MONEY OBEDIENCE

Think BIG

A friend who lives in the same neighborhood where he grew up recently told me that he can barely hang on to living in his area. It is a shock, because as a boy, he lived there while his father worked and fed the family, and his mom cared for the household without leaving home to work for wages. They could afford their house in that neighborhood, which has really not changed that much as far as socio-economic numbers are concerned. What happened? How is it that my friend tells me that he is “barely hanging on?”

According to an article in the Economist, a large majority of Americans believes that hard work and personal skills pay off. They think that if we apply ourselves enough, success will follow. This optimistic belief in merit – the idea that we each get what we deserve – has been the driving force for America’s success in decades gone by. But it looks like that this optimistic belief is turning out to be more belief than fact.

This is what the Economist had to say on this subject:

“Between 1947 and 1973, the typical American family’s income roughly doubled in real terms. Between 1973 and 2007, however, it grew by only 22%—and this thanks to the rise of two-worker households. In 2004 men in their 30s earned 12% less in real terms than their fathers did at a similar age, according to Pew’s Economic Mobility Project.”

In other words, the typical American family has been losing out in relative terms during the last four decades, since this trend even worsened during the current recession. Not only that, people born into the middle class have an equal chance of rising or falling in class standing – except for black families, in which case the next generation is much more likely to fall than to rise! So, this means if you’re non-black you have a 50-50 chance of doing worse than your father, and if you’re black, your life chances look even worse than that.

The one fairly sure way to improve your life chances is to get an education. Alas, as college expenses rise higher and higher it becomes increasingly difficult for middle class parents – and certainly for lower class parents – to get their children an education.

Still, an optimistic belief in your own future should be your guiding light. Throwing up your hands in resignation will definitely not lead to success. Think big and keep this adage in mind that I learned when I was young. “He who attempts something big has to be admired even if he fails.” (Sorry, I don’t know who said this.) This saying has kept me going and even daring in my professional and personal life. It may not work out all the time, but it sure is better than giving up.

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Posted in personal finance