CWR Building Wealth – In A Perfect World
By Dwight Harshaw, BBA, Personal Finance Counselor
In a perfect world, one would work hard for a single company and retire. They would start at an entry level and work their way up the ladder. Health care would be no problem because it’s a part of a well deserved benefits package. Wages keep pace with the cost of living. Raises are scheduled and saving for retirement is automatic. In a perfect world, a middle class lifestyle and all of its accoutrements would be accessible without the fear of losing it. Upon retirement, savings, pension, and social security would allow for an elder status of dignity and financial independence.
In a perfect world, wealth would be better distributed in the United States than it is now. The poor would be few, the rich would be less so, and there would be scores in between the two. Poverty would be on the decrease and our leaders in government would be working in the best interest for the most people. Building wealth and moving up into a higher wealth class would be no problem.
Well, we don’t live in a perfect world. There is growing inequality in the way wealth is distributed in our country and the sooner one realizes their place-in that distribution-the better. One has to know where one is, to get to where one wants to be.
What is wealth? Wealth is based on net worth. Net worth is determined by subtracting what is owed from the value of what is own.
Where is the wealth?
According to census.gov there are 114,825,428 households in the United States. When synthesized with data from the Economic Policy Institute – The State of Working America 2011, we get the following:
- One percent or 1,114,825 households control 35.6% of the wealth;
- Four percent or 4,593,017 households control the next 27.9%;
- Fifteen percent or 17,223,814 households manage 23.7%;
- While the bottom eighty percent or 91,860,342 control just 12.8% of the wealth.
The median household wealth in 2009 was $62,000. That means 57,412,714 households have more and 57,412,714 households have less than that amount of wealth. So somewhere almost in the middle of the bottom 80% is where the median can be found.
What should be gathered from this information-many people aren’t as wealthy as they appear. Eight out of every 10 persons exist in the bottom 80%. There are people, who earn lots of money and have the best of everything materially, who are broke. They owe more than what their things are worth. Instead of looking like a million dollars by what is worn, driven, and lived in, ratchet it back and do what is necessary and no more. To move up from the bottom one must not only work hard but also manage one’s own finances well. That means goal settings, budgeting, investing, and saving more, while spending less. In an imperfect world, that is how wealth is built.
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About Dwight Harshaw: Dwight Harshaw is a personal finance counselor and writer. He is also a Realtor with Access Realty, Inc. in Little Rock, Arkansas. He has a BBA from the University of Arkansas at Little Rock in Finance with emphasis on financial planning.