You’ve probably heard the saying Mo Money, Mo Problems.
While money does lead to new and different problems, there is almost no denying the fact that rich people have an advantage in life.
Perhaps reading this will motivate you to build wealth, diversify (and increase) your income, and to be more on top of your finances in general.
1) Ability to Hire Help and Outsource Tasks
Can you picture Lebron James changing his oil, mowing his lawn, or cleaning the windows of his home? Ah, nah, not likely.
The thing about being rich is that you have the ability to leverage money in a way that frees up your time. Mowing your own lawn may be saving money for an average person, but to others it’s an unnecessary chore. It may even be costing them money because they could be spending it in a more efficient way.
I’m not trying to say that rich people never mow their lawn themselves. Congressman John Boehner, who is better known as the Speaker of the U.S. House of Representatives, has often said he likes mowing his lawn. It’s relaxing for him.
With that being said, you don’t have to outsource everything if you’re rich, but you have the option. And that’s an advantage.
2) Income Diversity
When you’re rich you have the ability to diversify your income. Whether it’s through business investments, dividends from stocks, or income from rental properties, rich people have the ability to diversify their income. This helps avoid the risk of having all your eggs in one basket.
In a previous post I shared a tool that shows how much money you would need to live off of dividends. If you run some numbers through the tool it quickly becomes obvious that you would need to buy a lot of stocks to live off of dividend income. It’s not an “unbelievably” high number, though, and it’s a realistic number for many rich people.
Needless to say, having diverse – and ideally passive – income streams allow for wealth to compound. It also gives the owner of these income streams options as far as how they want to spend their time and what work they want to pursue.
3) Health Care is more about Care, and less about Cost
Health care has been a huge issue in the United States the past six or so years. In particular, access and affordability of health care have been the major discussion points.
Just because everyone now has access to health care does NOT mean it’s affordable health care. Many of the Obamacare plans have high deductibles and high premiums. If you need surgery and have no money set aside for your portion of the bill, you could be in a rough spot. You may even forgo the surgery (if it’s an option) because you aren’t in a place financially to foot the bill.
The rich can afford the high deductibles and depending on the situation may be willing to pay for a doctor that is outside of their network if they think he’s the best at what he does. Even the middle class can’t take this approach and typically are stuck with whoever is in their network.
One last note on this. I maxed out my insurance the past two years and my wife maxed out hers this year. It happened because of unavoidable surgeries that have nothing to do with how much you work out or how many fruits and veggies you eat. In other words, it can happen to anyone. Using our Health Savings Account (HSA) we were able to create a medical emergency fund. I encourage everyone rich or poor to do the same!
4) Ability to Vacation More
A lot of personal finance bloggers talk about “travel hacking”, myself included. I talk about how you can get a free $400 for travel or how you can go to Vegas for cheap or even free. Don’t get me wrong: you don’t have to be rich to travel.
At the same time rich people have so much expendable income that they can go on awesome vacations and not think twice about the cost. No need to churn a credit card or stress out over whether the trip is too much for their budget. In fact, if they are living off of dividends and passive income they can travel all the time!
The point here is that things like travel are easier for the rich. Going on a relaxing 10-day trip to one of the best resorts in Hawaii – every single year – isn’t out of the question.
5) Children Inherit Advantages
If you have wealth, your children have an advantage over other children. Rich people can afford to send their kids to the best schools, the best sports programs, the best educational programs/camps, etc. They are able to try many different activities at a young age and learning is typically stressed to a great degree.
While it doesn’t require wealth for kids to gain a great education or excel at sports, it certainly doesn’t hurt. Malcolm Gladwell once wrote about how kids who aren’t engaged over the Summer end up spending a longer time “catching up” when they return to school. Rich kids are the ones who are typically the most engaged during the Summer because parents have the money to invest in them.
Finally, children who have rich parents oftentimes have a built-in network. This can have either no impact on their future or a huge impact. If a child’s father is a CEO of a huge corporation you can bet his Dad’s connections will come in handy later in life when he’s looking for a job or internship.
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I may have made a misleading statement at the beginning of the post. Becoming rich shouldn’t be your only goal in life, nor do you need to be rich to have a great life. What I hoped this post would do is motivate people to get their finances in order and start saving and investing.
What do you think is the one biggest advantage rich people have in life? Did I miss something you think I should have mentioned? Finally – what motivates you to build wealth?
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I think financial security and the ability to just plain not worry about where your food, shelter, and healthcare are coming from is tops. I actually consider myself “rich” because I don’t have to worry about those three things, even though I’m certainly not rich by society’s standards. Being able to travel endlessly would also be pretty sweet…
I really, truly, find it hard to stomach the “more money, more problems” approach. I think that if you have money and guard it well (I guess not flaunting it goes along with this) you really will have very few worries or problems. It’s all about perspective.
I think the biggest advantage is that they can be philanthropists! Donating time (if you don’t have to work so much) and money must be incredibly rewarding. I know the little I can do I value.
