Why our kids expect to be rich...
 

interesting article i ran across today...

http://articles.moneycentral.msn.com...tToBeRich.aspx

so, who is to blame? the media, or the parents?

for me personally, nobody's given me the expectation that i will be rich, and given the potential career options that presently interest me, i would say that i would be foolishly naive to believe i would be rich. and yet, i'm surrounded by people (parents, parents friends, family) who enjoy extremely comfortable lives for many reasons, even though few of them are actually in fields that one would consider to be extremely well-paying, which makes me think it is achievable. the question is how.

Numerous people have skewed views of their net worth. That becomes apparent when you have people predict a realistic notion of their long term goals and possible business plan or strategic plan.

It does taking learning. Nothing is wrong with increasing one's learning when it comes to finances.

I do not think blame can be placed squarely on just one person. We are all to blame. Our American society is like that.

I think this thread should be moved to "News and Politics"

i read this article at work on Friday...

i think most of us have been raised in a culture where either our parents were:

a. poor and raised us with the mentality of "do well in school and make the kind of money i never could"
b. middle class parents who busted their humps as first-generation college graduates and raised us with the "if i can do it from scratch, surely you can with the modest upbringing we've provided"
c. parents who are wealthy off of new money and while they can revel in their family's fortunes, their parents are putting serious limits on the access to the money and saying, "this money will be here for you but you also need to earn your money for yourself."

as for why kids expect to be rich, of course the media has a big part to do with it (constant celebrity focus on how much money they make, how much they are worth, and even how magazines do spreads on how to front being rich without actually being rich). but in a "rich" society like ours, its no longer a matter of "if i become rich" its "how am i going to get rich" and even more so "when am i going to get rich"

parents have also found ways for their children to be rich way earlier in their lives - to become the next sports star, olympist, musician, beauty paegeant winner, etc... it's not even about the talent and "oh i want my child to realize their dreams" its about "how much can my child make on the stage/in the arena/with x, y, and z endorsements"

lastly, kids may "expect" to be rich because they see that, unlike their parents, you dont have to "work" to get rich. instead of 40 hr work weeks until youre 55, i know kids (and i guess young adults our age) who are getting their hands in many different areas - the whole idea of doing enough to have your money work for you.

Our society is one where much of the value put on people is because of "stuff." It's really sad, that children and adults alike place so much of their self esteem in what they have and can afford. I LOVE "thrifting" (our term for hitting the thrift shops and seeing what steals we can find.) I recently ran into a friend of mine in one consignment shop, and she hung her head in shame and said that she usually doesn't run into anyone she knows at these places. And here I was on cloud nine because I found brand new mini-blinds in the box for under $3!

Our society is also teaching, if you can't afford it put it on credit. It's obvious that you will be rich later.... :confused: I have friends who can't afford their mortgage payment who just bought all new flooring for their house, went on a lavish vacation and bought a new water system... all on credit. Now they can't pay the mortgage bill OR the credit card bills. She calls me, and asks for help putting together a budget, and when I point out she's paying $65 a week to get her house cleaned, she's offended. :rolleyes: She's a stay at home mom with three kids. To her it's a status thing. I'd love to get my house cleaned but I'd rather put that cash into savings and do it myself.

We don't teach our children to save. We teach them to spend.

^^^^That is so interesting you say all that. I am reformed spender due to the miserliness of my husband. Through him I have "sort have" lived by a budget with some relapses--like Nordstrom's shoes, just have to have some.

Well, I am saving without a huge plan for items and that I need to improve. We, together are investing with a brokerage account. I am investing in 2 IRA (1 Roth IRA) and 2 different life insurance policies besides the one from my job. I might have enough for when I retire, but not enough for my healthcare (wait till Sicko comes out).

So, now I need to set what I want in the future. I only have 25 more years before I can take early retirement. Then it is 30 years for social security to go into effect.

I don't know. The only kids I know who "expect" to be rich are the ones who have upper-middle class backgrounds--so, hey, they have a better shot at making more money than the average Joe Blow.

