Chapter 1
MONEY IN ACTION
How Americans Feel about Money
Since World War II, inflation-adjusted income has nearly tripled and the size of new homes has more than doubled. Yet polls show that the wealthiest Americans aren’t any happier than those with less money. At an annual income of about $50,000, the happiness curve flattens out. How ever, a sense of control over finances does correlate with happiness. To feel secure (and happy), Americans need to have enough money to retire, buy things they want, and cope with a financial setback. These and other poll findings offer insights into our attitudes toward money matters.
According to a recent survey on Americans and their money, 54 percent of adults said one of their biggest money pressures right now is just meeting their bills. Their top financial priority was getting out of debt (71 percent). Owning a home free and clear (52 percent) and taking one luxury vacation every year (33 percent) were two other important goals.
The rich are not so different from the average American. They want bigger financial cushions (85 percent) and have significant debt loads (42 percent are spending less so they can pay off bills). Their most pressing financial concerns were retirement planning (34 percent), wealth accumulation (19 percent), and supporting their families (18 percent). Most of the rich consider themselves middle class, not wealthy. They say they need $2.5 million to feel wealthy and the best ways to increase wealth are to invest in real estate (19 percent), get a professional degree (15 percent), inherit money (14 percent), invest in stock (12 percent), or start a business (12 percent).
Gender differences also affect the way Americans think about money. Most married adults share all their money, but 28 percent of women and 20 percent of men maintain separate accounts. Women tend to be more conservative and less confident than male investors, but 80 percent of women say they’re more knowledgeable about investing than they were 5 years ago. Historically most women weren’t involved in their families’ financial planning, but their role is evolving as more (63 percent) participate in investment decisions.
Critical Thinking Questions
1.What, if any, is the correlation between income and happiness?
2.What are some common financial concerns of Americans today?
3.What role does gender play in how Americans think about money?
Sources: Marion Asnes with Andy Borinstein and Douglas King, “The Changing Face of Affluence,” Money, September 27, 2002, p. 42; Gini Kopecky Wallace, “Can Money Buy Happiness?” Family Circle, April 15, 2003, pp. 64–68; Jean Sherman Chatzky, “Women & Money,” Money, June 1, 2002, p. 150; Jean Sherman Chatzky, “The 10 Commandments of Financial Happiness,” Money, October 1, 2003, p. 113.