You want to be rich. Perhaps you plan to be very wealthy indeed.
Who wouldn’t? Talking about the pros and cons of being wealthy seems as one-sided as a boxing match between Warren Buffett and Muhammad Ali.
However I’ve been giving this some thought – inspired by my strange and unfounded fear of winning £56 million pounds in the lottery – and there are quite a few bad points.
Don’t get me wrong – it’d be a nice problem to have. If you searched out ‘the pros and cons of being wealthy’ as a sanity check before accepting a briefcase of cash, I say take the money!
Later on you can come back and tell us how hard it is being rich. But let’s start with the good points.
The pros of being wealthy
Unless you’re very religious, contrarian, or you’re visiting our planet ahead of the full-scale invasion from Mars, you’ll know how great it is to have money.
The esteemed rap poet Nas sums up the general picture as follows:
Clothes that I buy, Ice that I wear,
Clothes that I try, close your eyes
Picture me rollin, sixes, money foldin
Bitches honies that swollen to riches…
Mr Nas is a bit weak in rhyming the clothes he’s trying with those that he’s buying, but then he doesn’t need to try too hard – Nas knows we’ve all dreamed of being rich. He just has to flick the switch.
At the very least, being wealthy gets you:
- Financial freedom
- Holidays anywhere
- A great home
- Funding for your pastimes and passions
- Good suits
- Great health care
- A swimming pool full of girls in bikinis
- Gold teeth
Feel free to substitute your own desires. Personally, I’d like an island.
The downsides of being wealthy
When I said this article was about the pros and cons of being wealthy, I meant it: having a lot of money has drawbacks, especially if you get rich overnight.
I’ve met a fair few rich people over the years, mainly through work, and I’ve also read widely on the subject, and I feel confident in listing these negatives.
(For clarity, I’m talking about being really rich – £10 million / $15 million net worth or more).
Money doesn’t make you happy
After a surprisingly low point, more money doesn’t make you happier. Rich people get depressed, just like the middle classes. True, there’s no evidence that money actually makes you unhappy (although one rich man is giving it all away) but it could distract you from fixing your real problems.
The end of your goals and ambitions
You see this with children born into money, as well as people who built a company up for several decades and sold too late to start another. When you have the money, what next? The trick seems to be to find a substitute to your old goal of achieving financial security. That’s why you can’t walk far in Africa without tripping over a philanthropist.
Being judged unfairly
People are very critical of the wealthy, especially here in the UK. In the US entrepreneurs are celebrated, but newly rich Brits will find many people waiting for them to fall. I’ve seen it in work – a self-made man or woman leaves the room, and someone says “well, he was lucky” or “he’s out of ideas” or even “what an asshole”. Not nice, but it happens.
Someone is richer than you
Rich people are human, too. Your yacht isn’t as big as the one next door, or you had to buy your furniture, unlike your neighbours who had theirs passed down from the 17th Century. Nobody is the richest person in the world on every measure – how many billions would Buffett give to be young again?
Guilt
Money can’t buy the love of your friends and family. “Don’t feel bad about being rich,” they say. But do you believe them? One has a broken boiler, another has a child with special needs, and then there are distant relatives who can’t afford nursing care. Do you help them all? Can you? Where do you draw the line?
Being rich is a big deal
Buy a country house and you need staff. Invest your millions and you need accountants. They move your money offshore, and now you don’t understand the taxes. You’ve no time to learn, because you’ve three different architects coming over to quote on your summer home. You think you’d be different? So do I. Didn’t they?
Scams and fraudsters
One reason you’ll need to all those professionals is because you’ll need help warding off the crooks attracted to your wealth. Nobody wanted to pretend to be you when you owed the bank money, but now you’ve millions parked away it’s a different story. Let’s hope your financial advisers aren’t swindlers, too.
I love you (and your money)
The big one. Does she really find you fascinating, or just your bank balance? Is he really won over by your beauty, wit, or experience, or does he just hope to bleed you dry while banging the French au pair?
