Monday, July 9, 2012
Throughout the ages, there have always been different "classes" in society. We have the wealthy, the middle class, the lower class, and those in complete poverty. In our current day, we have an illusion which masks our social status. Obviously this is because we are able to carry debts to live at a higher standard of living.
What I want to do today, is briefly examine the different classes. My hope is that once we see which class we are in, we can either be content and live accordingly, or we can work hard and responsibly to move to a higher financial class over a reasonable period of time.
These are the financially independent. They have passive incomes. Passive - meaning without any effort. No labor required. This income could be from a trust, an inheritance that was invested giving them continual payouts, stock income, or other investment income. Another possibility - generally for the young - they receive an income from family as long as they do as they are told. (You've heard the threats of the ultra rich saying they will "cut off" all support if they don't do as they are asked?)
Most commonly, the ultra - rich have wealth that has been carefully accumulated and passed down from generation to generation.
Characteristics - They tend to own multiple homes, vacation properties, have a full staff of servants, own multiple businesses, own yachts, travel the world, have expensive cars and spend their time at charitable events, visiting, and carefully overseeing the family fortune.
If you have plenty of money to do whatever you wish, without any need to work whatsoever, you are in the wealthy class. Very Few will ever move up to this rank.
(Just in case you were wondering, I don't personally know anyone who is in this class. Also, if it wasn't obvious - I am not in this group :)
The Middle Class
Generally, this is the professional class. These tend to be college educated, white-collar workers. This class has to labor to earn their income. Many have been brought up in similar homes, by college educated parents and come from some sort of privileged background. Privileged - meaning by white collar parents who have financially subsidised their children's growing up years and have helped them get established as adults.
The key to surviving in this group, it seems to me, is the education. These people are highly educated.
Characteristics - They own at least one very nice home in a beautiful neighborhood. They may or may not have dual income couples. Many have only one parent working. The other parent tends to the affairs of the home, their social obligations, and community events. This group has at least one domestic staff member. Either one full time maid, or a weekly maid service. Some have nannies and cooks. This group goes on vacations and has a generously budgeted amount of spending money. Their children tend to get an allowance, have plenty of new clothes, and can shop as needed. This group has medical and dental insurance, and other benefits from work - like stock options, pensions and retirement plans. This group has no financial trouble getting on a plane when necessary.
This group is not wealthy since they have limited resources, which are dependent on working and getting paid in order to maintain their status.
This group can, over generations of careful investments and a savings plan, move up to a budgeted state of financial independence. (This would be from passive income, built up and invested over time). They would remain on a budget to make the money last, but they would be comfortable.
It is very difficult to move up to this class, but can happen with help, encouragement, and possibly a generation or two of very hard study and work. ( I personally know several people in this group. Some are even related to me.)
Can this group drop to a lower class? Are they in danger of this? Most definitely. Two possible problems could come up - a lifetime of financial mistakes, or a collapsed economy.
The Lower Class
This is the blue-collar group who labor for their money. They may or may not live from paycheck-to paycheck. Generally speaking, this group is NOT college educated. Or, at least does not have a college degree. In my observation, there are two types of the lower class:
1. The Strugglers
[Those who struggle constantly to get to a higher class, and who are often in debt and have constant financial trials.]
Characteristics - This group may own or rent a home. They might finance a car. They might finance all manner of things and begin to require consumer debt just to survive. This group is often trying out the latest "get rich quick" program, hoping it will make their lives better. They are on a quest for money, but don't understand the concept of money. This group tends to have very little financial education. They may bounce checks at the bank, cannot balance their books and argue with bankers about overdrawn accounts. They have trouble paying their bills and misspend much of their earnings. They blame others and the economy for their woes.
This group cannot move to a higher class and will not even more to the class of "the content" [below] in their level because they cannot slow down long enough to change the way they live. In most cases, their children will repeat the same patterns.
2. The Content
[Those who tend to avoid debt, and manage to generally be content with their lot.]
