Who worries more about money, the rich or the poor?

I work with a couple who are probably the most extraordinary savers I have ever come across.

They’re not yet 60 years old, they’re schoolteachers, and they have more than $3.5 million invested in stock and bond index funds.

They also have a house that’s paid for, and they have put two kids through expensive U.S. universities.

But they worry about money.

They worry that they don’t have enough.

They worry about the cost of health care.

They worry about the dropping value of the U.S. dollar.

And they worry about the tax implications of rebalancing their portfolio.

For inspirational purposes, first of all, let’s have a look at how they could have amassed so much money.  Currently, they save far more than a full teacher’s salary.  In the past, they made less money, but look at what the following compounding scenario would have done:

If they started with nothing, 35 years ago, and if they invested $15,000 a year, they’d have $3.5 million, if they made 9 percent annually (a realistic historical return).

Of course, there’s no way that they were saving $15,000 a year, 35 years ago, but they have been saving far more than double that sum for the past 20 years.

By living on 4 percent of their portfolio (upon retirement) they’d have an annual income of $140,000 – which is far more than they have ever spent in a single year.

But they worry about money.

I have another friend who has been teaching overseas her entire life.  Closing in on 60 years of age, she doesn’t have any real estate, and her investment portfolio has less than $20,000 in it.  Because she taught at private schools, she won’t have a pension, and she isn’t eligible for U.S. social security.

When her grown kids are in financial binds, she skims off her paycheck to help them out.

But she doesn’t worry about money – at least that’s her claim.

A few years ago, I figured that those who worry about money are often those who don’t need to.  And those that don’t worry about money are often those who need to sort themselves out.

But I don’t know what to think anymore – because I’ve met poor people who worry and rich people who don’t.

So…to what extent could money worries be hard-wired?  Are we born as either “worriers” or not, regardless of how much or how little we have.

I don’t have the answer… but maybe you do.

And do you worry about money?  Why or why not?

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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11 Responses

  1. woodes34 says:

    Dead On Andrew!

    I come from a family of savers. My parents were depression era babies who grew up with nothing and saved their entire lives. My widowed mother now owns homes and income generating properties in three states. She recently lamented that at 71 she was being "forced" to take mandatory dispersals from her well funded retirement portfolio, even though she lives off of less than her pension brings. Mom's favorite shopping is done at thrift stores and she is an avid coupon cutter. Even so she still worries about money.

    My in-laws spent their formative years influenced by the late 60s- early 70s counter culture. They have always lived- and spent "in the moment". Now entering their 60s they have no savings, no home, and no pensions- yet they never seem to be concerned about the future and how they will provide for themselves.

    I sometimes wonder which is the better situation. Constant nagging thoughts about whether you are doing enough, or blissful ignorance and sleep filled nights.

    • Hey Woodes 34,

      Thanks for such a detailed example. I wonder if there's something statistical about that. Do the wealthy really worry more about money than the poor? Not in every case, of course, but as an aggregate, I wonder if it's true.

      Fascinating story about your family. They definitely fit molds that might be far more common than people expect.

      Where do you fit? Are you somewhere in the middle, between your mother and your inlaws?

  2. I find, for the most part, it's the wealthy that worry the most about money. They worry about making it. The worry about saving it. The worry about spending it. Money enters into the equation of every important decision in their lives.

    The poor may appear to worry about money at times, but if they really worried about it, wouldn't they change their behavior when they use it?

    • You make some really good points Uproar,

      I read on your blog, about how your family sees you as someone (in your own words) who obsesses about money. So here's my question. Do you obsess about money, or do your siblings/relations care so little, that you just look like you're obsessed, compared to their lax attitude about financial security?

      And to what extent do you think our parents mold us? Woodes 34 says that his mother is a tightwad, so I'm curious. If he has siblings, are any of them like his mom?