Money can be all consuming
The most surprising thing about How to Get Rich
The incredibly rich founder of Maxim magazine writes:
“Let me repeat it one more time. Becoming rich does not guarantee happiness. In fact, it is almost certain to impose the opposite condition – if not from the stresses and strains of protecting it, then from the guilt that inevitably accompanies its arrival.”
And he should know.
To conclude with the rapper’s perspective, what I didn’t tell you earlier is that the lyrics were from a song called Hate Me Now, in which Nas laments the ill-feeling his wealth inspires out on the streets.
Our bard sums up his frustrations thus:
You wanna hate me then hate me; what can I do
but keep gettin money, funny I was just like you
I had to hustle hard never give up, until I made it
Now y’all sayin that’s a clever nigga, nuttin to play with
Of course, the single was a hit and it made Nas even richer, just like Dennis’ How to Get Rich book has become a bestseller.
Being wealthy has its rewards, but irony – that’s priceless.
Question: Do you think the pros and cons of being wealthy are in balance? Would you rather be rich or just comfortable? Please let us know below.
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{ 28 comments… read them below or add one }
Well written article… And yet, I’ll take the problems of being legitimately rich any day. (Unlegitimately rich would be like Bernie Maddoff, that I don’t want).
Money Reasons on: 10 Millionaire Lifestyle Secrets
@Money Reasons – Thanks, we seem to be on the same posting wavelength today! Some cool facts you’ve found there. For the avoidance of doubt, I’d take the money too!
ha! ha! Brilliant article…. well written, funny, and educational.P.S. I’d take the money too.
I’d take the financial independence anyday. My motto is slightly different to yours with ‘Money doesn’t make you happy but it sure helps’.
The problems faced by the rich and poor are very different but I still think the ones you listed are preferrable to what some people are facing today:
- If only I had some money I could go private and get it sorted quickly rather than waiting for the NHS.
- The debt collectors are at the door again.
- Darling should we eat tonight or heat the house?
.-= RetirementInvestingToday on: UK Inflation – February 2010 Update =-.
@RIT – Yes indeed, I think we’re all agree it’d be swell to be mildly rich. But I do think there’s a case for saying truly rich isn’t a bed of roses? I felt the Dennis book was quite candid in this regard, though there’s no doubt he’s inherently quite a melancholy type.
@Money Reasons – Cheers. Interesting you bring up Bernie Madoff. He’s a classic example of what I mean about how the rich can get taken in – most of his investors were in this bracket.
@swebb – Thank you kindly!
I’ve seen this firsthand with my parents… They worked their asses off for 20 years to get where they are today and their families are now jealous and treat them differently… being successful has literally driven a wedge between them and their brothers and sisters and thus between me and my extended family as well. Super annoying and I hope that never happens with my sister and I (assuming only one of us gets wealthy).
Insightful look since a lot of people don’t think of the downside.
.-= Ryan @ Planting Dollars on: Hiking Diamond Head and Snorkeling In Waikiki =-.
The secret Monevator, is to be wealthy and have nobody know how much you make or have!
Nobody will EVER know what I make or have. They may guess, but they will never know which is exactly the way I like it. In fact, it’s better to be perceived as poor and have bank for some of the reasons you mention above.
The only thing I reveal on my site is my “Freedom Fund” barometer. It’s a measure of one savings account, but more importantly, I need it to be included in Kyle’s wealth tracker list! lol
.-= Financial Samurai on: The Most Important Tip For Job Hoppers: Join People, Not Firms =-.
@Ryan – It’s so sad when success backfires like that – I hope your family finds someway back. (Let’s hope your sister doesn’t start blogging?
)
@Sam – Yes, this is pretty much my outlook, offline and online. My favourite house I ever lived in – in a very rough part of town – looked like a crack den from outside. (It had broken glass cemented into the top of the walls!) But behind was by London standards a little oasis. I often think of it when thinking about how to present my financial profile to the world. (Admittedly I was a student and I did have no money then, but you take the point).
