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More money than you know what to do with
March 29, 2012 3:05 PM   Subscribe

We had a recent thread on things really poor people do when they come into some money, and now I'm curious whether there are analogous mistakes at every level of society. What sort of mistakes would be made by, say, a poor college student taking his first office job, by a middle-class man marrying into old money, by shoestring startup folk after a successful IPO/buyout? I'm interested in particular in sharp transitions, rather than, say, slowly climbing from the mail room to the board room over the course of a lifetime.
posted by d. z. wang to Society & Culture (17 answers total) 34 users marked this as a favorite
 
We had a recent thread on things really poor people do when they come into some money

Not an answer, but I'd love to read the example thread!


Here's one of them: The 5 Stupidest Habits You Develop Growing Up Poor.
posted by cashman at 3:10 PM on March 29, 2012 [2 favorites]


This just happened to some friends of mine, kids who grow up in working to middle class families who come into money have no idea how to game the tax system so they pay less, hiring an accountant seemed absurd to them but then they went and saved like, thousands upon thousands of dollars.

There was also some You Suck At Being Poor jokes right after college, people who still couldn't cook or save and spent a lot on things they thought of as " poor people things" like pre packaged Mac and cheese.
posted by The Whelk at 3:13 PM on March 29, 2012 [1 favorite]




Stories of lottery winners are either exhilarating or depressing.
posted by Ideefixe at 3:16 PM on March 29, 2012


Seconding whelk, Middle class people not knowing how/when to hire an accountant or lawyer. I've seen people burned on the tax issues before.
posted by larthegreat at 3:16 PM on March 29, 2012 [1 favorite]


This seems like it's really hard to generalize about. At this level, I would say: (1) assuming that the skills and practices that brought you to this new level will sustain you at the new one, and progress beyond it; (2) assuming that you have to change the kind of person you are in other respects, so that you wind up imitating inessential characteristics of that level to your detriment.

These exhibit a tension with one another.
posted by Clyde Mnestra at 3:17 PM on March 29, 2012 [1 favorite]


What about the rate at which some/many college freshmen (regardless of SES) acquire credit cards and then run up debt? I know most of my middle and working class friends (and some of my more wealthy friends too) signed up for 5-6 cards in one fell swoop freshman year and now have at least 5-6k in floating debt in addition to loans. Would that count as a sharp transition into sudden access to wealth where you didn't have it before?
posted by These Birds of a Feather at 3:26 PM on March 29, 2012 [3 favorites]


Venkat at Ribbonfarm had a lovely (and timely for me) piece on leaving the middle-class that touches on some of these things, what he calls "middle-class financial programming."
posted by feckless at 3:40 PM on March 29, 2012 [4 favorites]


The best investment advice you'll never get
As Google’s historic August 2004 IPO approached, the company’s senior vice president, Jonathan Rosenberg, realized he was about to spawn hundreds of impetuous young multimillionaires. They would, he feared, become the prey of Wall Street brokers, financial advisers, and wealth managers, all offering their own get-even-richer investment schemes. Scores of them from firms like J.P. Morgan Chase, UBS, Morgan Stanley, and Presidio Financial Partners were already circling company headquarters in Mountain View with hopes of presenting their wares to some soon-to-be-very-wealthy new clients.

Rosenberg didn’t turn the suitors away; he simply placed them in a holding pattern. Then, to protect Google’s staff, he proposed a series of in-house investment teach-ins, to be held before the investment counselors were given a green light to land. Company founders Sergey Brin and Larry Page and CEO Eric Schmidt were excited by the idea and gave it the go-ahead.
posted by caek at 4:17 PM on March 29, 2012 [12 favorites]


Anecdotally, most university grads I've known have spent money like there's no tomorrow upon landing their first 'real' jobs - expensive clothes, eating out all the time, hundreds of dollars spent on booze (if not party drugs) on any night out (of which there are plenty), overseas holidays, upscale accommodation close to town. Often this lifestyle is further funded by credit card debt.