      The couple I mentioned in my post (with the $3.5 million) have grown children who don't think about money—according to their mother. They spend and don't think about saving. I wonder if that's the norm–that the kids rebel. They weren't spoiled, growing up, but they hung around with wealthy expat kids…..so I wonder.

      To what extent are we influenced by our parents, financially?

  3. woodes34 says:

    My sister and I both worry about the future. Both of us have inherited our parents desire to save and be secure. My wife and I have a broad portfolio of self sufficient real estate and, (thanks to you Andrew) soon to be tax efficient, low fee index funds. My sister has similar holdings.

    And I enjoyed your choice of tightwad to describe my mom. She does not see herself in this light. She simply enjoys not needing to spend a lot. (We grew up considering yard sailing a sport!)

    While she maintains two comfortable homes, one would never peg her as wealthy by her actions. I think she embodies much of Stanley's The Millionaire Next Door- living beneath her means and always thinking long term.

  4. Hey Woodes 34,

    I love how you spelled yard sailing. The image is great, and you did reference it as a sport!

    It's good to hear that you and your sister are balanced. You're savers, but you recognize when excessive savings can go a bit far.

    That said, from a philosophical standpoint, we're all doing our best to live as well as we can. And I don't know if spending money really augments our satisfaction. I mean, I'll bet your mom is happy. And if she spent some of her money, would she be happier? Probably not. However, I suppose that if she worries about money, that's another issue…you can't be completely happy if you're worrying a lot. What do you think?

    Thanks for going down this path with me Woodes 34. I have to admit, I love conversing about money, as it relates to contentment, and wondering what connections there are, if any, beyond just having enough money for health, food, shelter etc.

  5. This is interesting, thanks! I personally worry about money 'round the clock, and it never occurred to me that maybe I'm one of those who, as you put it, don't need to.

    The reasons I DO worry are: At ages 44 and 52, my husband and I have only been homeowners for about 9 years. That means we bought in at the height of the bubble, pouring in all of our savings (including my retirement savings at the time) yet still only have 20% equity on our very modest home in the (expensive) greater Boston area. My husband is a small business owner, and whatever we didn't put into our house is wrapped up in his business. So we have virtually no other investments. At age 52, my husband also just started contributing to a 401(k). I started saving again for retirement about 4 years ago.

    The reasons we should perhaps NOT worry so much are: we do now manage to save about 8% of what we earn, and have a solid, 6-figure combined income. My husband's company has been growing at about 25% a year, even through the recession. So our hope is that one day he'll be able to sell it and that will plug the holes in our retirement savings and investment portfolios.

    What worries me most is the uncertainty of it all — What if something goes wrong with his company? When will we be able to sell it? Not to mention the monthly squeeze of paying bills for our family (we have 2 kids).

    I'd value your input!

    On a less personal note, you and your readers might be interested in some of the articles on Spectrem's Millionaire Corner web site about what worries affluent and wealthy investors these days. A few links are below. Retirement seems to be a huge concern for all:



  6. Correction: we only have 20% equity in our home — and that's based on a 2009 appraisal!

  7. Thanks for the comment Sharon,

    It sounds like you are doing pretty well financially. I guess the tough thing about certainty is that nothing is certain. This might sound strange, but the stock market could lose 90% of its value and stay depressed for decades, or we (or a family member) could get sick, and then money becomes the furthest things from our minds.

    I suppose the best thing to do is plan for the future responsibly, but then take a relaxed approach to whatever the outcome will be, knowing that we have done our best.

    Unfortunately, there are far too many people who (unlike you) take that relaxed approached–yet they've done nothing to help their financial futures.

  8. Pete says:

    Interesting discussion. David Chilton in The Wealthy Barber Returns tells us that he thinks we can always save more and the sooner the better. That is good advice about spending your money wisely. He goes on to say that experiences are valuable, yet so much we spend money on is less so…like toys and things and…stuff.

    Yeah, invest wisely and take a relaxed approach, but be disciplined about re-allocation after a market swing.

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