The Rich & Upper-Class & How They Got There

The Rich & Upper-Class & How They Stay There

Belief: Many "rich" people have more assets ("wealth") due to excessively high income. Maybe or maybe not. But it is certainly more complicated than people believe! Actually, the rich and upper-middle-class often spend their money more wisely on large items (buy a house early for the tax advantage, pick a house in a neighborhood that will hold its value, buy slightly-used cars, etc), save the max in their IRA & 401K from day 1 of work, pay credit cards off monthly while still gaining bonuses from the credit card company, invest wisely or at least look at their financial statements occasionally, research high-priced items before buying... Splurge when times are good with great vacations, eating out more, spending on their kids.. But, MOST IMPORTANT, cut back spending (23% - Business Week) in both obvious (cheaper or no vacations) and analytical ways (minimizing cable & phone bills, insulating house, lowering thermostat, checking for better auto and home insurance rates, putting off health & auto care) when times are bad. So they KEEP more of their assets (wealth) during the rough times. And consequently become relatively richer during economic downturns!

NOTE: The reverse is not true - poverty does not come from overspending. On the contrary, the above examples of spending and saving only apply to those who have disposable income (I'm thinking middle-class and above for a decent analysis).

-k