On my post about what we've learned from millionaires there was a bit of discussion about what it means to be "self made". One commenter suggested the following:
If you started off middle-class or inherited anything from your parents, you're not "self-made." Which is fine. There's no shame in your parents' having been able to give you advantages. But it's not the same experience as having come up out of a housing project.
The comment above: "If you started off middle-class or inherited anything from your parents, you're not 'self-made.' " irks me.
First, being middle class means what? You didn't have to dodge gangs to get through high school? You didn't have to work after school to help feed the family or deal with a drug addict parent? What, exactly do you believe middle class implies, that they had no worries and just because the parents aren't struggling they shower wealth on their kids?
Wow, tell that to my middle class friend who had the step mom from hell who convinced his dad to kick his butt out his senior year of high school or my buddy whose dad was an alcoholic who liked to whip the belt out after a six pack. How about my pal's wife whose father not only refused to pay for college but because of his income she couldn't qualify for any financial aid to include loans the first year because he refused to share his financial information with FAFSA. She got to move out, work full time, and then after a year go back and prove she was independent. As a matter of fact, most of my friends were hardly coddled; we all worked through college even those whose parents appeared they could have afforded it.
And as far as inheritance, if your parents are living until their 70's or beyond, you pretty much cannot count on getting an inheritance since you're in your 40's or 50's by the time they pass and someone who has worked hard and become a millionaire by that time should definitely be considered to have made it on their own.
Another took a more "what's it mean" approach:
Self-made - what does that mean, and what should it mean? I've typically seen it applied to anyone who ended up becoming far wealthier than their parents. I don't have a problem with that definition, though it likely means I will never be "self-made" as my wife's family is quite wealthy. However, our own wealth is our own - the result of our work, our investment risks, and our saving. We've had great examples, mentoring, and opportunities that many don't have, but does that count against what we have achieved?
Personally I try hard not to worry, care, or compare. There are always people smarter, harder-working, more accomplished, and wealthier in any case.
Then another replied to the original commenter:
I found your comment a bit insulting and sad to an extent. Just because my family was considered lower middle-class ($38000 for a family of 4), I had nothing handed to me. My parents knew nothing about college, nothing about what I should study, spent all their money, provided little to no guidance, and left me to deal with everything. They agreed to help with a loan, but then defaulted on it leaving me to deal with a $14,000 bill. The school told me I was not going to be allowed to finish my degree until I paid. I could have whined and complained but in the end I had to work 3 jobs and negotiate with the college to get loans. When the money the school loaned me was not enough to pay for everything, I ate food from a local Christian food bank and lived in a single room in a basement. Worked through college delivering boxes, lowered my rent by cleaning the basement area and helping out the owner. In the end, I made it through just to not find a job due to a downturn in the market. I owed $40,000 and $12,000 in credit cards and was working for or at near minimum wage or not working at all. When I finally got my first job in my field, everything I made went out the door to pay loans and the normal costs of living.
I think everything is about your attitude. The old saying that God helps those who help themselves is true. I didn't give up, but kept fighting. In the end, people noticed this and I was very blessed to have had people in my life that helped me when I needed it the most. When professors told me I wouldn't succeed I proved them wrong. When jobs dried up, I found something else to keep income coming in.
Fast forward 20 plus years and my lovely bride and I have been very blessed. This year is our 20th anniversary. We roughly live on 25% of our income; pay 25% in taxes and save the rest. It is again our attitude, our choices and great blessings from above that have led to our success. We chose to pursue the careers we are in and sacrificed in the beginning to reap the rewards we now get. Nothing has been handed to us. It was the choices we made and our attitude to stick to it that made us able to contribute to the millionaires series.
And finally, there was this:
My interpretation of self-made is that your station in life is a function of the combined effort of you and your wife. These days I would tend to exclude help given towards a child's college tuition since with the large increases in tuition it has become such a common occurrence.
Our 3 children ages, 50, 53, & 55 have each received help from us on a few occasions but they are good savers and although I manage their investments for them the contributions are all their own. I have also given them loans at various times which they have always repaid.
Interesting conversation, huh?
Shortly after that, I stumbled upon this article from Dr. Thomas Stanley. He didn't define self made, but made some clear statements as follows:
In my thirty plus years of surveying and studying millionaires, I have consistently found that 80 to 86% are self made. That also applies to decamillionaires. In 1982 according to Forbes about 38% of America's wealthiest people were self made. In 2012, the percentage jumped to 70%.
He rambled on about the politics in Washington for a bit, then made this comment that I loved:
Economic opportunities abound in this country. Yet most Americans are not wealthy. It is easy to blame the so-called inequities in our economy. But it is more about the fact that Americans spend all or most of their income on things that have little or no lasting value! They lack the discipline required to accumulate wealth. Most households are on a treadmill of working and consuming. The typical American household has a median annual realized income within the $50,000 to under $75,000 bracket. Only 6.3% of these people have any realized capital gains income. Thus an update is in order. Remember what I wrote in The Millionaire Next Door: big hat, no cattle. And now the update: no capital, no capital gains.
Very true. Americans do have a tendency to spend, spend, spend.
But that doesn't get us any closer to defining what it means to be self-made. So I'll take a shot at what it means and let the rest of you make changes or offer other options from there.
I would say someone is self made if they:
- Have a built a sizeable net worth (vague, I know)
- Done it on their own with no help from family, friends, etc.
- I would not include college as help, but would include things like large loans, the gift of a job, etc.
What I don't think is important:
- The net worth doesn't have to be "millions". It may simply be a few hundred thousand dollars. The key is they did it themselves.
- They need to make/have more than their parents. If my parents have $1 million and I have $500k, I'm still self-made as long as I earned that $500k myself.
So, what is your definition of self made?