Wealth Accumulation - Essay Example

Wealth Views Order No. 236929 No. of pages: 4 Premium 6530 Wealth is a magnetic word but not all people are attracted to it. Wealth to some may be everything, but wealth to others may be nothing. So wealth in other words is a personalized factor. It’s individualistic. Wealth in other words means the chosen 2% in the world who have control of almost half of the world’s wealth – the millionaires, the billionaires and the trillionnaires!!! Being wealthy is an attractive proposition, but to handle wealth the right way is yet another story. Our case in point now is how healthy is being wealthy. There is no doubt that being wealthy is a very good feeling, but how wisely we handle this delicate situation is what is most important. For example a person who got a lottery of a huge sum of money was riding on cloud 9 for a couple of months. After about 6 months of living a high life, I happened to meet him in one of the shops that I frequently visited. He was the same stony faced gentleman I had met before he had got the lottery. I felt pity for him and enquired what he had done with the lottery money. He felt shifty and his eyes could not meet mine as he told me how he squandered away his treasure on things like clothes, drinking, gambling and lots and lots of petty things. I comforted him, took leave and thought to myself that this was a typical case of “A monkey with a rose garland”. He had no idea what to do with his wealth when he had the chance. On the other hand, we have people gradually become wealthy over time by their perseverance and hard work. These are the kind of people who intelligently know how to make use of their money, who remain wealthy all through their lives and enjoy its benefits. They have understood well that “Rome was not built in a day!” Nearly all those people on the Forbes book belong to this category of wealthy people. Psychological Costs of Wealth: The desire for much more wealth is something that is universal. Studies conducted in the Journal of ‘Psychological Costs of Material Wealth’ (S. Luthar, 2003) has shown indication that parent belonging to very wealthy families or communities are more highly emotionally vulnerable than those belonging to the middle class. For them flaunting their wealth gives them a kind of high as they tend to buy or pay for everything rather than sharing within their community. In case both the parents are holding high positions and raking in tons of money, they tend to be obligated to their duties at work and neglect the home front. Children coming from such backgrounds, who have the best lifestyles and the most luxurious living patterns, have their own share of problems. They have everything they can wish in life- a posh comfortable house with all the amenities affordable, the best food, expensive clothing, hi-tech gadgets, and the best school, but yet most of them don’t seem to be very happy. This is because they do not face life in its natural form. Everything is provided to them, they don’t have to work or earn it. In the course of this scenario, these children grow up to be difficult adults when they really step out as adults into the society. They are the ones who suffer psychologically when the pressure is put on to them to achieve. In the words of Mother Teresa, “The hunger for love is much more difficult to remove than the hunger for bread.” (S. Luthar, 2003) On the other hand, children who come from middle class families are much more adjustable in different situations because they can easily adapt themselves to it. They are more natural and practical in their outlook in life. But for those people, who hanker after wealth, being poor, would cause them a lot of psychological problems. Classism is another angle where wealth is concerned and it is to a certain extent directed towards the rich. The desire to be readily accepted and liked by others is something universal because everyone whether rich or poor are still all human. Very often the wealthy are a source of envy and dislike in social circles and generally become the butt of malicious pranks and jokes. A lot of research in this area is being carried out to understand the depth of problems faced by children in this area. Wealth Accumulation and Homeownership for low- income households: Owning a house can be a very important facet of wealth accumulation especially for people in the lower income strata. To encourage this, the Federal Government has drawn up different policies to motivate the people in this group to understand how important it is to purchase a house. To study the various issues on Housing wealth accumulation ‘The Panel Study of Income Dynamics (PSID) conducted a survey at the University of Michigan. They took into account the members in the household, their housing expenditure levels and did a detailed analysis of the net wealth position with regard to the family. This analysis resulted in some very interesting findings. Firstly, it was found that the lower income owners often transit back to renting a house and do not usually regain ownership status. Out of this income group only about 37% return to owned status. Whereas in the higher income group of white households, the percentage of returning to ownership is higher at 58%.(Publications- Wealth Accumulation and Homeownership: Evidence for Low- Income Households, Dec. 2004, p.46) Wealth and Taxes: The paying of taxes on a person’s wealth should be proportionate to the ownership of wealth. In the National Journal Magazine, Martha Neil (March 7th, 2008) tells us that the Internal Revenue Service (IRS) has reported an increase of 84% in the escalating number of audits for wealthy individuals who are earning more than a million or even more. Therefore their chances of getting audited stood at 1 in 11. The reason for this is because now their chances are higher than what it was a couple of years ago. In a press release, attorney Robert McKenzie, a partner of Chicago-based law firm ‘Arnstein & Lehr,’ stated that "Those who aggressively under-report their income or claim improper deductions and expenses may become the target of the IRS criminal investigation special agents."(Robert McKenzie, Business Wire, 2007) From the year 2006, the IRS has increased audits of individual returns for those earning 1 million and more by 13 ½%. (Business Wire, 2007) Those going against the law by failing to pay their right taxes for the wealth accumulated would have to face criminal investigation by the IRS. Therefore, it goes without saying that having wealth is one thing and maintaining it within limits is quite another thing. Being wealthy is not a bad thing at all, but using it wisely and not recklessly is what is more important in order to live a peaceful life. References: Psychological Costs of Material Wealth Summarized from Child Development, Vol. 74, Issue 6, The Culture of Affluence: Psychological Costs of Material Wealth by S. Luthar. Copyright 2003 The Society for Research in Child Development, Inc. All rights reserved. www.srcd.org/journals/cdev/1-1/Luthar.pdf Wealth Accumulation and Homeownership: Evidence for Low-Income Households (December 2004, 46 p.) www.huduser.org/publications/HOMEOWN/WAccuNHomeOwn.html IRS is Scrutinizing Tax Returns of Wealthy Individuals. www.abajournal.com/news/irs_is_scrutinizing_tax_returns_of_wealthy_indi.. The Secret Diary of Steve Jobs: On Being Obscenely Wealthy www.fakesteve.blogspot.com/2006/12/on-being-obscenely-wealthy.html Read More