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When a GED trumps a PhD. Wealth Building in America.
We went to a dinner a few weeks ago hosted by a friend, to honor his former University of Chicago Economics professor, Luigi Zingales, whom the press refers to as a rising star of the Conservative Party. Our friend had graduated from Chicago's Booth School of Business MBA program and gone on to found a company that earned him several million dollars when it went public.
Also at dinner were several of the employees of our friend's new company and our group of nine included at least four PhD's, two MBA's, and two JD's. That's a lot of intellectual firepower at one table!
And yet, interestingly, with the exception of Luigi and his lovely wife, about whom I know little beyond his economic theories, I am fairly confident that my own parents are actually wealthier than any other person sitting at the table that evening. And my dad had to drop out of high school to help his family (his mother was widowed young and was raising twelve children) and only later got a GED in the army. My mom didn't pursue her education beyond high school.
My parents would be mortified if they knew I was posting this, as they are modest, don't talk about finances kinds of people. But they won't know of this posting, because they don't have a computer.
Now how do two high school graduates, who don't own a computer, amass greater wealth than our table of PhD's, MBA's, and J.D.'s?
I would have asked our star Economics Professor Zingales this, but he was at the other end of the table;-).
The reasons are likely twofold. First, my parents are in their mid-sixties and everyone at our table was in their late 30's/40's. That's 20 some extra years to accumulate wealth and if you understand the "magic of compounding interest", referred to by some as the “the eighth wonder of the world”, you will see this has a huge impact on wealth.
And it is quite possible if our friend's second company becomes successful, he may well surpass my now-retired parents in net worth later in life.
But how are my parents at the "head of the wealth table" at all with a group so well educated? What beyond their extra 20 years puts them in this category? Especially as they don't even believe in investing in the stock market?
The answer is day to day life and the accumulation of 40 plus years of frugal living. My dad worked very, very hard building up his own redi-mix business. He was off to work at 4:30 a.m. most days, and often not home until after 8 p.m. This was hard on my parents' marriage and I think my brother still feels some resentment that our dad was rarely at school or sporting events.
But my dad was driven to succeed and providing for his family was paramount. When his mom was widowed at a young age with so many children to support, the fear of the kids being sent off to Mooseheart, a sort of economic orphanage that still exists near Chicago, was very real. His first job was in second grade, setting bowling pins at an alley until midnight, then having to get up and go to school. Sometimes he would fall asleep in school and the nuns would slap his hand with a ruler to awaken him.
Once married, he and my mom put in a lot of years of hard work. My mom did the book-keeping for the company for many years and stayed home with us. My dad slogged it out through recessions, union problems, lawsuits, EPA battles, and the general ups and downs of the construction industry. Small business owners truly do EARN their wealth in this country.
And my parents were and are very frugal. They have never been into outward displays of wealth and if you met them, never in a million years would you peg them as wealthy. My mom's engagement ring has a stone so tiny, it might well be a chip;-). She still shops thrift stores, cuts coupons, and recently bought a used living room set, which is lovely and in great condition, her only concern: the $200 price tag. My dad still mows his own lawn, repairs his own screen doors, and recently climbed up to the roof to try and fix a leak despite this being almost three stories up and his having had two major back surgeries.
Growing up, we rode around for years in an old police car that my parents had gotten for a "steal" at auction. One of the reasons for the cheap price was that there were no door handles nor window cranks in the back seat (lest the prisoners should escape) and wherever we went, my brother and I had to wait in the back seat for someone to open up the door so we could get out. (This early experience may explain my almost religious adherence to staying on the right side of the law, one of the few who actually drives the speed limit).
They've eased their purse strings a bit now that they are retired. My mom now drives quite a snazzy Mitsubishi Montero and my dad just bought a tractor for his new hobby - farming. But they remain, at core, frugal, hard working people. And at our dinner as the red wine was flowing, I raised my glass of cabernet in a silent toast of congratulations and thanks for all their efforts. My dad would have preferred an Old Style.
Post script - There is an enormous value to education that goes beyond finances. My brother was never encouraged to go to college as he didn't get good grades and "the plan" was for him to take over the family business and he has said he thinks he missed out a lot on the whole college experience. He's been very successful and even patented a truck part, but he has a sense of loss. Likewise my mom has said she has sometimes wondered what life would have looked like if she had gone to college. So I don't mean to imply the only reason one should go to school is to make money.
