels, that just might be the path to true wealth.