The imprudent rich?

Two related items here. First, the FT reports that the “rich” are increasingly using pawnbrokers to finance things like school fees. Second, Rachel Johnson says the “middle class” (she means the rich) are neglecting their children as they work long hours.
All this seems to be sub-optimal behaviour. If you have big expenses coming up - and school fees are a foreseeable event - it’s a bit foolish to buy rapidly depreciating assets such as Aston Martins. And Rachel says the parents are “guilt-ridden” about their neglect.
It also seems to betoken considerable imprudence. For example, a man on £100,000 a year - a modest wage by City standards - takes home well over £5000 a month. This leaves over £3000 after you’ve sent one child to a top private school, even without scholarships. And £3000 a month seems to me a very generous sum, assuming one has paid off the mortgage - which anyone whose spent a few years in the City should have done.
What seems to be happening here is the hedonic treadmill. The rich get a taste for fancy cars, expensive jewellery and second homes and so need to work long hours just to finance all this.
Which seems to me to miss the entire point of money. For me, the point of money is to buy freedom, not a gilded cage. 
So, who’s got it wrong - me or them? Are the frazzled rich undervaluing freedom?
Or have I got it wrong? Sometimes, I fear that in saving money I’ve bought some freedom at the expense of memories; unlike people who have spent money, I have almost no stock of happy memories. And perhaps such a stock is as valuable as wealth - a point neglected by standard optimization theory.

Comments

[Stuart]

"So, who’s got it wrong - me or them? Are the frazzled rich undervaluing freedom?"

Perhaps you place a different value on freedom? Or simply value different types of freedom? It's a fairly subjective subject, after all. To each their own, etc.

[dearieme]

"For me, the point of money is to buy freedom, not a gilded cage." Bloody right: once you've got your 'Get stuffed!' fund, the world is a sunnier place.

"unlike people who have spent money, I have almost no stock of happy memories." Blub.

[reason]

My happiest memories are of impoverished freedom.

[Dave Cole]

I think you've missed Thorstein Veblen.

Something like an Aston Martin is a Veblen good - it is attractive precisely because it is expensive - while it is harder to show of your child being at a good school.

Equally, by the standards of their peer group, such people aren't rich - they're merely normal, and have to work harder to show that they are more materially successful than their (already stonkingly rich) neighbours.

xD.

[Mark Harrison]

I think that you have it right.

Compared to my own valuations, most people I see my age are under-valuing time and freedom, and over-valuing "doodads". (A marvellous American word for anything showy that consumes revenue as well as capital.)

In my case I could EITHER run a Bentley, or send my daughter to Prep school... the event is forseeable - it will kick in in the summer of 2009 - and hence the Bentley went earlier THIS year, but we took the choice to give her the educational opportunity.

My income is somewhat lower than the £100k per year you suggest, by the way, but I took a decision to only work 2-3 days a week and be closer to a full-time dad when she was 6 months old - that is MY stock of happy memories.

Mark, age 37, two kids... a 6-year-old and a 3-year-old... both of whom I collected from school today at 11:45 and 15:00 respectively.

[Andrew Duffin]

So... rich people work hard and buy fancy toys; you think that misses the point of money.

That's why you are a schoolteacher and they are bankers.

Choices, choices.

[Andrew]

Perhaps you place a different value on freedom? Or simply value different types of freedom? It's a fairly subjective subject, after all. To each their own, etc.