It is tempting to be like Flexo from Consumerism Commentary and reveal all my finances on Monevator, in semi-anonymity, as I think it could be useful for readers to see the ups and downs, but once you go public you can’t take it back. What I may do is set up a demo real-money portfolio or two, a bit like your cash freedom fund, and track that here.
I know what its like to not be rich so if you are willing to force it upon me I’ll take my chances with money!
Frankly, if suddenly I had it, my life would change little. I have no need for a bigger house or a new car. As long as my family is healthy I have everything I already need with the exception of money in the bank to sustain my current lifestyle through retirement.
.-= LeanLifeCoach on: Combat The Closing Techniques – The Puppy Dog Close =-.
@LeanLifeCoach – Mine neither, with the possible exception of buying a property irrespective of what I see as the overvaluation. I’ve often thought I’d try to hide a small lottery win (say £1m/$1.5m) completely from my friends, and just invest the lot. (That said, I’d give some money to my parents and tell them “I had some luck on the stock market I wanted to share” or similar! And maybe the same for sibling down payments on property.)
Was it Earl Nightingale that said ” You’ve got to BECOME a millionaire on the inside before you can be one on the outside ”
I found that a pertinent point , even with all the risks attatched im guessing most would still take it
Keeping it a secret .. that’d make you feel like Clark Kent right .. you’d have all these super powers of wealth & you’d have to be very elusive in how you displayed it to help others , it’d be one hell of a feel good kick ! .. helping others yet being humble enough to not let them know it was you
The Investor , think i read you saying you are overweight on equities right now with inflation looming , i’ve just sold out all my holdings today , it is going to be painful keeping it in cash at near 0 % .. , if you squeeze another 10 % or so out good on you man , im just going to grit my teeth & sit tight for now , atleast i got most of my losses back yay
@Davy – Thanks for the comments. (I deleted the Kipling poem after initially approving it, because it just seemed to break up the discussion here).
Clark Kent – yes, that’s exactly how I’d like to be wealthy. I’m already a bit like that as a blogger, with most of my family and friends having no idea about Monevator.
Re: Stocks, if I was only looking for 10% from the market I’d not be so overweight… I am looking for 50-100% over the next 5-10 years or so, before dividends. Possibly much more. I would love to be more diversified though, not least because I think asset allocation is woefully overlooked by private investors and I’m being a hypocrite. I’m watching Gilts like a hawk, and will start buying 10-year gilts at 5% most likely.
Yeah, worth picking one fund of yours and just tracking it. Pick a savings cash account, or equity investment account or whatever. It’s fun!
.-= Financial Samurai on: Marketing Or Manipulation? =-.
I’ve decided not to discuss specifics of my money for another reason not mentioned. The tax man! Not that I’m behind in taxes, but because the government has used blogs and Facebook postings against people. No BS on this.
.-= Investor Junkie on: Are You Saving Too Much? =-.
@Sam – I’ve actually set up an account ready to track a small £10K equity trading portfolio, really just to have some nice way of grouping my share write ups together. The trouble is it sends the wrong messages in some ways (passive is actually better for most, and £10K isn’t barely enough for efficient trading of 10+ holdings). So I hesitate.
@Investor Junkie – Wow, do you have any links? I’m such a goodie two-shoes I wouldn’t be worried about the tax man calling from a financial point of view, but could do without the paperwork and time etc.
The Investor , agreed .. there’s alot of good honest advice out there about correct asset allocation & it does make common sense , as you never know which asset class will be declining or advancing at a particular time , there was an interesting article i read on it not so long back showing how it can effect the deviation , not sure what you’ll make of it
http://tinyurl.com/ykuodg
With the 10 % , i just meant that the markets are looking overdue for a correction , that’s why im taking a breather from them , there may be some gains left on the table who knows , im looking to buy in at lower levels .. im after similar gains to you in the long term , never bought gilts as of yet , would consider it though
$10K? Don’t feel bad. I’m just tracking $1.8 billion in The Samurai Fund.
