The super rich are both similar and different than you and me. Of course they have more money, but the super rich also have problems. Find out what matters to the super rich, their worries and money strategies that you can implement to build your wealth.
The Super Rich Have Problems Too
“The most important thing for everyone to understand is that no matter how much money you have you cannot buy yourself out of the human condition. And that is that we’re all going to die.” ~Robert Kenny, EdD in Town and Country Magazine
Over the years I’ve know some very wealthy folks. Family friends lived on the same island as Gloria Estefan. Jason, a pal I grew up with had a dad who owned a trucking company, lived in a big mansion with full time help, and had lots of cool stuff. Jason’s sister even had a Coach purse in high school! My dad’s best friend died with an estate of more than $10 million. (Back in the 1980’s that was a lot of money!) My husband’s college room-mate was CEO of a fortune 500 firm. You know, the type of company that pays millions of dollars in salary and stock options annually. Now that is really “do anything you want” kind of cash. Those folks aren’t wondering how to pay the mortgage or considering whether to buy a tablet or a netbook.
I never really thought about lives of the uber-rich until I read an article several years back from the Monitor on Psychology. The article cited a study by Robert Kenny, EdD at the Boston College Center on Wealth and Philanthropy and surveyed people worth $25 million or more. Interestingly, Kenny transitioned from academia and is now a senior vice president and financial advisor at RBC Wealth Management. The subjects in the wealth study were asked several questions:
“What is the greatest aspiration for your life?
What’s your greatest aspiration for your children?
What’s your greatest aspiration for the world?
After each question, the subjects were asked how their money helps or hinders their aspirations.”
What the Super Rich Value
The uber wealthy’s greatest aspiration in life is: “To be a good parent.“ How different is this aspiration than the hopes of the average parent? I don’t know about you, but my greatest aspiration is to be a good Mom as well. And my net worth is not in the $25 million range!
In the interviews with the big time rich people, there were many ways they worried that their money got in the way of being a good parent. For example, they were concerned that their kids wouldn’t know if people liked them for their money or themselves, they worried that the kids wouldn’t have internal motivation to succeed, and they worried about their kids ability to lead meaningful lives. There was also discussion about the access to cash leading to drug abuse and acting out.
These wealthy folks not only worried about their own children, but about the children of world in general.
Although the super rich appreciated the opportunity to build something and amass large sums of money, this situation brought its own stressors. The freedom from financial worries provides the opportunity to do whatever you want, and raises the eternal question as well; “What is the best use of my time?”
Have you ever wondered about the best use of your time? What about the desire to be a great parent? So, far, there are some similarities between the worries of the super rich and those of an ordinary parent.
Granted, most of us lack the financial freedom to buy whatever we want but no amount of money can buy freedom from problems. I’m fascinated when popular celebrities get divorced, overdose on drugs, commit suicide, and experience the problems of day to day living. Their fame and wealth doesn’t shield them from problems.
The researchers were surprised at their own findings. The rich worry about many of the same things you and I do. Next time you’re tempted to dream about a life filled with riches and free from worry, remember that even a life with lots of money doesn’t buy you a free pass for happiness.
When Money Can Buy Happiness – No Need to Be Super Rich
If you don’t have the cash to buy good food for your kids or pay the rent, then money can buy happiness! If you have a minimum wage job and four kids, more money will significantly improve your life. If you need medical treatment and can’t afford it, money can buy happiness.
Yet, it turns out that if you want a designer purse and it’s not in the budget, buying it anyhow will not make you happier. It will create more bills and stress. When your basic financial needs are met, with some money left over for the occasional splurge, then more money won’t make you happier.
Get a Step by Step Primer in Wealth; How to Get Rich
In “High Income Improves Evaluation of Life but Not Happiness”, a landmark Princeton University study by Kahneman and Deaton found that high income does not equate with greater happiness. The researchers discovered that people who earned more than $75,000.00 (in 2010) were not markedly happier than those at the $75,000.00 threshold. In short, if your family earns $75,000.00, more income is not likely to boost your happiness. This figure should probably be adjusted for cost of living and geographic regions. Seventy-five thousand dollars per year doesn’t go as far in San Francisco or New York City as it does in Cincinnati or St. Louis.
Money Secrets of the Super Rich
Invest in Index Funds
Warren Buffet, the 87 year old founder of Berkshire Hathaway is reportedly worth $85 billion. Buffett is financially conservative or some might say, frugal. He lives in the same home in Omaha Nebraska that he bought in 1958 for $31,500. He enjoys the simple pleasures in life such as coca-cola and living in the town where he was born. He shies away from owning multiple homes and cars and many of the trappings of luxury.
Buffett elects to invest his money instead of splurging on luxuries. And he’s frequently touted the benefits of investing in a passive index fund strategy.
Start Investing Early
John Bogle, is 89 years old and the Founder of The Vanguard Group, Inc. Bogle is widely accepted as creating and promoting the widespread passive index fund investment strategy. Bogle promotes the magic of compounding and recommends starting to invest as early as possible so that your money will grow exponentially.
Maintain a Cash Cushion
Billionaire Li Ka-shing, chairman of CK Hutchison Holdings, is one of Hong Kong’s richest men with a net worth of $31 billion. He dropped out of school early to support his family and opened his first factory in his early 20’s. Ka-shing was an early investor in Facebook.
He began as a plastics manufacturer in the 1950s and always maintained a cash cushion. Than enable him to expand into other sectors. For the regular guy or gal, keep a healthy cash cushion allows you to buy more investments when markets are down and avoid going into savings when a big expense pops up.
Learn From Your Mistakes
Facebook CEO Mark Zuckerberg, with a net worth of $54 billion explained one of his earlier mistakes, that probably cost him billions of dollalrs. When he started Facebook, he divided up the equity among the founders without establishing a vesting schedule, because he didn’t know what it was.
Everyone makes mistakes, especially investors. The most important lesson is to learn from your mistakes and try not to make the same one again. If you invested in a loser, don’t be afraid to sell it, take the tax loss and more on to a more promising investment.
Pay off Debt Fast
Sixty year old Marc Cuban, star of Shark Tank, owner of the NBA’s Dallas Mavericks, and founder of many businesses including the successful startup Braodcast.com, Cuban has a wealth of money advice. He currently clocks in at a net worth of $3.7 billion. Similar to Warren Buffett, Cuban strives to raise his children with a conservative mindset. Don’t spoil your kids so that they can grow up to become contributing members of society.
Cuban eschews debt and advises young people to pay off debt as fast as you can. If you’re paying 20% interest and earning 2% on your savings account, you’re losing 18% of your money. Take your savings and pay off your debt. The bottom line from Cuban boils down to living conservatively, beneath your means.
Super Rich Action Steps
Write your own answers to these questions:
- What is the greatest aspiration for your life?
- What’s your greatest aspiration for your children?
- What’s your greatest aspiration for the world?
- What small step can I take today that will lead to wealth?
What do you need to do to realize theses aspirations? Create a plan to reach your personal and financial goals to maximize the wealth in your life.
Can’t Get Enough Values and Wealth?
- 5 Reasons Why Stealth Wealth is the Best Wealth at Wise Bread
- Is Money the Only Measure of Success? at Barbara Friedberg Personal Finance
- Don’t Short-change Yourself , Don’t Waste Your Time at MapleMoney.
What is your greatest aspiration today?
A version of this article was previously published (prior comments remain)