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Agreed, but I take issue with the idea that people squander money because they have no "experience with long term wealth management". I actually don't think ma

by jjeaff 6y ago

Agreed, but I take issue with the idea that people squander money because they have no "experience with long term wealth management". I actually don't think many people at all, including those raised with money, actually have much knowledge and experience with money. And in fact, lots of middle class people become wealthy and manage that wealth fine. The real difference is whether you were raised in poverty or not. Because poverty imparts a very different psychology on a lot of people. Many raised in poverty have the mentality that you had better spend money while you have it, because it will eventually run out or be taken from you. Maybe stolen by someone on the street, but more likely stolen through bank fees lending schemes and other institutional grifts. That's not to say that poverty can't lead to the extreme opposite, which is to hold on to and save every penny. But either way, poverty can have a strong effect on people.

toyg 6y ago
I do not disagree, but I think it really depends on your definitions of "poverty" and "middle class" here. There is a big chunk of people in between those. Middle-class people (in UK/European terms at least) are likely to have had some exposure to long-term wealth management of some sort: owning a house, having a regular income that allows for significant savings, small investments, small businesses, pensions, etc. Hence it's easier for them to "turn out fine", as parents will have taught them the basics of interest and investment, the value of recurring income, inflation, and so on. The working class, though, is a step below. They have stable paychecks but that's it. There is less of a long-term view, and there is a concept that money is entirely linked to performing work. They are not necessarily poor or ignorant, but they are unprivileged and unfamiliar with "money issues", if not downright hostile to the concept of accumulation - because they'll never be rich, so might as well live a full life instead. A lot of athletes start from here. It's not poverty, but it's also a situation where there is no familiarity with, or propensity for, significant long-term wealth. And then you have utter poverty, and that's definitely a killer like you said. Some athletes come from here, but not all of them, I would argue not even the majority (although I don't know the stats, and it probably varies across countries). However, from what I read, the issue of well-paid athletes that end up bankrupt after a few years is widespread, and going well beyond the limits of people coming from really poor backgrounds.

by jjeaff 6y ago

toyg 6y ago

I do not disagree, but I think it really depends on your definitions of "poverty" and "middle class" here. There is a big chunk of people in between those. Middle-class people (in UK/European terms at least) are likely to have had some exposure to long-term wealth management of some sort: owning a house, having a regular income that allows for significant savings, small investments, small businesses, pensions, etc. Hence it's easier for them to "turn out fine", as parents will have taught them the basics of interest and investment, the value of recurring income, inflation, and so on. The working class, though, is a step below. They have stable paychecks but that's it. There is less of a long-term view, and there is a concept that money is entirely linked to performing work. They are not necessarily poor or ignorant, but they are unprivileged and unfamiliar with "money issues", if not downright hostile to the concept of accumulation - because they'll never be rich, so might as well live a full life instead. A lot of athletes start from here. It's not poverty, but it's also a situation where there is no familiarity with, or propensity for, significant long-term wealth. And then you have utter poverty, and that's definitely a killer like you said. Some athletes come from here, but not all of them, I would argue not even the majority (although I don't know the stats, and it probably varies across countries). However, from what I read, the issue of well-paid athletes that end up bankrupt after a few years is widespread, and going well beyond the limits of people coming from really poor backgrounds.