I feel I already am living a rich life even if my net worth isn’t in the same stratosphere as the ultra rich. Yes, they definitely have a lot more options where spending is concerned and I still strive to earn more to be able to broaden my own life options yet I feel that DH and I are in a good place financially after years of instability and we continue to strengthen our position every day.
I think the biggest advantage comes down to pure opportunity. Generally speaking they have more opportunities and can do more with there money because of that. However, that’s also assuming they’re wise with how they manage their money as you can be “rich” but living poorly because you’re wasting said money.
Being the presence of wealthy, successful people definitely motivates me to build wealth. I’m reading a book on outsourcing now. I want to outsource some tasks to free up time to build more wealth of my own, but I struggle with when can I afford it and then when can I afford not to.
I think the biggest advantage that rich people have is freedom. They have freedom of travel, of work, of choice. Rich people can make decisions without considering the financial cost. This is a privilege that few of us know. I’m motivated to build wealth by the want of freedom to travel, to be a good financial role model, to love my work, and to give.. Great post!
As someone who works with rich people frequently, I actually don’t think that they have that many advantages, and despite the fact that they can purchase many of these things, it doesn’t mean that they can necessarily afford them in the long run. I have also worked with the children who have inherited some of the money and they are not happy either because their privileged upbringing has led them to feel bad about themselves for not measuring up to the success of their parents. I guess my message is that the grass is not always greener. We just have to be happy with the gifts we have been given.
I say freedom. For me vacations are not really an advantage because I don’t like to travel and I think children of the wealthy have a disadvantage. Too much has been given to them and like Shannon said, it might be hard for them to measure up.
Interesting post though. It’s got me thinking. Maybe the grass isn’t greener on the other side.
As the saying goes: It takes money to make money. I think the wealthy definitely have many opportunities and advantages such as better educational opportunities, a wider network, money and opportunity to invest in various things. What motivates me to build wealth: financial freedom.
It depends on what you qualify as rich. Having a high salary but being deep in debt causes more problems than it solves, in my opinion. I think being truly rich give you more opportunities and if something goes wrong, it doesn’t mean ruin like it would living paycheck to paycheck.
DC, this is awesome, and something that drives me to keep working hard to pay off our debt. I think lots about how, if we had managed our money well from the beginning, how Rick would have the option right now of not working, which would free up the time he needs to get things done on the farm here: something he would love to have as a “job”. The reasons you mention above are what motivates us to continue to work harder to get out of debt and achieve wealth, and I can’t wait to get there! Great post, my friend.
I definitely agree with your points, DC. The one I really noticed firsthand is with #5. With my volunteer work at Junior Achievement, I have spoken to inner city children about money. And while there are always a few kids who are see a brighter future for themselves, I was surprised by how many thought this was all life had to offer them. They couldn’t envision a life where they didn’t struggle financially. Whereas, when I’ve spoken in more affluent areas, the kids expect good things because that is what they taught. Some may say that is naive, and to an extent, they are correct, but life often meets our expectations too.
I don’t actually have anything to base this on, but I’d imagine that a huge advantage is peace of mind. Knowing you have financial security and not legitimately worrying about your income versus your expenditures would feel liberating. I think a person’s whole outlook and attitude would be affected by letting go of that stress.
I hate to say it, but wealthy people are typically just happier. There are certainly diminishing returns, but having wealth, assets, options, freedom from debt or necessary work that’s not fulfilling…these things all lead to a greater level of happiness, too.
#3 and #4 are some of the things that motivate me to build wealth. Being wealthy doesn’t always mean being happy, but what would you choose, being unhappy and poor, or being unhappy and rich? :P
I agree with all these points. At this stage of my life I’m motivated the most by #2 and #4. I have multiple streams of income but I wan them to grow. I also want to be able to vacation whenever I want to.
For me the biggest advantage rich people have is easy access to credit, to leverage wealth in real estate or on the stock market. It is much easier to build wealth when your bank lets you borrow for 5 rentals instead of just your home.
Interesting and very topical (in a good way) post! I completely agree with you around the flexibility and freedom that it provides.. It really means that you do not have to concern or focus on a lot of concerns i.e. paying bills or doing the everyday chores (if you choose not to)..
This is definitely a big goal of mine but the purpose of it is to pursue hobbies when and where I want to i.e. golf, learning a language, spending time with a family (when I have my own), travelling, reading, starting my own not-for-profit.. There’s plenty of goals I want to achieve that are non financial but having the financial resources will enable me to achieve all of these and more :)
I know I wouldn’t worry as much about unexpected expenses if I knew I had a ton of cash to cover them, so I think peace of mind is a big one. That is one of my top motivators. The others would be vacationing and not having to work just for a paycheck.
Mrs. Frugalwoods I think of that as more of a basic necessity (food, shelter, health care) than of something a “rich” person would have, but to each their own. Travel would be pretty great, not gonna life.
RetiredBy40 I agree. You don’t have more problems if you have more money, you just have different problems. Sometimes those problems are exacerbated by having a lot of money, but people will have issues whether they are rich or poor…or somewhere in between.
debt debs I didn’t think of that, Deb! I think being able to “give back” would be incredibly fulfilling. That’s not to say you can’t on a small scale (I know my wife and I do), but when you are wealthy you can really impact change.