It seems that all the years of low-paid jobs, awful shared houses, terrible student food, and penny pinching while studying create a strong rebound when grads feel suddenly flush with money, and they're determined to spend it, every last cent and more. Very few have had any real savings or investments at the end of their 20s.
posted by UbuRoivas at 5:09 PM on March 29, 2012 [2 favorites]


More than one of my friends who grew up middle to upper-middle class (especially those who grew up on the wealthier end of that spectrum) got into serious financial trouble in their 20s, after finishing college. We speculate that, as a group, we hadn't ever learned to do without or wait very long for something we really wanted; that our parents had not shared any information about how the family's finances were handled; that we had absorbed certain rules about what things should cost and where it was OK to buy, say, clothes (this applies to all kinds of relatively minor things, but I remember 20 years ago when I bought my first house, a small 3-bedroom in a decent urban neighborhood, for $52,000, my father told me that there were no decent houses for under $100,000); and that these things were impossible to live up to on a starting salary. I didn't get into major financial trouble, but more than one of my friends did, and it seems to be a common part of the process for our cohort that we had to learn the hard way how to live within our means, when our means were less than what we were used to in our family of origin.
posted by not that girl at 5:32 PM on March 29, 2012 [4 favorites]


Sports Illustrated investigated the strange and perilous financial lives of professional athletes a few years ago:

SALARY ASIDE, the closest analogue to a pro athlete is not a white-collar executive. It's a lottery winner—who's often in his early twenties. "With athletes, there's an extraordinary metamorphosis of financial challenge," says agent Leigh Steinberg, who has represented the NFL's No. 1 pick a record eight times. "Coming off college scholarships, they probably haven't even learned the basics of budgeting or keeping receipts."

Now, whenever people wonder why athletes go broke, I tell them the hilarious true story of Torii Hunter's ill-advised foray into the floating flood-rescue furniture industry.
posted by Snarl Furillo at 5:33 PM on March 29, 2012 [2 favorites]


Every geeky man I know (literally to a one) bought a huge TV immediately upon getting his first white-collar, non-student job. I put my foot down and told my husband we were not getting a huge TV but all his friends gave him so much crap about how little his TV was that I eventually just threw up my hands and we went and got one too.
posted by troublesome at 9:06 PM on March 29, 2012 [1 favorite]


not that girl, your description of the trend that played out amongst your friends is really interesting to me, because my friends are kind of coming out of that phase of life (finished college, settling into our first real jobs) right now. We were mostly upper-middle class kids from a neighborhood made up of a few middle class homes, many upper-middle class homes, and many solidly upper class homes. But it was the friend who was the least well off who ran into the most trouble after college. I believe that for her, it was an unfortunate mix of deep insecurity about her social standing and wanting to erase any impressions that she was of a lower class, and her ignorance of the fact that many of our well-to-do peers were able to maintain a certain standard of living because they were still being heavily subsidized by their parents. She got buried in debt trying to keep up.

Those of us who were a little more well off while growing up were probably not so concerned about appearances, and we got generous help from our parents from time to time so we understood how, say Betty, who has been a receptionist for the past 6 years, has been able to afford designer clothes and an expenisve new car with ease. Meanwhile, the friend who didn't grow up in a family with this kind of financial culture only sees that the Betties of our peer group are treating themselves to all kinds of luxuries they can't afford on a starting salary, and maybe thought, "fuck it, why shouldn't I have those things too?"
posted by keep it under cover at 10:58 PM on March 29, 2012 [1 favorite]


I think a common "First Real Job" trap a lot of people fall into (I know I did for my first several jobs) is feeling way too beholden to their at-will employers, hence the numerous questions we see on AskMeFi along the lines of "I just got a great job offer but I feel really bad about leaving my current job because they gave me my first break and I'd be putting them in a tight spot and I don't want to make my boss mad." The sooner you can internalize the fact that you have to look out for yourself before you look out for your employer the less likely you are to get yourself mired in a job that makes you miserable out of that sense of loyalty and obligation.
posted by usonian at 11:48 AM on March 30, 2012 [2 favorites]


by shoestring startup folk after a successful IPO/buyout

There are literally thousands of Silicon Valley stories about the people who were good at starting companies but horrible at running them. Usually it takes the first baby that they hold onto way too long before they realize they have to let their babies go and become a serial entrepreneur. I read two or three books (and many more magazine articles) in this vein around 10-20 years ago, e.g. The New New Thing.
posted by dhartung at 3:47 PM on March 30, 2012


Perhaps not exactly the same thing, but I've seen managers/entrepreneurs with an inability to delegate fail after meeting with even limited success. This seems to take a disproportionate toll on micromanagers, but I think it's part of a larger problem where the skills that got you through Round 1 may actually act as a detriment in Round 2. Doing everything yourself may be advantageous during the early stages of a career or company, but if you really want to advance, you need to learn how to delegate.
posted by Afroblanco at 10:24 AM on April 1, 2012 [1 favorite]


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