Reply to Lower Middle Class VS Upper Middle Class

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[quote=Anonymous][quote=Anonymous]Hmmm.  [b]Can't some of you figure out that "LMC" folks may have different savings strategies[/b], educational approaches, etc based on their incomes and backgrounds?  If my parents had more money, they would've probably had different investment strategies.  But they didn't, so they chose the most conservative path.  Regarding schools, my parents did not go to college, so they were less skilled in guiding me along the application process.  That doesn't translate, however, into they didn't care about what I was doing or they placed less value on it, just only that they lacked a background in the area. It takes a village to raise a child and life can be a lot more forgiving - and less expensive - if your relative, who live around the corner, are able to cover for you during times of crises.

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I think this is something that people who have money, grew up with money, et cetera, just don't get.  My parents didn't earn a lot, but they saved every penny they could and budgeted well.  But because they were worried about periods of unemployment and because every dollar was earned with blood, sweat and tears, they were extremely risk-averse.  The reason wealthy people invest better is because they can invest better.  They can take more risks because the losses aren't felt as hard or as painfully as they would be with a family who doesn't have a large salary and has no hope of ever inheriting much.

But I have found that people who grew up with money just don't grasp that.   It's a shame, because it's a big part of what makes upward mobility difficult.  It's partly why it can be a difficult upward climb to grow wealth.  If you don't have huge salary potential, even if you scrimp and save, it's very difficult to grow wealth in a substantial way because making your money really work for you requires at least having something significant to invest, and being able to risk losing some, and also being able to comfortably put that money in an investment mechanism where it is not liquid.  The lower class people I've known who have been savers were also worried about layoffs, strikes, being unemployed, and so they viewed their savings as something they needed to have access to and not something that they could risk having tied up in investments.  And of course, traditional savings accounts don't yield a lot in the way of interest.  Even high interest savings accounts don't really yield a lot in terms of interest.

And I would add that a lot of lower income/class people are highly suspicious of financial advisers.  It isn't because they don't value education or don't think they have any expertise.  It's because most often it becomes very clear that most financial advisers don't fully understand the needs and worries of working class people.  There's a disconnect.

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