As people wait until they are doing very well in their careers to start a family, a lot of their kids don't see the hard work that their parents put in before they were born. When people started families younger, the kids saw the parents sacrifice and work really hard to provide, so they had a more realistic perspective. Now, when kids see their parents working from home half the time, remodeling the house at a whim, and going on lavish trips, they didn't see the 10-15 years of hard, hard work that allowed them to have that lifestyle. So, they think it takes a minimal effort. A lot of my friends had that experience--they had no idea what their parents went through before they were born.

I totally agree with this.

I've always wanted to do better than my parents, and I think a lot of kids want the same. I don't think anything's wrong with that. I do think a lot of the things that are shown on T.V. like some of the videos, gives some kids a false impression of wealth. It's like they see these videos with fancy cars and really hot girls/guys so then they wanna live this lifestyle as well, and it's not that easy.

I do think the media has a lot to do with it. This struck me over the weekend, actually, cleaning out old stuff at Dad 33's. 15-20 years ago we didn't have InStyle or Teen People magazines that are all about celebrity lifestyles - not to say we didn't have celebrity focused magazines, just not to the degree of celebrating the THINGS they had that those do. Same with TV - Entertainment Tonight was it. Now we have E! plus however many other cable channels that are totally focused on celebrities. You see that 24/7 and start thinking celebrities are just like you, so why are you not living like that?

not to mention the proliferation of home decorating/shopping shows and magazines featuring "real" people. Trading Spaces started out as a fun idea, now it's gotten to the point where people think there's something wrong if they don't redo their houses every month. It's completely insane.

I don't think it's totally the media - there are most definitely parents who put in their kids' heads these notions - but if you compare the media from a while ago to what it is now, it definitely plays a big part.

I was thinking the same thing. I know a lot of people in the area that I'm in are all about putting on a good "front."

My husband and I have been married almost 2 years and several of our friends have gone out and bought "McMansions" and have raging debt, no savings and still lavishly spending. It's amazing the people who question our decision to wait and get an affordable starter home and live within our means.

This reminds me of The Millionaire Next Door and the discussion in it about the difference between people with actual wealth and people that just have a high income. The authors make a distinction between Under Accumulators of Wealth (UAWs) and Prodigious Accumulators of Wealth (PAWs). Most of the millionaire households that they profiled did not have the extravagant lifestyles that most people would assume. This finding is backed up by surveys indicating how little these millionaire households have spent on such things as cars, watches, suits, and other luxury products/services. Most importantly, the book gives a list of reasons for why these people managed to accumulate so much wealth (the top one being that "They live below their means"). The authors make a distinction between the 'Balance Sheet Affluent' (those with actual wealth, or high net-worth) and the 'Income Affluent' (those with a high income, but little actual wealth, or low net-worth).

Really an excellent book.

Very good point! Thank you for the book recommendation, I ordered it today! :D

We are going through the same thing! It's so funny because the fact we don't want to do a 100 percent mortgage and actually HAVE A DOWNPAYMENT seems to be something many of our friends don't understand. :rolleyes:

I'll be ordering that book as well. It's funny when I think about it. Many of the wealthiest people I know don't waste their money and shop wisely. :D

Heck, I can't figure out who in their right mind would get one of those Quicken Intrest-Only Mortgages that I see commerical after commercial for. Sure, your monthly payment may be 40% lower, and you might "save" thousands a year - but unless you're taking those thousands and investing in something with a higher % rate of return than your mortgage APR, you're actually LOSING money, that is, if you ever plan on paying off your house. If you're not ever planning on paying off your house, you might as well be renting - at least someone else is responsible for the repairs. How hard is it to understand that if you're only paying interest, your priciple is NOT going down?

some people sign onto loans, with or without interest only ones, and then flip the house and get bought out of the loan and then do that again.

i'm not entirely sure on the process, but it involves something along the lines of you made the payments, you have a nicer house than when you started but this nice house comes with debt so the house and all loans associated therewith are transfered upon sale of said properity