November 2000 November 2000
Millionaire!
Cynthia Crawford, crawfordc@missouri.eduInheriting money, being a starter in the National Basketball Association, and winning the lottery are ways of getting rich. But these are not the ways most people get rich in America, and it is a costly mistake to believe they are.
During the winter of 2000, AARP conducted a nationwide survey on money and the American family. The national survey consisted of 2,366 interviews. 1501 were from a representative sample of the population age 18 and over. Minorities were deliberately over-sampled in the study.
Most Americans say they would like to be wealthy if given the chance. Why do they want to be wealthy? Not because they consider earning a lot of money a key measurement of a successful life, but because they believe money can make possible many of the things they value: providing for the needs of their families, helping friends, contributing to worthy causes, having freedom to live as they choose, reducing stress and adding more excitement to life.
Their analysis clustered respondents into five distinct groups:
6% feel Left Out. They are the most unhappy with their financial status and are highly pessimistic about the future. A high proportion of minorities are in this segment according to the study.
21% are American Dreamers. These are people that are in better financial shape than the first group but are still striving for more. Nearly two-thirds of this group are younger than age 45. They are trying to save however they have too much credit card debt to deal with first. The Dreamers also contain a high proportion of minorities.
24% of the population were labeled High Achievers. These are households that have much and want much more. While they have a current high level of economic satisfaction they also have a very positive outlook for the future. They want to be wealthy.
38% are Settled and Satisfied. Comfortable and does not desire more describes this group of the population.
11% are Wealth-averse. The Wealth-averse reject the importance of money and do not seek it.
To read more about this study, go to the web site
http://www.aarp.org/researchguide
This study and many others suggest that people need effective strategies for managing money and establishing and increasing saving and investing. The personal savings rate, for example, is at an all time low since World War II.
State Specialists Dr. Joyce Cavanagh offers several points about saving and investing:
- Estimate your retirement financial needs. The web site www.asec.org can help.
- The best day to start saving and investing is your first day of work. Better early than late. Better late than never.
- Tax exempt? Tax deferred? Immediately taxable? These are considerations when making saving and investing decisions.
- No matter how modest your income, you can save.
- Time is more important than timing when it comes to investments.
- Be careful about falling into "The American way of debt management " rather than managing long term saving and investing.
- Define your goals. Think ‘em and ink ‘em – but don’t chisel them in stone.
University of Missouri Extensionhas developed a 4 lesson self-study course, "Saving and Investing Basics."
Lesson 1. Getting started saving and investing. Finding money to save. The financial planning process.
Lesson 2. Stocks
Lesson 3. Bonds
Lesson 4. Mutual funds. Selecting professionals
There are no meetings to fit in your busy schedule and you can work on the self-study course at your convenience. Of course you’ll receive high quality, unbiased information that you always expect from University of Missouri Extension. Our job is education. There are no sales pitches. The charge is $15. For details contact the Saline County Extension Center, 153 S. O’Dell, Marshall. 660-886-6908 or e-mail salinecounty@missouri.edu.
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