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Do The Rich Work Harder? Is The Key To Wealth Hard Work?

It is often assumed that because the rich have amassed a fortune, that they really don't have to work very hard, and that in general that they work less than others who are less well off. They just have others to do the work for them. It's an assumption that is even held by some of the wealthy.

British billionaire Richard Branson is quoted today as saying that the wealthy don’t work harder than everyone else–they are just fortunate.

“Yes, entrepreneurs may work hard, but I don’t think they actually work any harder than, say, doctors, nurses or other people in society, and yet tremendous wealth comes with it and therefore enormous responsibility comes with that wealth, responsibility to do good things, maybe create new businesses and maybe tackle some of the more seemingly intractable problems in the world

While I might agree that with wealth comes an enormous responsibility, I don't think that the assumption he makes about the wealthy not working harder than other people in society would bear out. Studies seem to agree:

studies on the comparative work habits of the wealthy tell a different story.

Research by professors Mark Aguiar and Erik Hurst combined the results of several large surveys (including studies where randomly chosen subjects kept detailed time diaries), and found that the working time for upper-income professionals has increased compared with 1965, while total annual working time for low-skill, low-income workers has decreased.

As David Brooks put it in a 2006 column: “For the first time in human history, the rich work longer hours than the proletariat.”

So those who had high income professions tended to work longer hours than those in lower skilled lower income professions.

I really do think that in our day and age being in poverty and having a low income has become much more tolerable than it may have been in the past. Even those who are poor and living on government benefits can have a TV, game console, a car, food to eat through local charities or government programs and the rest of their basic necessities covered. In the past, they would have had much less, and had to work much more for it. I'm not sure it is completely a good thing to have so much more available for so little.

Being Wealthy And Successful Isn't All Fun And Games

With those working so hard to become wealthy you might think that they also play hard, but research has shown that the wealthy also found less time for leisure pursuits.

Research by Daniel Kahneman, the Nobel Prize-winning psychologist, shows that “being wealthy is often a powerful predictor that people spend less time doing pleasurable things and more time doing compulsory things and feeling stressed.”

His study found that people who earn less than $20,000 a year, for instance, spent more than a third of their time in passive leisure, like kicking back and watching TV. By contrast, those earning more than $100,000 a year (more affluent than wealthy), spent less than a fifth of their time in passive leisure.

My own experience tells me that the wealthy work insanely hard. I spent Monday and Tuesday with a billionaire who got up at 4:30 a.m., held meetings and business briefings until 9 p.m., ate dinner, then worked on emails until 2 a.m. He woke up at 5 a.m. the next morning, and started all over again. Seven days a week. This entrepreneur hadn’t taken a day off in 10 years (and I checked).

So apparently being wealthy isn't all unicorns and rainbows. Quite often you've become wealthy and well off for a good reason. You're motivated, disciplined and you work hard.

The number that really surprised me in the above quote, however, was the one that said those who earn less than $20,000 a year spent more than a third of their time in passive leisure, while those earning more than $100,000 spent less than a fifth of their time doing the same. That's quite a difference!

Finding A Balance Between Hard Work, Passive Leisure And Other Things

For me I think it's commendable that by working hard, being motivated and disciplined you can find success. I know that not everyone who works hard becomes wealthy and that not everyone who has a low income job spends as much time in passive leisure pursuits. Personally I think the sweet spot lies somewhere in between where you work hard, but you also play hard. You are dedicated to your career, but your family comes first. You spend some free time in leisure, but you don't become a couch potato.

I believe in moderation in most things. If you let one thing become too important in your life, like your job or like your leisure pursuits, it can have an unhealthy and damaging effect to your life. Anything can become an idol if you allow it to, and it can ruin your life.

So my motto is to love God and my family, to work hard, and to play hard. How about you?

Do you think that the wealthy work harder than those who aren't as well off? Can you see how you might be able to spend less time in passive leisure, and more in promoting your career and work life? Do you think it can be hard to find a balance? Tell us your thoughts in the comments.

Controversial Statement Of The Day: Not Everyone Should Go To College

By Mr. Money 13 Comments

I‘m about to make a controversial statement. Brace yourself. Here it goes:

Not everyone should go to college.

In this day and age it has almost become an untouchable gospel that everyone should go to college, and if you don't, there's no way that you can succeed in life. Without a 4 year degree, you might as well kiss your future life goodbye. You'll never amount to anything!

I on the other hand would like to offer a counter argument – that not everyone should go to college. For many it would just un-necessarily saddle them with huge mountains of debt, for a degree they aren't really going to use – or that doesn't have the value they expect it will.

Why Shouldn't Some People Go To College?

There are several reasons why I think college may not be the right choice for some people. I'll list them out below.

A Degree Isn't What It Used To Be

A college degree isn't as highly prized as it once was. It could almost be argued that a college degree is now worth about the same as a high school degree was in the past.

