We've been bombarded the past few years with stories about the "horrendous" wealth inequality that needs to be corrected. I'm a bit confused because when I drive in our metro area I see many homes with values of $150,000 to $1 million with two to four cars in the driveway. Are we being deceived?
According to a 2013 report by Credit Suisse, two-thirds of the world's 3.2 billion adults has a net worth less than $10,000. A 2018 report stated a net worth of $4,210 would put you in the top 50% worldwide. A typical American teen with a used car is probably close to this dollar amount. These numbers tell me the world is quite poor.
A better analysis of net worth is provided by a 2016 Federal Reserve study of 126 million U.S. households. A net worth of $97,000 would put a family at the 50th percentile. The 70th landed on $270,000 and 80th percentile was $499,000.
These statistics tell me that higher personal wealth numbers can be achieved and we shouldn't be concerned about the wealth attained by Bill Gates and others. Wealth is not a zero-sum game.
Why aren't Americans wealthier? Both spouses are working and they're having fewer children. It could be those two or more cars in the driveway and never-ending car payments. Automobiles are not a wealth creator. Family sizes have shrunk but houses have gotten larger. Although residential home values have seen nice price appreciation, many homeowners are still carrying too much debt.
These poor spending habits are hindering families from contributing funds to college savings accounts and then they must rely on debt.