Kassandra @ More Than Just Money That’s great, Kassandra! I think it’s important to keep things in perspective and be grateful for the things we do have.
FrugalRules There are definitely many people who are rich who will eventually lose all their money. You make a great point about opportunities, and it’s crazy how momentum can really lead you to bigger and better things relatively quickly.
brokeandbeau I might be interested in reading that book, Stefanie! I have struggled with outsourcing on my blog and there are so many business ideas I have that literally only need me to free up time in order for them to become a reality.
theFinancegirl Really great comment and you bring up an important point. Even middle class people don’t have much choice in their day-to-day life. They have to work and continue to grind away at building savings and investments. There’s nothing wrong with that, it’s just not even close to the lifestyle that the rich have.
blonde_finance I guess I’m not just talking about kids of the ultra-wealthy. Even if you have material wealth (i.e. a couple million net worth) you can afford to give your children advantages that lower middle class and the poor simply cannot.
SingleMomIncome I’m not a huge fan of travelling, but that’s mainly because I hate the TSA at the airport. I like going to places like Hawaii, though, and would LOVE to be able to go there a few weeks a year.
Andrew LivingRichCheaply Great point, Andrew. The opportunities to invest and build wealth shouldn’t be understated.
Eyesonthedollar I don’t think it has a whole lot to do with salary. I think it has more to do with passive assets, but you’re right, it comes down to definitions.
Laurie TheFrugalFarmer Thanks Laurie, I really appreciate the kind words! I think visualizing what life can be like if you attain a certain level of wealth can be really motivating. It motivates me to keep grinding away beyond my 9-5 job.
ShannonRyan I volunteered with Junior Achievement too and I agree with your assessment. We’ve only gone to lower-income schools and I think some kids are not being invested in like parents in more affluent areas invest in their children. It’s a matter of money, at least in part, because if you have a higher income you have more security, resulting in more time and money invested in your kids.
BudgetAndTheBees Excellent point. I don’t think this can be stressed enough, really. I know at work I would take more risks and be more confident if I knew that if I lost my job I wouldn’t be in a bind. I think that’s why business owners are more confident in general – they typically have enough money stashed away that they can take risks and be more assertive.
DonebyForty I agree with everything you said. There are certainly diminishing returns, but I think you have to have a pretty high income and level of wealth to reach that point of diminished returns.
PoorStudent I think being rich gives you more opportunities to be happy. Yes, you won’t be fulfilled socially, physically, etc. by having money, but it makes attaining those things easier, if not simply because you have more time or can buy more time.
Jason @ The Butler Journal I don’t even think that vacationing whenever I want would be what I need. I think just being able to go to some place amazing – like Hawaii – for a few weeks a year and not having to worry about the expense would be incredible.
RFIndependence That’s a good point. Being able to leverage credit – and your assets – to build more wealth is a huge advantage.
mycareercrusade Good points. I also have some goals that I want to pursue that are not directly related to finances. Having that financial backbone is certainly beneficial and enabling, though.
JourneytoSaving Peace of mind is huge. I can’t even imagine what it would be like to know I have enough money to cover any and all repairs that my home or car could randomly incur.
Worrying about what the rich have is an excuse. Worry about yourself and do what you have to do to get ahead. My parents have nothing, they worked huge hours to get “something” and my siblings and I are expanding on that to have “a lot.” Worry about yourself and you’ll get much further than thinking of your disadvantages.
Jay
Jay at Thinking Wealthy Umm was that directed at me? If so, you must have interpreted it differently than most everyone else that commented on this post. I was simply stating facts. For some people hearing this can be motivating.
It depends how you define rich doesn’t it?
Most young people see it as the guy with the porche and and 2 weeks vacation in the tropics. Many of those people work 60h+ weeks and buy on credit.
I think it’s more mindset than total amount of wealth, you can outsource to a full time VA for $400 a month for example…
DC @ Young Adult Money Jay at Thinking Wealthy No not really at all. I was just pointing out that a lot of people have that excuse in life. Many people take the “woe is me” approach when thinking of the rich. Especially for your 5th point.
Jay
I think it would be great to put more money towards self-care, including better health care. I agree that just because everyone has insurance doesn’t mean it’s even remotely good. That part to me is the most frustrating.
Dangerous territory there Jay (with the wording ha) but I see what you mean though.. DC I’m sure didn’t mean to complain :)
Anyway great post here again and very interesting
These are all great. I think the biggest advantage is not having money control your life. Money has so much more control over your life when you don’t have it, rather than when you do!
mycareercrusade Jay at Thinking Wealthy I’m glad you didn’t interpret it that way!
Jonny Venture I definitely meant for it to be defined as someone who has a large pool of assets that produce passive income. Probably should have defined that at the beginning of the post.
Beachbudget Insurance can help avoid catastrophes, but it’s nothing like the “money is no object” position that some people find themselves in.
MoneyMiniBlog Great point. I agree 100% that money controls you unless you have enough of it to dictate how it is allocated and invested.
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