5 Reasons to Care About America’s Income Gap

Sarah Shemkus, Salary.com contributing writer

Two weeks ago, we looked at some numbers that suggested the gap between rich and poor in the United States is growing. Last week, we considered some possible reasons for this growing inequality.

This week, we answer perhaps the most important question: So what? Continue Reading

Why the Rich Get Richer & the Poor Stay Put

Sarah Shemkus, Salary.com contributing writer

The typical American household had less income last year than the year before and the gap between the richest and the poorest is growing, according to newly released numbers from the U.S. Census Bureau.

Adjusted for inflation, median household income in 2011 was $50,054, down 1.5 percent from the 2010 midpoint. The decline was driven largely by households in the West, where income fell 4.1 percent, to $52,376, over the same period. Continue Reading

A New Religion

Often, people wonder how billionaires like Sam Walton, Carl Icahn and Warren Buffett not only amassed their wealth, but were also able to maintain it. Mark Stevens, founder of MSCO, in his book, “Rich is a Religion,” says it’s all about the way they view(ed) money. One definition of religion, according to Merriam-Webster, is a cause, principle, or system of beliefs held to with ardor and faith. It’s that definition that Walton, Icahn, Buffett, and Stevens himself apply to money. They don’t worship it as a false idol or horde it like misers. They enjoy their wealth without squandering it.
“Rich is a Religion” is filled with anecdotes, illustrating Stevens’ point. Sam Walton, for example, bought a house in the suburbs on a street like any other. The only luxury was a tennis court because Walton loved to play tennis. Since he was getting older and the hard cement surface was hard on his knees, Walton didn’t play tennis as often as he once had. When asked why he didn’t get the court redone with clay or some other softer surface, it was Mrs. Walton who answered. She said that resurfacing the court would require hiring someone to maintain it and that, apparently, was not considered a practical way to spend their money.
Stevens’ book isn’t a how-to for getting rich. Instead, it’s an explanation of what kind of behavior modification is necessary to amass the kind of wealth that will make a person totally financially independent. What’s complete financial independence? It’s being able to write a check for anything you want or need, he says. Stevens decided to practice the religion of the rich after watching his father literally stress himself to death, leaving his family almost penniless, because he didn’t understand or practice the religion of the rich.
It’s not impossible for everyone, recent college graduates starting their first entry-level jobs, college students working on paid internships, or anyone with the discipline to practice the religion that helped Stevens, Buffett and others to become financially independent. He points out that one reason most people today will never become rich is because they believe that the appearance of wealth is more important than actual wealth. Stevens begs to differ. The most important wealth you have, he says, is the wealth that no one else ever sees. Keeping up with the Joneses will keep you in the poor house, he warns.
It takes more than simply saving part of the wages from an entry-level job or internship. It takes the discipline to consistently put away a certain percentage of each paycheck, invest that money wisely (Stevens advises finding a reputable, trustworthy financial planner), never touch the money in a savings account for indulgences, and always live slightly below your means.