What Class are you?
Posted on July 30, 2008
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Although I eschew talk of “Class Warfare,” David Brooks makes an interesting observation that Americans can be divided into two classes: the Investor Class and the Lottery Class. It’s interesting to me that he doesn’t choose “rich” and “poor,” or “haves” and “have-nots” to describe the two classes, and I think he’s correct to use the terms he does, because they emphasize that the class you belong to isn’t determined by how much money you have, but the class you choose to place yourself in will ultimately determine your financial success or failure.
I disagree with him on one minor point: he says some people have “little access to 401(k)’s or financial planning” which to me implies that these people are unable to invest. I don’t think that is correct. While many people don’t have a 401(k), anyone can open a Roth IRA account with Fidelity or Vanguard and start their own retirement account.
How do you determine what class you are in? It depends on your financial behavior. Do you cut expenses as much as possible? Do you spend less than you earn, saving and investing the rest? If so, then you’ve placed yourself in the Investor Class. On the other hand, if you spend more than you earn, carry a high debt load (especially debt from “anti-thrift” institutions), waste money on lottery tickets, etc, then your behavior places you solidly in the Lottery Class.
Cheers,
Ken
This is great info to know.