By SHANNON WHITWORTH | Nov. 17, 2014
I’m not wealthy, but I'm working on it.
My wife and I recently had a conversation about someone in our lives whom we find mind-bogglingly frustrating. The gist of the conversation was that this person still tries to game the system, taking any opportunity he can to avoid paying for the things he takes and trying to earn money through any means other than work.
Yet, he never seems able to get himself or his family on solid financial ground. I said, “You have to understand, [this person] and [his wife] are at the same level of financial maturity. And until they have that epiphany that the only way to get ahead is to get on the train and ride, nothing we say will make the least bit of difference.”
The “train” is the vehicle by which one builds wealth and moves away from poverty. You don’t need a ticket to get on board, but if you want to continue to ride, there is a simple code of conduct that will be enforced. The principles of creating and maintaining wealth are earning, disavowing debt, saving and giving (yes, giving is an essential part of creating and maintaining wealth), and adhering to these principles long-term. These principles are as immutable as they are effective.
Unfortunately, most Americans have no idea what they are doing with their money. According to a 2012 report from the Securities and Exchange Commission, people in general have a weak grasp of elementary financial concepts. According to a 2008 report from the Jump$tart Coalition for Personal Financial Literacy, U.S. college students averaged an appalling 62.2% on a basic financial literacy exam. That’s a flat-out fail. Among minorities and the elderly, the situation is even worse.
You want to do better? Here is where your education begins.
There is a difference between being rich and being wealthy, just as there is a difference between being broke and being poor. Being broke is a temporary condition; being poor is a way of life. The difference between being rich and being wealthy is the same concept. You can have all the money in the world, but if you don’t care how you earn it, don’t know how to hold onto it or how to build on it, the money will leave you with nothing to replace it. We all have heard about lottery winners, entertainers and professional athletes who made enough money for several lifetimes but were broke within months after the money stopped rolling in. There is no substitute for getting on the train.
Do yourself a favor and disregard the image of wealthy people portrayed in entertainment and the news. Cease listening to people who say that people become wealthy only through ill-gotten gains or on the backs of poor people. For the most part, those images are caricatures, used to inflame people in order to push an agenda.
Like almost everything else, behavior will dictate results. Lack of basic economic common sense keeps more people in poverty than rogue Wall Street brokers. The reason you find predatory lenders only in the poor areas of town is because wealthy people don’t fall for that crap. It’s not that wealthy people are smarter, they’ve just learned enough to stay on the train.
The most obvious way to learn how to be wealthy is to learn about wealthy people and do what they do. Imitation is the sincerest form of becoming wealthy. But there is a prevailing attitude today that wealth is something that can be done for you. The most glaring example comes from politicians who claim that wealth could be bestowed on the poor if only the wealthy were willing to pay a little more.
This is the most insidious and vicious trick played on the poor. It can’t work, because they haven’t been taught how to stay on the train. Attempting to provide wealth through fiat is as worthless for the poor as it is frustrating for the people from whom that wealth was taken. It’s a cynical ploy to keep people poor while voting for the promise of making them rich.
You simply cannot provide wealth to someone by taxing someone else. There’s absolutely nothing wrong with giving short-term relief to people in need. But selling welfare and entitlements as a means for getting out of poverty is a cruel joke on the poor. The only sure-fire way out of poverty is for people to decide they no longer want to be in that place, scrape together what little they have, and get on the train. There is no substitute for being on the train.
Shannon Whitworth is a Wisconsin attorney. This column represents his personal opinion.