Six levels of wealth - how are you doing?

[MrBojangles]

Well yes, if descendants of a billionaire set their minds on simply living to the max off their inheritance without adding value, then POOF sounds about right.
But I wonder how many wealthy families have gone opposite to that trend and have increased their composite wealth over a few generations?
The Rockefellers maybe?
The du Ponts?

There was an article in The Wall Street Journal about the watered down Rockefeller fortune from about 1989 when I was in college. I wish I could find it. Basically, too many heirs with profligate spending habits and nary a desire to work, IIRC.

 

[MrBojangles]

Agree!!! I don't agree with most of his category assumptions.
Degrees, the following do not have them. And many more successful people I know don't either.
Richard Branson, Larry Ellison, Mark Zuckerberg, Bill Gates, Steve Jobs, and Michael Dell.
Housing: look at Warren Buffet's house, and read the millionaire next door. Many millionaires live in average houses.
Clothing: It's considered "cool" to shop at discount stores and places like Good Will. My Orthopedic MD wears faded old t shirts to work!
Concierge medical care? Who gets that? I waited 7 hours in the ED one night.

And yes about the wine. That's been proven over and over again.

I looked up all of the aforementioned individuals to see what most of them have in common because I have felt all along it’s why I didn’t at least have a shot at being like them. Now, the reality is, had I had this almost universal common background, the exception being Steve Jobs and possibly Larry Ellison, chances are like that of owning a business, 1 in 3 fail in the first five years, except, in this case, the odds are far worse against being like one of these individuals.

My background is basically I’ve accepted any job offered, with no alternative choices, which means they aren’t necessarily the best fit and I’m wasting precious hours that could have been spent tinkering, coming up with concepts, running a business without regard to where the next paycheck will come from and when, and possibly one or more connections to at least get an initial leg up. Most of these individuals have parents that are upper middle class, they attend above average schools, they can drop out of school, if desired, not worry about an income, and these individuals came up with ideas that did not require returning to school, and, had they flopped, they always could have returned to school.

Warren Buffett (who completed college) is the son of a businessman and Congressman

Richard Branson’s father is a barrister.

Mark Zuckerberg’s parents are a dentist and psychiatrist.

Bill Gates’ parents are an attorney and a banker/non profit executive.

Michael Dell’s parents are a stockbroker and an orthodontist.

Larry Elliso was adopted by an uncle who is a government employee. Not sure how much money he had and what level. If higher up, he comes close to some of the others, if low level, then less so.

Steve Jobs was adopted by folks who weren’t very well off. Interestingly, his true father came from Syrian wealth and his real mother’s family had real estate and a mink farm.

So, not all, but most of these individuals came from upper middle class households that were likely wealthier than most other families and households in the area.

This allows for creativity, and other similar individuals who did not attain the fame and wealth of these individuals to fail miserably and still be successful in the end.

 

[Diogenes]

So, not all, but most of these individuals came from upper middle class households that were likely wealthier than most other families and households in the area.

This allows for creativity, and other similar individuals who did not attain the fame and wealth of these individuals to fail miserably and still be successful in the end.

They did indeed, but vast numbers of young people in America were born into the upper middle class. Vast numbers studied hard, got into excellent schools, garnered degrees and so on... and of those, a good portion has the yearning to make money, the talent, even the opportunity... but they didn't. Either they never tried, or they tried and failed. Even of those who "succeeded", most are merely "mass affluent" today. They're not billionaires.

Even as a person of very middling wealth, of nothing truly noteworthy, I notice that the care-and-feeding of that "wealth" requires considerable attention, and even sacrifices. That's because I'm not a businessman. I have no head (or heart) for ambitious gambles that result in great increase in wealth. The best that I could do, is preservation. And that's with a vehemently parsimonious life, that most here decry as being self-limiting and downright stupid. Now imagine there being several descendants, likely less dedicated to parsimony than me. What's going to happen to the family fortune? It doesn't take drug abuse or idiotic spending or some flagrant abuses to witness the money wither away.

Even for smart and responsible people, it's hard to build wealth, and to retain it. Maybe that's a good thing? Because if lots of us are wealthy, than nobody is wealthy, right? Wealth, to be true wealth, has to be a bit exclusive.

I wonder: if a level-6 person were to enjoy a level-6 lifestyle, how long before dropping down a level or two?

 

[Taco]

Interestingly, my career brought me in contact with one of the Carnegie fortune’s descendants, though of his also-wealthy brother, Thomas. Nice person. She made her own jewelry …

My wife enjoys wearing Gogo’s raccoon pecker ring.

