Understanding Worry – Behavioral Trait
I came across a very good write-up which I thought I should share.
The Worry Never Leaves
I thought I should throw out a "blanket definition" of wealthy before I begin. I describe "wealthy" to myself and to my clients as a state of financial life whereby the individual can simply live off of financial assets. There is no need to work. If wealthy people work, it's because they want to, not because they have to. Big difference.
Once we understand "wealthy," I would supercharge that definition to describe what I would call the "super wealthy." These would be individuals who have a personal net worth not just in the millions but in the tens or even hundreds of millions of dollars (perhaps even billions).
As a student of behavioral finance, I'm always searching for links between our state of wealth and our state of health and happiness. Having one, doesn't necessarily lead to having the others.
One thing that most "non wealthy" experience, even on a daily basis is the emotion of "worry." We worry about everything. We worry about paying the mortgage, our jobs, our retirement, our time (or lack thereof to spend on personal items), our wants and desires and what can be taken away from us. In simple terms; humans are "worry-warts."
When I study those who are "non-wealthy" I often ask why they want more money or more financial wealth. A common answer I get is, "So I don't have to worry anymore." Their thought process is that by obtaining more wealth, the worrying goes away.
But I've had an opportunity to study the wealthy as well and what I am finding is, they worry too (and sometimes a lot.) What do they worry about? Here's some examples;
- They worry that some of the top performing private equity funds are closed and won't take their money. There are so many super wealthy individuals trying to invest in the same private equity funds that require sometimes $5 to $10 million in minimum investment amounts that these private equity funds are turning investors away.
- They worry about running out of money due to inflation (I am not kidding on this one). The cost of living for the wealthy is rising in double digits even though the core inflation rate is much lower. Financial markets are down and their spending behavior is not being adjusted accordingly. I know you feel sorry for the cost increases in maintianing a Lear Jet and associated jet fuel prices for these people...
- They worry about staying competitive with their peer group. When they go to the Hampton's, or Palm Beach, or Jackson Hole, or on their yacht while flying their private jet, the guy next door has a bigger house, a bigger yacht, a newer jet. These are driven people that are used to being at the top of the food chain. It kills them to see someone pull ahead of them. They all want to be the kingpin, the big cheese. So they worry about how they will pull ahead of others in their peer group or they worry about falling behind in their peer group as in, "I feel like a loser since I only am worth $25 million and these people are all worth $50 to $100 million..."
So what motivates them is a combination of fear and greed and while they deal with both of them, their lives are still full of worry. The worry in their lives never left. What is worrying you and is it something that is controllable or non-controllable? Are the things we worry about really important in the scheme of life. If we were 85 years old, dying on our death bed while lying in a nursing home bed, will we look back on our current life and say, "I'm glad I worried about all that stuff 40 years ago...Oh wait...what was I so worried about?”