.-= Financial Samurai on: Marketing Or Manipulation? =-.
“The end of your goals and ambitions”
This is so true. Once you traveled to all the places you wanted to go and eat at the finest restaurants, you do become bored. People are looking forward to visiting Argentina and you already been there. Your neighbor is excitied and when you already had a safari, you almost wish you didn’t b/c of the excitement of looking forward to it. You run out of fun and ambition. trust me, I know
.-= Moneymonk on: Friday Quote =-.
About a million quid should do it. Much more than that seems excessive. Even with just a 5% real income from that you’d have 50K. 50K on top of any salary is a lot of money in my opinion, not to mention the million sitting there to dipped into on the odd occasion.
If I won the 56 million I’d be very tempted to give 55 million to somebody who needs it more than a millionaire.
I could imagine there being a tough side to being wealthy..knowing that I would still like to give it a try myself. Good points.
.-= Ken on: Weekend Linkage – Olympic Edition =-.
Pros. I get to travel all around the world with my family. Can I also buy an island?
Cons. Where do I go next after visiting all the places/countries I like?
.-= DJ@ProductivePinoy on: Avoid Low Price Strategy =-.
Even if you’re not really rich, you encounter this problems…but then rich people encounter a lot of problems than the middle class people, yes they have all the resources but there are things that money can’t buy, love, friendship, peace of mind and loyalty. Very well said, though admittedly we all want to get rich.
.-= Christina on: The Dollar & Gold – What’s Next? =-.
I think you raise a lot of valid issues, wealth provides a person with freedom and options, nothing more. Wealth can also be a burden, you need to really be in touch with yourself to manage it well. Most wealthy people I know appreciate the freedom but can also find it stressful.
to live in your home that is paid for and you know that you aint got sign on and be harassed and made homeless by government policy has to be better than being skint…..the rest is bonus
Being wealthy begins with a mindset. I remember when I was as broke as a joke and blaming everything else but myself. I had some of the best business opportunites out there, some of the best partners, but I always seemed to mess things up. After years of living in this broke state of mind, I realized that I was the one who was at cause of all my “broke-ness” and no one else. Being wealthy has to be a mindset and has to come from within, BEFORE it ever manifests in its psychical form.
One thing I have come to understand is that when you are too poor, your life is all about money or more precisely, the sheer lack of it. If you become too rich, then your life becomes all about money or more precisely having an excess amount of it. There is a comfortable middle where your life is no longer about money, and if you have been poor and broke that is probably where you need to be. Living in a moderate way and secretly having a lot of wealth is probably the best way to go.
Your main problems aren’t really with money, but rather with faulty human psychology.
That money doesn’t bring you happiness isn’t a problem with money; it’s a problem with building up unrealistic and inaccurate expectations.
If being rich means the end of your goals and ambitions, then you are a very shallow person. Try pursuing wisdom and truth, and fulfillment of the mind; not only can you do that while trying to get rich at the same time, but once you’re rich, you can still keep on with those higher pursuits.
And nobody cares about being judged unfairly. Surround yourself with as many wise and good people as you can and this will never be any more than an occasional and minor nuisance. Besides that, if people get aggressively envious, you can afford jiu-jitsu lessons and a gun license.
Someone being richer than you is, again, not a problem with money, but with a lack of gratitude. If I have $20 million, I won’d give a damn if the next guy has $25 million; because I have more than enough for what I need materially already.
As for guilt, be honestly charitable and have good use (for yourself to save or spend, or for others) for every single dollar you have, and you will never feel guilt. I don’t see the point in even bringing this up.
Hiring others to handle your wealth isn’t a problem with being wealthy but rather with how you use your wealth, along with how much you know about the use to which you put it. Keep things as simple as you can and plan things out ahead of time and it won’t be complicated enough to justify a complaint.
