We read all the time about the wealth of some individuals and it seems staggering. The irony is many of them are cash poor. Their wealth is on paper but not in their pockets. Much of their wealth is illiquid, meaning it cannot be converted into cash. I actually know of a few working-class people from very wealthy families. This happens in a variety of different ways. Many wealthy families live off of a trust fund or an allowance. These funds sometimes may not allow for cost of living increases. Some family members can be denied family wealth also. In the case of the Yuengling family of Yuengling Brewery, the children of the owner do not inherit the business, they have to buy it from their parents. The older wealth families may also have properties that are cared for by funds or funded by the business but it’s possible the people living inside may be cash poor. Even the expensive sports cars driven by millionaires may be provided as a perk by the company. Super billionaire Elon Musk claims to be cash poor. In his case, his shares in his company cannot be sold because of regulatory limitations. His company Tesla has negative free cash flow and lots of debt but yet on paper Musk’s worth is $25 billion.
With lots of money also comes lots of expenses such as taxes, security, alimony, lawsuits both frivolous and legit, etc. Much of what we see of the ultra-wealthy is smoke and mirrors. They live in a very fragile economic bubble that can burst anytime. Sean Quinn was a very wealthy investor in Ireland who lost $2.8 billion because of bad decisions. His worth dropped to about $50,000. Elizabeth Holmes, owner of the start-up company Theranos went from a net worth of $5 billion to $0 because of her bad decisions. There are many similar riches to rags stories.
The point is, wanting to be financially healthy is ok. Looking at the ultra-wealthy as the optimum standard of living is probably not wise, especially given the fragility of today’s economy, not to mention legal and contractual obligations that comes with the wealth.