 

[youbet]

Keep in mind that one being a level 6 does not mean one makes wiser decisions on investing and spending. Some do and some don't.

But, apparently most of those level six folks did something financially right along the way...............

 

[robnplunder]

I'm not sure how to answer that, but we had our kids late in life and could afford to send them to private school up through grade 8 and then we actually moved to a different city to insure we got the kids into the best school in our region of the state.

Kid's education was the one thing where we "lived" like a 6 but had the finances of a 4 or 5. Everything else, we look more like 3's or 4's and, as always, YMMV.

Ditto (bold part). We sent DS to private schools until he went to college. His high school education cost more than his college education, which probably delayed our ER by a year or two.

 

[pjigar]

Keep in mind that one being a level 6 does not mean one makes wiser decisions on investing and spending. Some do and some don't.

This is true for my level 6 friends. Sometime they make downright dumb investing decisions but they can afford to make mistakes since they are wildly successful in their core activities. And remember these are really smart people otherwise. Fortunately they are making good spending decisions. This kind of goes back to the family fortune: once the successful activity stops then the fortune may quickly erode due to investing and/or spending mistakes.

 

[ShokWaveRider]

We have our own level of wealth. There is only one. Having enough to live comfortably, with the ability to afford above average shelter, food, vacations, "stuff", discretionary spends, above average income from a well above average stash (According to various financial experts), and not having any significant "controllable" worries for the foreseeable future.

If one has those, then, one is golden. Good health would be another, but for the most part it is not really controllable.

 

[TickTock]

The best that I could do, is preservation. And that's with a vehemently parsimonious life, that most here decry as being self-limiting and downright stupid.

Speaking only for myself, I do think your lifestyle is self-limiting in terms of how much you spend vs. how much you could safely spend. I certainly don't consider it stupid, just a different choice. You do complain more than most about the consequences of the lifestyle you've chosen.

 

[Rianne]

Meh, I just finished the excellent book, “Fortune’s Children,” about the world’s richest family of the Gilded Age, the Vanderbilts, written by a Vanderbilt from a never-moneyed branch of the family. Classic wealth story: The founder was rags to riches, his son worked hard to double the fortune, and then everyone else afterward proceeded to blow it, vapidly, on mansions, ever-sillier parties, yachts, and intermarriage with titled, failing, Europeans. Only 100 years ago, Vanderbilt mansions literally lined 5th Avenue, yet today not a single one stands. All demolished. Many unreal summer mansions still stand in Newport, but not one was occupied beyond the generation that built it.

The major takeaway for me is, what, really, is the point of building a fortune? It takes hard work, focus and financial acumen to make and keep money, otherwise it floats away, like a gas.

^This is what makes HBO "The Gilded Age" fun. All the social climbers, the big money men who walked over each other, snubbed those with smaller mansions and lived by their name and status. So this is the 1880s or so. Here we are in 2025, is it much different?

 

[Gumby]

.... Most of these individuals have parents that are upper middle class, they attend above average schools, they can drop out of school, if desired, not worry about an income, and these individuals came up with ideas that did not require returning to school, and, had they flopped, they always could have returned to school.
....

This is a good point. For those without a parental safety net, walking the tightrope to success is a far more formidable challenge.

 

[Diogenes]

You do complain more than most about the consequences of the lifestyle you've chosen.

My complaints (besides the usual whining about taxes) are mainly social and psychological.

Jones spends more money than Smith on a car. Both are sitting in traffic. Jones has air conditioning, a radio, comfortable seats. His car is well-insulated and quiet inside. Smith is in a bedraggled jalopy with no climate control... that suddenly overheats in traffic. The reply would be, for Smith to spend more money on a car. Doesn't have to be a Lexus or a Range Rover, but something built in the 21st century would be sensible.

In our theme here, Smith is level 1, while Jones is 2 or 3. Big difference, and obvious too. No argument from me.

The argument is social and psychological. Suppose that both cars break down. Jones has somebody to call... friends to come help him. Smith has nobody. The video about "levels" touches on this... meaning, it's not just about wealth or material resources, but about human connectivity. Those folks down at level 1, aren't just poor (or miserly). They're alone. They don't have a kin-group or a social group or a network to rescue them in difficult times. They're widows who live alone, putter-around alone, one day fall in the bathtub... and aren't discovered until months later.

What gives me so much pause, is how in our society, our social-purchase correlates with our material purchases. The widow in my vignette would face the same prospects, whether she's part of Vanguard's Flagship Select, or if she's destitute. It's not her wealth that bestows resources on her, but the correlation between spending and social engagement. Kind-of the opposite problem, from our earlier discussion, of how the Vanderbilts dissipated their wealth across the generations.