Characteristics - This group may rent a home, or own an inexpensive house. Very few of them ever finance a car, furniture or anything else that would cause debt. Not because they are necessarily averse to it (they are) but because they do not want to put other things in danger by promising over future money that they aren't sure they can consistently keep up with. These people tend to be content with inherited furniture (or things bought at second-hand stores), and few possessions. Once this group has enough chairs, and other furniture, they rarely ever buy more (or new) their entire lives.
They are very diligent at saving and careful spending. Their home expenses are kept to a minimum by very frugal endeavors. This group will have to work their entire lives in order to keep to their standard of living. They have no funds for a domestic staff. They generally do all their own home repairs, housework and car repairs. Or they trade out with friends, by helping each other. In some cases, they do hire help for emergency situations but these expenses put a tremendous burden on their finances and could put them in danger of going hungry or having an electric bill shut off, or lose their winter heat, until they can get their bills caught up. Some will find odd jobs (if they are lucky) and work a horrific amount of hours just to keep food on the table during this time. But these people have great characters, and a tremendous work ethic.
It is possible, however, that their children can move to a higher class. Through sacrifice and hard work, their children can become educated in high paying trades, and carefully taught skills (both hands-on skills and book learning) to be able to earn a high and steady paycheck. In must be noted here that the children themselves have to be hard working in order for this to work.
This group is highly educated in frugality and thrift. This is what helps them survive. They are also fully aware of the stock market, investments and money management, but are not able to use those skills with their limited earning potential.
Those In Poverty
This group can include those who are homeless, or those who are completely dependent on others for basic needs. Anyone from any class can fall into this category, and it is devastating. This group is not necessarily a "class" but a part of society where help is greatly needed, and always will be. Those in the upper classes must find a way to be charitable, through organizations or their local food pantries, etc. to help on a regular basis.
They key to surviving in each class is financial education. We need to constantly learn and understand the latest developments in our modern world - relating to money. Even the ultra rich could possibly lose their wealth if a generation of their offspring spent away their money and made poor investment decisions.
My recommendations to financially survive:
To Get Out of Debt
- Anything Dave Ramsey (He is the only one I recommend for debt elimination because he understands the difficulty of the "now," when one is struggling financially. He is also realistic and an incredible motivator.)
To Learn to Live on Very Little and Be Content
- Anything from The Good Old Days publications (with Ken Tate). Looking back in history to the Great Depression, will help us understand how they got by through incredibly rough times. There are also a treasure trove of ideas for fun, happiness and inspiration that doesn't require any money.
To Learn To Live on Very Little
- "Your Money or Your Life" will help put this all in perspective. This book may also help you get off the crazy "Money Quest" that is ravaging our culture.
To Learn to Invest and Build Wealth
You will get many ideas and inspiration from "Rich Dad Poor Dad".
Learn how to Budget and Handle money wisely
Anything from Crown Financial Ministries, and the late Larry Burkett, is amazing for this!
Being Content in your Class
Now that we've talked about the characteristics of each class, have you figured out where you stand? I know exactly which spot our family belongs in. But now the question is, are you content there? Or would you rather work your way up to the ultra rich?
The most important thing about the distinction of the classes, is learning to live as that class must live. This includes studying money, staying within a budget and finding ways to build the education and skills of your family. There are only 3 ways of moving up in a class: 1. An inheritance. 2. Winning the lottery. or 3. Hard work, tremendous study and patience!
One of the greatest books written for the lower class (which is the group a great many Americans are in) is The American Frugal Housewife. Her introductory pages in the beginning are inspiring and sobering. She is also very clear that one should not "dress above their station in life," (which is a beneficial thought relating to the classes. We can't spend more money to live, than we can realistically afford.)
May I just say this? Don't be ashamed of the class you are in. Be grateful. Take pride in your lot in life. It is amazing that we have so much freedom in this country that we can work our way up if we choose to. We have the Immigrants as examples. Their hard work and determination helped build the wealth that generations of children now enjoy today. Take pride in your class, just as the Immigrants took pride in theirs.
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This post is part of The Christian Home Magazine in the Financial category. To see more articles in different aspects of Home life, please visit the latest issue, hosted at Day by Day in our World.