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The risk of becoming poor: how to avoid it? The biggest mistakes that would cost you a fortune

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A, b, c, d... men

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Contemporary writer and psychologist Franz Wertvollen wrote the book “The ABCs of a Modern Man” which talks about people, finances, communication, and answers why you’ll never be rich, and how to get yourself out of a financial strain.

Read the article for more.

And here’s an excerpt from the biography of the author:

He was born in Almaty. When he was nine years old, his family moved to Paris where he graduated with a degree in information and communications. Worked at UNESCO headquarters.

Since the age of 16, he has been published in well-known economic publications such as “Kursiv” and “National Business”. Now he lives and works in Los Angeles.

Franz Wertvollen

Contemporary writer and psychologist Franz Wertvollen wrote the book “The ABCs of a Modern Man” which talks about people, finances, communication, and answers why you’ll never be rich, and how to get yourself out of a financial strain.

Read the article for more.

And here’s an excerpt from the biography of the author:

He was born in Almaty. When he was nine years old, his family moved to Paris where he graduated with a degree in information and communications. Worked at UNESCO headquarters.

Since the age of 16, he has been published in well-known economic publications such as “Kursiv” and “National Business”. Now he lives and works in Los Angeles.

Franz Wertvollen

Read a passage from the book below 🔽

«Why you will never get rich.

How rich a person is is determined only by what they like, how they think, and whether they think at all.

To get from anywhere in the world to New York City, you must first know where you are standing now.

Can you identify correctly which Box you belong to in this drawing of Social Boxes? If you have a distorted perception of reality, you will only get poorer, no matter what, where, or how hard you work.

So, let’s begin.

Late 19th century. An Italian economist, examining the patterns of wealth distribution, concluded that 20% of the population controls 80% of the wealth, respectively, 80% of the population lives on 20% of the resources. Such pattern was true for most of the capitalist countries of the time.

And became obsolete decades ago.

In 2012, Harvard conducts a new study of the distribution of wealth in the United States. Today, 40% of all the money is in the pockets of 1% of the population. 80% of people live on 7% of all the money.

Encouraging numbers.

The share of wealth of the common people is only going to go down.

From the same study it becomes clear that financial tension in social groups is on the rise. But we’ll come back to financial tension; let’s deal with the Social Boxes first.

Do you still think of social classes in this way: the poor, middle class and the rich?

You shouldn’t. 

You should have started thinking more globally a long time ago.

Today there are four boxes, each with its own poor, middle and rich segments.

If you can’t see the difference in those schemes, you know, the beggar on the streets can’t see it either.

If you don’t think there is much difference, you’re going to be crushed by loans and mortgages.

And if you exclaim that you already knew that, and there’s nothing to think about, and no need to, then modern day financial slavery will one day be sure to devour you.

For the rest of us, let’s continue.

These days there is no longer a “middle class” in the same sense in which 19th century economists saw it.

Box D — the destitute.

Attention, these people are not the beggars on the streets — those folks are nonexistent for the society, merely phantoms — the destitute of Box D are the cashiers, drivers, sales clerks, and their like.

Box C — the poor. This is where the majority of people pile up. Here belong the office clerks, all sorts of managers and, yes — the so-called creative class — art directors, journalists, small, often medium business owners…

All this horde used to belong to the middle class, but not anymore. 

Box D — the destitute.

Attention, these people are not the beggars on the streets — those folks are nonexistent for the society, merely phantoms — the destitute of Box D are the cashiers, drivers, sales clerks, and their like.

Box C — the poor. This is where the majority of people pile up. Here belong the office clerks, all sorts of managers and, yes — the so-called creative class — art directors, journalists, small, often medium business owners…

All this horde used to belong to the middle class, but not anymore. 

Why?

Financial tension. 

Let’s take a nineteenth-century German burgher: we’ll call him Otto Stetter. As a member of the middle class, Herr Stetter is not in financial strain, because he has enough funds for his house, his cook, housekeeper, and other burgher expenses.

Now let’s take the average modern “creative class” family. He’s a marketing manager of a small company, she’s a freelance journalist, and maybe a yoga instructor at a fitness club for 40-year-old female accountants. Financial tension? Absolutely. Dig a little into that family’s finances and you’ll find countless loans: for their apartment, their car, the TV, etc. I’m not even talking about their vacations. White sandy beaches and palm trees? Forget it. Their holiday reality is crowds. It does not matter where — Turkey, India, Iceland, even Honduras — their reality is cheap hotels, if not hostels, and places littered by crowds alike this couple. And even that they can afford only by the means of vacation loans.

So, what is financial tension? It’s when the average expenses of a certain social group exceeds its average income.

Like, for example, the family members in our example, who are sweating their guts out at work to live in constant lack of funds and in constant need to choose what’s affordable over what’s desirable.

Box B is wealthy citizens. Top managers of international companies, owners of more or less large retail chains, in Europe and in the U.S. this includes the «cream of the crop» of successful lawyers and doctors.

But we will see the same financial tension here as well. Today, even the people from Box B on average have more expenses than income. And they too are faced with having to choose what’s affordable other than what they want, and they too are getting loans after loans.

Box A is the rich. It would seem that this is who has the money. In fact only 1% of society today is not subject to financial tension. But they’re not subject to it in such extent… well, to a quite vast extent.

Now as for the middle class goes, it exists in each of the Social Boxes, because each of the Boxes has its own poor, middle, and rich segment.

The financial stratification of society has led to the fact that today, once you fall into one Social Box, your chance of climbing out of it is 1%. But your financial situation may still be changing, right? For example a tiny clerk in DHL gets promoted, and then promoted once again, and in 10-15 years he is already a leading specialist or general manager of some department. Now in his Box C he is not with the poor anymore, he’s a part of the middle class, but the chance that he will ever become the vice-president of DHL, and the main shareholder, is very small — of course, there are tales about Cinderella, but Cinderella… well, at the least she was beautiful.

My point is that if you really want to get the money, then you must keep up with the current state of the world, not drag behind with the 19th century ideas in mind. 

If you truly believe that your job might somehow ensure your future and wellbeing, then you are a like a convict, who’s convinced that the more stones, and the heavier stones they carry, the sooner their release from the concentration camp will come.

But then again — to each his own.

After all, even in those places, people managed to believe that work sets you free.

But there’s more to it…».

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