 

[Markola]

My wife enjoys wearing Gogo’s raccoon pecker ring.

Wow! Small world, though I have questions about that ring.

 

[imjustawarrior]

I got an invite in the mail today to attend a gala this fall. My DW and I always laugh at the idea of attending a gala. We are not gala people. We have attended the last couple of years because we really enjoy the evening. They usually have a very good speaker, and we see a lot of people we know. It is a fun evening.

 

[planuntilthefisthits]

Funny story about attending a fundraiser:

The event was a "wine dinner," and aside from the entry fee, money for the charity was raised from a pre-dinner silent auction and a post-dinner live auction of super-premium wines. I had a habit of trying to drive up the bid price in order to help the charity, but always quit bidding at the right time. One year, on the last auction item of the night (traditionally the most expensive wine), I did my part to drive up the price. I stopped bidding at the right time, but absentmindedly and innocuously touched my nose and then heard the auctioneer (a friend) say, "Sold for $700 to Planuntilthefisthits!"

Well, it was a benefit for children, so we put down the money and used that bottle of wine a few years later to celebrate our first post-pandemic dinner at another friend's home.

 

[COcheesehead]

We’ve been to many “galas” which is just a fancy name for bring your checkbook.

Lots a rubber chicken and a few silent auction items soon forgotten, but you do it for the charity.

We stopped going a few years ago. I would rather donate and just stay home.

 

[luckydude]

My complaints (besides the usual whining about taxes) are mainly social and psychological.

Jones spends more money than Smith on a car. Both are sitting in traffic. Jones has air conditioning, a radio, comfortable seats. His car is well-insulated and quiet inside. Smith is in a bedraggled jalopy with no climate control... that suddenly overheats in traffic. The reply would be, for Smith to spend more money on a car. Doesn't have to be a Lexus or a Range Rover, but something built in the 21st century would be sensible.

In our theme here, Smith is level 1, while Jones is 2 or 3. Big difference, and obvious too. No argument from me.

The argument is social and psychological. Suppose that both cars break down. Jones has somebody to call... friends to come help him. Smith has nobody. The video about "levels" touches on this... meaning, it's not just about wealth or material resources, but about human connectivity. Those folks down at level 1, aren't just poor (or miserly). They're alone. They don't have a kin-group or a social group or a network to rescue them in difficult times. They're widows who live alone, putter-around alone, one day fall in the bathtub... and aren't discovered until months later.

What gives me so much pause, is how in our society, our social-purchase correlates with our material purchases. The widow in my vignette would face the same prospects, whether she's part of Vanguard's Flagship Select, or if she's destitute. It's not her wealth that bestows resources on her, but the correlation between spending and social engagement. Kind-of the opposite problem, from our earlier discussion, of how the Vanderbilts dissipated their wealth across the generations.

It's a sweeping (and stereotypical) generalization to assume that just because someone has lower level of wealth (in your example, Smith being at level 1), that this person has no friends and is socially isolated.

I have friends who are in lower levels of wealth who have a very rich and vibrant social circle of good friends and loving relatives. At the same time, I know people at higher levels of wealth who live very isolated lives and have no one to count on (other than what their wealth can them).

No offense, but your statement is a good example of the kind of stereotypes associated with wealth levels as perpetuated by this Holy Schmidt video, which attributes personal characteristics and lifestyle choices to people at different wealth levels, and assumes that, for example, people at lower levels are less educated, financially ignorant, and socially isolated, etc., etc.

We all have different and unique life experiences, and a lot of times, our financial success (or lack therefore) is driven as much by luck and circumstances outside our control as it is by hard work, education, smarts., etc. We all like to think that we got to where we are through hard work, LBYM, good choices, sound investments, but the reality is that luck and circumstances also play a huge role in our success, even though we may be reluctant to acknowledge them.

FWIW, DW and I at level 6, but I have enough self-awareness to know and acknowledge that luck played a huge part in our "success". Just because we are at Level 6 doesn't mean that we're somehow smarter, more socially connected, and more able than people at lower levels. Far from it. At the end of the day, I know that we got really, really lucky, that's all. YMMV of course.

 

[Calico]

@luckydude

Yours is the most insightful comment on this entire thread.

 

[Koolau]

We all have different and unique life experiences, and a lot of times, our financial success (or lack therefore) is driven as much by luck and circumstances outside our control as it is by hard work, education, smarts., etc. We all like to think that we got to where we are through hard work, LBYM, good choices, sound investments, but the reality is that luck and circumstances also play a huge role in our success, even though we may be reluctant to acknowledge them.

