For happiness, money's a tool, not yardstick --
This is the good life?
The Wall Street Journal ran an article last week about the deep
divisions running between old money and the nouveau riche in Palm
Beach, Fla. It seems that a rather flamboyant entrepreneur who donated
$750,000 to a particular cause was named chairman of the charity
ball that benefited that cause. Chagrinned that an upstart was put
in charge, the old-money crowd snubbed the event, attending instead
another charity ball that was deliberately scheduled on the same
night. The showy entrepreneur publicly declared his ball a great
success by comparing it favorably to the previous year's event:
This year's event raised $2 million vs. $1 million last year.
There's that comparison thing again -- how gauche!
The socialites in Palm Beach representing both old and new money
also keep score -- and have enough grist to keep the gossip mill
going until next year's event.
The trap of normal folks
The well-to-do may have their own petty grievances to deal with,
but they can take their minds off unpleasant situations by making
extravagant purchases of diamond necklaces without worrying too
much about how it might affect their budgets.
It is a problem when regular folks who earn modest salaries or
wages indulge in material things as though they have a limitless
supply of cash. Many just can't resist the latest new gadget or
fashion item and they keep spending nonstop until one day they find
themselves in too deep.
Revolving credit balances -- from credit cards issued
by retailers and banks -- have increased by nearly 108 percent over
the last 10 years, according to figures
from the Federal Reserve.
Research by Arthur Kennickell, a senior economist with the Federal
Reserve, shows how debt is distributed among the haves and have-nots
in America. In 2001, the richest 1 percent held 6 percent of the
nation's debt and 33 percent of its wealth. Meanwhile, Americans
in the bottom 90 percent held 70 percent of the nation's debt and
30 percent of its wealth, according to a report in the Wall Street
The rich are different ...
The rich use debt strategically -- in a way that will generate more
money for themselves through investments, for example. Their strategies
might backfire, but they're in a better position to bail themselves
out if necessary. The average American uses debt to buy things that
he otherwise could not afford.
"Once upon a time, status was conferred upon people by their
class and birth," writes Rowley. "Nowadays, we tend to
use money to compete for rank. Immersed in a consumer culture of
mind-boggling choice, we define ourselves by style and aesthetics."
So rather than purchase a car for the purpose of transportation,
keeping in mind long-term financial goals, consumers may get seduced
into buying a status vehicle, a Lexus instead of a Toyota, as an
outward indicator of prosperity. It looks good in the driveway,
and is a real smooth ride.
The availability of credit has made it all too easy for Americans
to commit future earnings for stuff they may not really need today.
Barraged by advertisements for flashy cars and big-screen TVs and
loads of other consumer goods, we can lose sight of the difference
between our immediate desires (which are emotion-based) and our
long-term goals (which are values-driven). And all too often we
may feel the need to prove something, whether to ourselves or to
our imaginary competition, that we are worthy enough to get a certain
product at whim if that's what we want.
That tendency to try to satiate our hunger for immediate gratification
will result in happiness that is short-lived and could produce long-term
financial problems. Rowley implores us to look within and list those
things that are really important to us and align our financial goals
"If you want to be happy with your money, never measure your
financial achievements against anything except your own goals,"
she says. "We can banish envy by returning to values -- thinking
about what you really desire in your own life, and organizing your
financial house to get those things, or at least the most important
of them. Because when you get what you truly want, why would you
want what someone else has?"
Longtime financial journalist Barbara
Mlotek Whelehan earned a certificate of specialization in financial
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