Scams and fraudsters are preventable by means of research and credibility. If you can’t keep things simple enough to avoid great problems with how you organize and protect your money, you may as well give most of it away to charity and manage the rest by yourself.
Your last point has far more to do with recognizing female psychology than with being rich; most people who are good with women rarely come across this problem. There are signs you can look out for and subtle tests you can give to weed out the gold diggers.
Thanks for the article. I’d sometimes wondered whether it was worth becoming rich, and for which reasons. It’s hard to discuss since a lot of people say “yes” automatically, and don’t understand that there’s some effort involved, and this may or may not be worth pursuing depending on one’s talent, and whether the time needed justifies the change in one’s life due to the money (e.g. working constantly until one is 75, and ending quite rich but without having lived, is hardly worth it. I would not trade bodies and finances with Warren Buffett!). There are other related questions such as in the process of getting rich whether you get to create new cool technologies or music, or just something boring like filing tax documents.
I make a great salary working as a scientist at tech companies. And I also do investing and created some early stage startup at this point. But I could pursue startups more or go more into business if I cared about money that much. I realized already making 6 figures that more money doesn’t really matter for my lifestyle. Like Warren Buffett said the only real difference at the high end is transportation: private jets. I suppose one could get a bigger house but at some point it’s just wasteful and tacky, and the trappings of wealth become more and more gross and superficial at some point. I’d like a nice house, or a vacation home also, but after that I’d rather spend money on curing diseases or helping people. The other points made in this article are of some minor importance, but as Marlowann commented, they’re really problems with insecurities inside people, that people need to address anyway, they’re not pros or cons of having money.
I feel like the biggest advantage of being rich is being able to work on whatever you’re most passionate about. Since when you’re hired by someone often you’re told what to do, and that might not be the best task on which you should spend your very limited time on Earth. I feel lucky to have a career in science and technology where there is a lot of flexibility in what I can work on. Nevertheless having more money would give me more potential positive impact on the world.
Some of the other perks such as having houses in multiple countries, can actually be had by people with less income if they just shop for a good deal and rent out the house when they’re gone. Beautiful women can be had by anyone who works out, has a decent career, has good social skills, and practices dating. If you want to be superficial, even luxury cars can be obtained on the cheap by shopping for a used car. I don’t care about luxury cars and I enjoy a pretty woman but it’s more important she has a good soul.
So on the whole I mostly view wealth as something utilitarian to let me work on fun problems, since I already have enough money to live a nice lifestyle. I mostly do investing for the theoretical reasons that it helps correctly allocate capital to growing businesses thus creating jobs, prevents loss of principal due to the central bank, and benefits capitalism and creates new technologies. Similar reasons for my startup. That is, the drive to make money is because of the theory of making the world better, and not the practical benefit of spending it. The practical benefits don’t actually seem that big since I know rich and non-rich technologists and we all live nearly identical lives anyway, it’s just we get to do more or less exciting work and have more or less ability to change the world. Getting that extra $100k, or even $1m in funds will modify only a little bit of my day, where maybe I take a helicopter home instead of car, but on the whole I’ll be happy either way and just do fun and challenging activities.
Probably the money is most appealing to people who are so superficial that they interpret having a helicopter instead of a car as evidence of them being a better person. This superficiality is a non-sequitur although greatly encouraged by my society (America). It doesn’t really change their lives much, and almost surely worsens their character, personality, relationships, and friendships. However even if these people are only motivated by the superficial desire to flaunt their ego and as a result they create businesses, jobs, services, goods, then this is still a good thing, which is probably why this is held out as a carrot, motivating people to be rich. But the motivation is backwards so it would probably be better if people were directly motivated by the desire to create businesses and improve society than being driven solely by money, that way they wouldn’t be driven by negative emotions such as jealousy, or feel their motivation is gone if they become rich.
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