I love the article by Jonathan Clements that appeared in the Wall Street Journal in 2005 called “Why It’s Good to be Rich” because it underscores the power of having surplus money, something you must experience to truly understand. A person in debt will never understand the idea that a little bit of surplus money can multiply quickly in your hand.
Clements article outlines 25 financial benefits that people with fat wallets are able to enjoy and the ways in which those benefits create additional wealth. Here are some of those benefits:
- You can pay off your credit-card balances each month, avoiding high interest costs.
- You will always have enough money to take advantage of tax-favored accounts like Roth IRAs.
- Your fat investment portfolio helps you feel rich so you don’t need to prove your wealth by purchasing new cars and designer clothing on credit.
- Your accounts are big enough that you won’t get hit with annoying bank fees, annual IRA fees, and account-maintenance fees like those with smaller balances must pay.
- Your high FICO score and superb credit history ensure that you can always get a loan and qualify for no-fee credit cards.
- You can drop term life insurance because you’ll have so much money that your spouse and kids won’t need insurance; you can invest the premiums in cash-producing ventures instead.
- You won’t have to buy long-term care insurance, saving thousands of dollars in premiums for something you may not even need; if you do end up going to a nursing home, you can pay your own care facility or home-healthcare costs instead.
- You can sleep better at night because you don’t have to worry about how you’re going to pay the bills or whether your investments will see you through retirement.
- Your financial prudence provides a good example for your children, so they grow up to be financially independent and less likely to need bailing out from you.
- You won’t ever be forced to sell your home and move into an apartment after you retire, or worse, in with your kids.
- You can avoid playing silly financial games such as buying lottery tickets in hope of “getting rich quick.”
- You always have the cash on hand to seize lucrative financial opportunities whenever they present themselves.
- You have enough money to travel the world or engage in philanthropic ventures that will provide you priceless experiences you would nave have been able to have otherwise.