FWIW, DW and I at level 6, but I have enough self-awareness to know and acknowledge that luck played a huge part in our "success". Just because we are at Level 6 doesn't mean that we're somehow smarter, more socially connected, and more able than people at lower levels. Far from it. At the end of the day, I know that we got really, really lucky, that's all. YMMV of course.

I like the expression "I'd rather be lucky than good." I completely agree that a lot of what determines our "level" is luck. Just being born in the "First World" - especially the USA gives one a leg-up. Of course, hard w*rk and determination are usually needed to exploit the luck that life has handed us.

 

[Dtail]

It's a sweeping (and stereotypical) generalization to assume that just because someone has lower level of wealth (in your example, Smith being at level 1), that this person has no friends and is socially isolated.

I have friends who are in lower levels of wealth who have a very rich and vibrant social circle of good friends and loving relatives. At the same time, I know people at higher levels of wealth who live very isolated lives and have no one to count on (other than what their wealth can them).

No offense, but your statement is a good example of the kind of stereotypes associated with wealth levels as perpetuated by this Holy Schmidt video, which attributes personal characteristics and lifestyle choices to people at different wealth levels, and assumes that, for example, people at lower levels are less educated, financially ignorant, and socially isolated, etc., etc.

We all have different and unique life experiences, and a lot of times, our financial success (or lack therefore) is driven as much by luck and circumstances outside our control as it is by hard work, education, smarts., etc. We all like to think that we got to where we are through hard work, LBYM, good choices, sound investments, but the reality is that luck and circumstances also play a huge role in our success, even though we may be reluctant to acknowledge them.

FWIW, DW and I at level 6, but I have enough self-awareness to know and acknowledge that luck played a huge part in our "success". Just because we are at Level 6 doesn't mean that we're somehow smarter, more socially connected, and more able than people at lower levels. Far from it. At the end of the day, I know that we got really, really lucky, that's all. YMMV of course.

And thus your name luckydude.

 

[Taco]

It's a sweeping (and stereotypical) generalization to assume that just because someone has lower level of wealth (in your example, Smith being at level 1), that this person has no friends and is socially isolated.

^^^ This. Definitely this!

The idea that "wealthy" Jones has someone to call for help with their broken down car, but "poor" Smith doesn't, is just silly.

A more likely scenario is that someone with wealth would just call for a tow and not bother their friends. Smith would call his buddies who would bring their tools / tow straps and come lend a hand.

Saw on t-shirt many years ago:
"Nobody likes a redneck until their car breaks down."

 

[Diogenes]

Nowise would I exclude or diminish the impact of luck, whether in building wealth or in building relationships. Implication that skill or talent, are what determine success, was never my intent! But I do note, with much personal chagrin, that the video is quite right, in drawing correlation between willingness to spend, and the building of social connections. I wish that it were otherwise.

Put another way, it's a myth that wealth by itself leads to social connections. It does not. It's the usage of wealth, and not the mere possession of it. That's something that I didn't realize 30+ years ago, having then thought, that if only I achieved (by skill or luck) such-and-such, then all sorts of bennies would rain down from heaven. There is no such rain. One has to purchase the sprinkler system.

 

[imjustawarrior]

The idea that "wealthy" Jones has someone to call for help with their broken down car, but "poor" Smith doesn't, is just silly.

Makes me think of Gene Hackman and his wife. They were level 6, but they were recluses.

 

[imjustawarrior]

Nowise would I exclude or diminish the impact of luck, whether in building wealth or in building relationships. Implication that skill or talent, are what determine success, was never my intent! But I do note, with much personal chagrin, that the video is quite right, in drawing correlation between willingness to spend, and the building of social connections. I wish that it were otherwise.

Put another way, it's a myth that wealth by itself leads to social connections. It does not. It's the usage of wealth, and not the mere possession of it. That's something that I didn't realize 30+ years ago, having then thought, that if only I achieved (by skill or luck) such-and-such, then all sorts of bennies would rain down from heaven. There is no such rain. One has to purchase the sprinkler system.

I have found the best way to build social connections is by having a dog. The cuter or uniqueness improves the odds.

I can meet more people than I care to with my dog.

 

[planuntilthefisthits]

I have found the best way to build social connections is by having a dog. The cuter or uniqueness improves the odds.

I can meet more people than I care to with my dog.

I'm seriously curious about this, and hope you or others can explain. I see random people walking their dogs in a park or street and then they stop and have animated conversation. Sometimes I am with a friend without his dog, and if he comes across a dog, he gets all swarmy and wants to talk to the owner. Clearly these people don't know each other. What are they talking about? Why the attraction?