Also at dinner were several of the employees of our friend's new company and our group of nine included at least four PhD's, two MBA's, and two JD's. That's a lot of intellectual firepower at one table!
And yet, interestingly, with the exception of Luigi and his lovely wife, about whom I know little beyond his economic theories, I am fairly confident that my own parents are actually wealthier than any other person sitting at the table that evening. And my dad had to drop out of high school to help his family (his mother was widowed young and was raising twelve children) and only later got a GED in the army. My mom didn't pursue her education beyond high school.
My parents would be mortified if they knew I was posting this, as they are modest, don't talk about finances kinds of people. But they won't know of this posting, because they don't have a computer.
Now how do two high school graduates, who don't own a computer, amass greater wealth than our table of PhD's, MBA's, and J.D.'s?
I would have asked our star Economics Professor Zingales this, but he was at the other end of the table;-).
The reasons are likely twofold. First, my parents are in their mid-sixties and everyone at our table was in their late 30's/40's. That's 20 some extra years to accumulate wealth and if you understand the "magic of compounding interest", referred to by some as the “the eighth wonder of the world”, you will see this has a huge impact on wealth.
And it is quite possible if our friend's second company becomes successful, he may well surpass my now-retired parents in net worth later in life.
But how are my parents at the "head of the wealth table" at all with a group so well educated? What beyond their extra 20 years puts them in this category? Especially as they don't even believe in investing in the stock market?
The answer is day to day life and the accumulation of 40 plus years of frugal living. My dad worked very, very hard building up his own redi-mix business. He was off to work at 4:30 a.m. most days, and often not home until after 8 p.m. This was hard on my parents' marriage and I think my brother still feels some resentment that our dad was rarely at school or sporting events.
But my dad was driven to succeed and providing for his family was paramount. When his mom was widowed at a young age with so many children to support, the fear of the kids being sent off to Mooseheart, a sort of economic orphanage that still exists near Chicago, was very real. His first job was in second grade, setting bowling pins at an alley until midnight, then having to get up and go to school. Sometimes he would fall asleep in school and the nuns would slap his hand with a ruler to awaken him.
Once married, he and my mom put in a lot of years of hard work. My mom did the book-keeping for the company for many years and stayed home with us. My dad slogged it out through recessions, union problems, lawsuits, EPA battles, and the general ups and downs of the construction industry. Small business owners truly do EARN their wealth in this country.
And my parents were and are very frugal. They have never been into outward displays of wealth and if you met them, never in a million years would you peg them as wealthy. My mom's engagement ring has a stone so tiny, it might well be a chip;-). She still shops thrift stores, cuts coupons, and recently bought a used living room set, which is lovely and in great condition, her only concern: the $200 price tag. My dad still mows his own lawn, repairs his own screen doors, and recently climbed up to the roof to try and fix a leak despite this being almost three stories up and his having had two major back surgeries.
Growing up, we rode around for years in an old police car that my parents had gotten for a "steal" at auction. One of the reasons for the cheap price was that there were no door handles nor window cranks in the back seat (lest the prisoners should escape) and wherever we went, my brother and I had to wait in the back seat for someone to open up the door so we could get out. (This early experience may explain my almost religious adherence to staying on the right side of the law, one of the few who actually drives the speed limit).
They've eased their purse strings a bit now that they are retired. My mom now drives quite a snazzy Mitsubishi Montero and my dad just bought a tractor for his new hobby - farming. But they remain, at core, frugal, hard working people. And at our dinner as the red wine was flowing, I raised my glass of cabernet in a silent toast of congratulations and thanks for all their efforts. My dad would have preferred an Old Style.
Post script - There is an enormous value to education that goes beyond finances. My brother was never encouraged to go to college as he didn't get good grades and "the plan" was for him to take over the family business and he has said he thinks he missed out a lot on the whole college experience. He's been very successful and even patented a truck part, but he has a sense of loss. Likewise my mom has said she has sometimes wondered what life would have looked like if she had gone to college. So I don't mean to imply the only reason one should go to school is to make money.
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