You Have More Money Than You Think

When we focus on wealth inequality, we always focus on the people above us.

We think of Occupy Wall Street protesting outside of investment banks. We think of Bernie Sanders gesticulating wildly while telling us about millionaires and billionaires. We think of Mitt Romney and friends with money coming out of their suits.

How we view the 1%.
How we view the 1%.

And there is a time and a place for that. Inequality in the United States is an issue that needs to be addressed. Economists and policymakers should be spending a lot of time focusing on the people at the top of the pyramid and looking at how to level the playing field.

For the rest of us, though, it might help to look at the people below us on the pyramid to gain some perspective from time to time.

Credit Suisse recently issued its annual Global Wealth Report, which has some really interesting numbers on this point.

Your Portion of Global Wealth

The Credit Suisse report looked at global wealth. What they found is that inequality is on the rise.

The richest 1% of the world owns 50.8% of the world’s wealth.

The richest 10% of the world owns 89% of the world’s wealth.

The richest 50% of the world owns more than 99% of the world’s wealth.

Immediately this looks extremely unfair and you may be ready to get up in arms over global wealth inequality. But where do you fall on the spectrum?

If you have $71,600 in cash, investments, and assets, then you are in that top 10% that owns 89% of the world’s wealth. You are part of the world’s wealthy elite.

Hell, $10,000 puts you in the top 27%.

Half of the world has less than $2,222, and the bottom 20% have less than $248.

As a point of reference, 20% of the world’s population is over a billion people. Over a billion people have less than $248 to their name.

What Does This Mean?

First, this means that we should be grateful. We should be grateful that we won what Warren Buffett calls the “Ovarian Lottery.” We should be grateful that we were born in the time and place that we were with the abilities and aptitudes that we have.

Next, at least for me, was the realization that the time to give is now.

I had always donated to charities when friends or family were raising money. I would donate to causes that I felt were important from time to time. But I had never systematically and consistently donated to charity. I always figured that once I had gotten myself more financially secure, then I would be able to be more generous with my money.

Then I did some research on income and wealth inequality. I realized that while I still had a long way to go before I felt financially secure, I was far better off than most of the world.

This coincided with my reading Money: Master the Game by Tony Robbins, in which he says that if you won’t give a dime out of your dollar, then you aren’t going to give a million out of your ten million.

This hit me pretty hard. If I am not generous with what I have now, how can I expect to change when I have more money?

I am not even 30 yet. I have been out of school for fewer than five years. And yet I am in the top 10% of the world in wealth already. If I am not donating now, what makes me think I will donate when I am part of the global 1%?

Where to Donate

The short answer is anywhere. Anywhere that you believe you can be helping those who are less fortunate than you.

Maybe for you that means food pantries. Maybe your church. Maybe your school district’s music program. Maybe political causes that you believe will help people over the longer term.

Last week I talked about Effective Altruism and my own current favorite charity (and I recommend checking that out, as well).

But today we are talking about global wealth inequality. With that in mind, take a look at the map below from the Credit Suisse Report:


screen-shot-2016-12-04-at-11-54-40-am

If you’re looking to help address issues raised by global wealth inequality, then you’ll want to find charities that target the blue countries.

Here are a few that you may want to look into:

  • Against Malaria Foundation – Provides nets to families in sub-Saharan Africa to prevent the spread of malaria, which killed around 438,000 people in 2015, including over 300,000 children.
  • Schistosomiasis Control Initiative – Treats diseases caused by worms in poor countries. These diseases are cheap and easy to treat, but often go untreated.
  • Deworm the World Initiative – Similar to the Schistosomiasis Control Initiative, but focused on school-based programs and increasing school attendance through decreasing disease.
  • Project Healthy Children – Works to fortify staple foods with vitamins and minerals, preventing malnutrition and micronutrient deficiency in children in poor countries.
  • GiveDirectly – Gives cash directly to very poor families in Kenya and Uganda. I discussed the evidence supporting this program last week.

Any of these causes, and a litany of others, could use our help. It’s time we looked around, saw how lucky we are, and started working to pull others up with us.

21 thoughts on “You Have More Money Than You Think”

  1. Those are some eye popping wealth statistics! It ready helps put things into perspective and give credence to Warren’s ovarian lottery comment! We certainly are fortunate. Combine this info with your post last week on how far our money can go in helping people in developing countries, I think that’s enough to get anyone off their butt and start donating at least something.

    Great post, Matt!