One big conclusion that can be drawn from the PayScale data is that college—and college alone—may not be the great investment it was once thought to be. Richard Vedder, director of the Center for College Affordability & Productivity in Washington, D.C., notes that with the college-educated accounting for a larger percentage of Americans, the bachelor’s degree has been devalued, and its ROI has taken a hit. “We have credential inflation in America. A college degree has become mundane and ordinary,” Vedder said. “We used to send kids to college to become lawyers and doctors. Now we send them to college to work at Walmart.”

The Return On Investment Isn't As Great As Some Would Have You Believe

The ROI that you'll get by graduating and getting your degree isn't as great as some might have you believe. In the past it was assumed that most people could expect to earn anywhere from $900,000-$1,600,000 more over a working lifetime just because they got a degree. A study released by Payscale.com found, however, that the return on investment for those who got a degree was much lower than that for most colleges and majors. The study found that the ROI for a college degree was anywhere from just under $400,000 to just over $600,000. That is still a substantial amount, and for many that will be enough, but remember to go in with eyes wide open, and realize that it may not be as great as you had hoped. The ROI will vary greatly by major and specialization as well.

Not Everyone Needs A 4 Year Degree

Far too often people that don't really even need to go to a 4 year school end up going and piling up a mountain of debt. Instead for many of them they could have attended a cheaper 2 year trade or vocational school, picked up a useful trade, and found a good paying job – without all of the hefty school loans. My wife is one example. Instead of attending a 4 year school like many of her friends (who ended up just having kids and not needing a degree anyway) she attended a 2 year school in a specialty she enjoyed. She loved it, and didn't spend nearly as much as her peers – who ended up not using their expensive degrees!

Advanced Degrees Often Lead To Higher Consumption Spending Behavior

One thing that people don't often talk about is how you may end up with a higher paying job when you get an advanced degree, but quite often it also comes along with learned high consumption spending behavior as well. When we're in school for a long period of time we learn that it is accepted behavior for those with an advanced degree to be high earners, and also high spenders. Thomas J. Stanley explains via an example in his book the Millionaire Next Door:

Being well educated has certain economic drawbacks.

Victor’s well-educated adult children have learned that a high level of consumption is expected of people who spend many years in college and professional schools. Today his children are under accumulators of wealth. They are the opposite of their father, the blue-collar, successful business owner. His children have become Americanized. They are part of the high-consuming, employment-postponing generation.

Going To College Is Still A Good Bet For Many

Ok, now that I've spent an entire post talking about the downsides of getting a 4 year college degree, I want to make sure that I mention that I still think that college is a good bet for many people.

Studies showed that people who saw an especially good ROI on their education include those in technical and engineering schools, and those that required an advanced degree to get certified (lawyers/doctors).

If you are going to go to college, make sure that you're shopping around for the best school for your major, at the best price. You'll often find that the schools where you get your best return on your money aren't the ones you thought they might be. So be sure to do y0ur due diligence.

What do you think about college education – is it pushed on far too many kids who aren't ready for it, or on others who may not necessarily need to go to college? Tell us your thoughts in the comments.

Unemployment Benefits Extended And Are Available Again For Up To 99 Weeks

By Mr. Money 1 Comment

In early June millions of people who were without a job ran out of jobless benefits as congress failed to push back the deadline for people to apply for unemployment. It is estimated that over 2 million people have had their benefits lapse.

Unemployment Benefits Law Passed

Today President Obama signed an extension of the unemployment package meaning many people will once again be eligible for benefits.

From CNN Money:

Millions of jobless Americans are getting their unemployment benefits back.

Hours after the House voted Thursday to push back the deadline to file for extended unemployment benefits until the end of November, President Obama signed the measure into law.

The approval came a day after the Senate voted 59 to 39 to restore the payments, ending a seven-week stalemate.

Benefits will now be available again for up to 99 weeks for some unemployed persons:

Federal unemployment payments, which last up to 73 weeks, kick in after the state-funded 26 weeks of coverage expire. These federal benefits are divided into tiers, and the jobless must apply each time they move into a new tier.

The payments will be retroactive to the previous deadline of June 2. But it could take up to a month for states to start sending the checks again, experts said.

Benefits May Be Delayed

Even though the benefits have now been extended, many people may not receive their extended unemployment checks for weeks to come.

even if a final bill is approved soon, it could take weeks for workers to collect benefits that they have missed since the extensions started phasing out, said Judy Conti, federal advocacy coordinator with the National Employment Law Project, a New York-based advocate for workers' rights.

“Even the best states will probably have a week or so of lag time, and it wouldn't surprise me if in some states the lag time were a month,” Conti said.

Conti said she expects workers to receive backed-up benefits in lump-sum distributions, rather than in dribs and drabs.

Personally I don't mind that people collect unemployment benefits, after all we all may end up losing a job one day and need some help. But now that we have unemployment benefits for almost 2 years, I think it's a bit much. If you can't find a job in 2 years, you're either not trying hard enough, or turning down jobs that aren't “up to your standards”. Time for some new job search strategies!

What do you think? Should the benefits have been extended? Are the benefits becoming too much, and continuing for too long? Tell us your thoughts.

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