“…uniquely American upward socioeconomic mobility…” – This phrase is from Thomas J. Stanley, Ph.D. (the author of The Millionaire Next Door, etc), who is one of my favorite authors, in this article.
It was in regards to hyper-consumption, but I believe this upward mobility is an interesting conversation in so many ways. With both good and bad ramifications.
If you look back through most of history, and even today for many, your socioeconomic level was/is defined at birth. A few top achievers, visionaries, and “rebels” were able to rise to prominence from lower classes, but most did not move up but very slowly, if at all. Even owning your own land was uncommon in many cultures, instead trading your labor for the right to use some of it. Kings, Pharaohs, Emperors, Lords, Tribal Chieftains, or Barons were positions only open to the children of existing titleholders. Even the “middle class” of educated, decently paid workers with a comfortable lifestyle had a fairly solid floor – only by a stroke of luck did one move up and out of the poor house. Whereas today, someone can grow up poor but perform well in school and land a scholarship or two, or even spend time in the military. Graduating with a Bachelors Degree and having a healthy work ethic, there is no reason they will not be solidly middle class or higher in only one generation. Many of the richest today such as Bill Gates, Warren Buffet, Elon Musk, Mark Zuckerberg, Jeff Bezos, etc have built their massive wealth in 1-2 generations.
And so far we have ignored that fact that even today’s first world poor and lower middle class live like kings compared to even millionaires from a hundred years ago. Indoor plumbing, refrigeration, automobiles and power tools, options in food, access to knowledge via internet, instant global communication, and on and on. But that doesn’t mean you shouldn’t strive for some wealth.
Given we’re in an unusual time of economic mobility where one can easily move up or down the “class” system, our goal is to climb and amass some $$$’s before economic/class mobility possibly reduces. There are two common paths to upper middle class wealth currently, barring starting a successful business or becoming a politician.
- Slow and steady saving and investing over a 40+ year career, where you’re subject to the whims of society and multiple employers. You only amass several million dollars because of compound interest since you will keep working to 60-70 yrs old. Or…
- Use your youthful drive and stamina making $$$ for 10-20 years with saving and investing 50% or more of your income. Technology and efficiency is changing every industry, so after a little experience you’ll be competing with 50-60 year olds who are re-training, expecting higher salaries, and don’t want to put in long hours. Right or wrong, you can outperform most when in your 20’s and early 30’s because of few family or community responsibilities, ability to burn candle at both ends for a while, and low fixed expenses. Couch-surfing is societally ok at age 25, where it isn’t for a 45 yr old. Between low expenses and relative ease of picking up and moving for a job, your earning power is immense given some drive and finding a well-paid career path.
Either way isn’t a bad option, but we would recommend amassing what net worth you can sooner rather than later. If the world reverts to its more common socioeconomic classes/ceilings, you and your descendants would rather be higher than lower on that scale. There are no guarantees, but we would rather pad our chances, all the while praying it doesn’t change for the worse.