  2. What an eye opener !! That’s totally true, where Tony said about – When you don’t donate a dime out of your dollar, then most likely you won’t donate more when you earn more.
    As for me, I have donated hundred bucks here and there each year, but never had a recurring event or a schedule to it. I will set aside some budget each year exclusively for charity, so I am reminded of that amount to given for a good cause.

    Thanks Matt, for choosing to create awareness among the people and give a sense of reality check of how fortunate we indeed are !

  3. You are correct, that we are very fortunate. I try to relay this concept when people somehow think they can’t go to more flexible working conditions.

    Something to keep in mind about ‘helping people’, is that giving money to a beggar on the street can actually do more harm to the “system”. It is much, much better to donate money to organizations who can help with the long term issues of providing shelter, healthy food, work, counseling, etc…
    Primal Prosperity recently posted…From the Sunday “Scaries” to the Sunday SolacesMy Profile

    1. You are right that there are definitely more efficient ways to help than others. My article on Effective Altruism last week looked into that topic a bit, but it is definitely something that needs to be considered when you are working to help people.

      Thanks for the comment!
      Matt recently posted…You Have More Money Than You ThinkMy Profile

  4. It’s easy to focus on your own little world. Perspective is a funny thing, we in the U.S. compare to others around us but not people in other countries. Once you expand the comparison parameters, the results take on a whole new meaning. Thanks for keeping us honest in this regard. Great thought provoking post.

    -Brian
    Brian recently posted…November Dividends 2016!My Profile

  5. That’s so true, I didn’t realize that having 5 figures in the bank account puts us way above in the totem pole of the world. The thing with capitalism is that it can’t exist without wealth inequality (by definition, someone has to benefit more than another monetarily, at the very least). It goes to show how you can still feel poor having a 5 figure bank account when others have a 6 or 7 figure bank account. Relational results is what we, as humans, care about the most! Not that absolute results don’t matter but we tend to put more weight on relational results.
    Finance Solver recently posted…Equaling the Competition in Wealth InequalityMy Profile

    1. For sure. Capitalism requires some level of income inequality to work. The inequality incentivizes the behaviors that cause the economy to run. The problem becomes when inequality becomes too severe, like it is now. In that case we end up with decreased economic mobility and your wealth and status becomes determined far more by who your parents are than by how hard you work. An article that fivethirtyeight ran yesterday does a good job of explaining why the current level of income inequality is harmful to the American dream – http://fivethirtyeight.com/features/inequality-is-killing-the-american-dream/

      Thanks for the comment!
      Matt recently posted…You Have More Money Than You ThinkMy Profile

  6. Hey, Matt. Very sobering post. My go to statistic on how fortunate we are in the United States is this: there are over 500 million people in India without a toilet! I agree wholeheartedly with you about income inequality. In my last full year of employment, I made a little over $60K (not counting benefits). And I thought that was a ridiculous a sum giving what I did. I sat in my house for 8-9 hours a day, tapping on a keyboard. I couldn’t imagine what it’s like to be compensated in the millions. Here’s my idea for combating income inequality in the US. Give every corporation a choice. They can have 0% corporate tax or a 35% corporate tax (or whatever the current corporate tax is). But if they choose the 0% rate, the total compensation for the CEO can’t be more than 30 times the total compensation of the lowest paid corporate employee. If if the lowest paid employee at GM has a total compensation of $50K, the total annual compensation of GM’s CEO can’t exceed $1.5M. And if they choose the 0% rate, they must distribute a minimum 5% dividend to shareholders as well. What do you think of this idea? It would certainly rattle the cage at the shareholder and board level. And it might even put a serious dent in our inequality problem. I can’t imagine many boards going to their shareholders and saying, “No, we’re going to forego the 0% tax rate and the 5% dividend. We much rather pay our CEO $100M.”

    1. Intriguing. I like the idea of tying CEO compensation to the compensation of the lowest paid employee. This would provide incentive to increase the pay of the lowest paid workers which both addresses inequality and also would decrease government spending on benefits for the poor. This seems like a winner for the economy overall.

      I’m not sure about the dividend minimum. I don’t know that it would help to address inequality all that much when only around 50% of Americans are in the stock market at all (including retirement accounts). Presumably the half of the country that is not investing is most likely to be the lowest income Americans, and so they wouldn’t benefit from this at all. Plus, the people with the most stock would get the most benefit, and the people with the most stock are already the wealthiest Americans.
      As a FIRE-minded individual who dumps a lot of money into stock, this would definitely help me, but not sure how much it would do for inequality.

      That said, I love discussing theoretical policy proposals and the more original the better. So thanks for a very thoughtful comment!
      Matt recently posted…You Have More Money Than You ThinkMy Profile

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