You're Not Super Rich? You Lucked Out.

By Jonathan Clements

Great wealth is overrated.

Whenever my kids swoon over a palatial home or a passing Ferrari, it always bugs the heck out of me. Before long, I am on my soapbox, insisting that they shouldn't be awed by such symbols of wealth.

This might sound odd coming from a personal-finance columnist. But the fact is, while it is comforting to be financially secure, money is no measure of self-worth, no guarantee of happiness -- and no reason to be impressed.

We all tend to sit up and take notice when we come across people with fancy titles, hefty incomes and immense riches. Yet these aren't signs of genius or virtue. Want proof? All it takes is two words: Paris Hilton.

Wealth may be inherited, which means the beneficiaries' struggle for riches didn't extend beyond the delivery room. Legendary investor Warren Buffett, the billionaire chairman of Berkshire Hathaway, has described "the idea that you win the lottery the moment you're born" as "outrageous."

What about the self-made rich? Shouldn't we be more impressed by them? While their hard work and perseverance are often admirable, I wouldn't be too quick to deify.

Today, if you are adept at judging the chances that a corporate takeover will go through, you can make good money running an investment fund devoted to merger arbitrage. Such a skill, however, wasn't nearly so valuable in thirteenth century England -- or, for that matter, twenty-first century Afghanistan.

In other words, in a different society or at a different time, your peculiar set of skills might ensure fabulous financial success. But in today's America, you are just another working stiff.
Displays of wealth can also be misleading. Folks can appear wealthy -- but the mansion may be fully mortgaged, the cars might be leased and the landscaper may still be awaiting payment.
Even if you come across somebody who can easily afford the trappings of wealth, the trappings themselves are not a sign of wealth, but of wealth that has been spent. The money lavished on the cars, homes and jewelry is now gone.

True, these purchases could always be sold. But there's no guarantee they will fetch the price that was paid -- and, in the meantime, they may require hefty maintenance costs.
Don't get me wrong: There is nothing wrong with spending. The whole reason for saving and investing now is so we can have money to spend later. That said, I can't imagine why I should find this spending impressive -- and I am not sure it is making the spenders happy.
As the old adage goes, money doesn't buy happiness. Yes, those with high incomes and more wealth often say they are happier.

This may, however, be a so-called focusing illusion. When the well-heeled are asked how satisfied they are with their lives, they contemplate their position in society -- and they realize they're pretty fortunate.

But research has found that, when high-income earners are asked about their emotions on a periodic basis throughout the workday, they don't report being any happier -- but they are more likely to say they are anxious or angry.

All this might have you scratching your head. It seems obvious that your life would be better if you had a gardener to maintain the yard, a chef to prepare your meals and a private jet to whisk you off to exotic locations.

And if you were suddenly handed all these things, life would indeed be grand -- until you got used to them. Unfortunately, after a while, you would become accustomed to the great food and the no-hassle travel, and you would be hankering for something even better.

Problem is, once you are used to life's finest, that hankering can be hard to satisfy. Suppose you go to the best restaurant in town with your wealthy friends. To you, the food is unimaginably good. To your friends, it is just another meal -- and yet there's no place better they can eat.
As you might gather, I think it is important to realize that there is nothing that special about the wealthy or the life they lead. But my goal isn't to discourage folks from striving to be rich. That brings me back to my children.

Not everybody will grow up to be president of the United States -- or, for that matter, president of a major corporation. Still, I hate the idea that my kids might be so awed by such people that they consider these lofty positions out of reach.

Maybe, of course, my kids will decide that they aren't interested in spending their lives in pursuit of fame and fortune, and that would be fine. But I don't want them to be so awestruck by anybody -- whether wealthy, talented or powerful -- that they rule out such possibilities.
Having enough money is important, but having heaps of it doesn't guarantee happiness. Instead, what matters is doing something that you enjoy and that gives you a sense of purpose -- and I don't want my children to be deterred from doing just that.