Fact: Jews make more money.
Before you rush into calling me prejudiced, hear me out. Although being Jewish and caring about wealth is a stereotype perpetuated with negative connotations, there is absolutely nothing wrong with being raised to value education, financial knowledge and family values. In fact, we can all learn from Jews.
Why Some Religions “Pay” More
Let’s forget about ethnicity and focus on religion. What does our religion have anything to do with wealth?
Well, it turns out – everything.
Religion shapes moral values, family values, educational values and… you guessed it – financial values. And it turns out Judaism does all of these things much more effectively than many other religions. However, before you throw bricks at me let’s consider a few things.
According to a study by Lisa Keister, at Ohio State University, Jewish people:
- Accumulate more than twice the amount of wealth of an average individual with different religious affiliations.
- Inherit twice as much from their families and more frequently.
- Typically own twice as much stock.
- Own much more valuable homes
The big question is why? I know I’m curious!
Keister proposes a very convincing answer: it’s their values, stupid! (ok, I got carried away with political catch phrases here.)
Education’s Effect on Wealth
Jews place more importance on a strong financial foundation early in their children’s lives. They invest in their children: better education, more savings, better social connections and a preference for strong community ties. Importance of building wealth is taught early and is a critical part of preparing for success. For example: on the date children come of age (Bar Mitzvah and Bat Mitzvah) parents, relatives and friends often give financial gifts, not just in money, but in investment and saving vehicles. This strong religious tradition sets a course for a child’s financial path.
Don’t take my word for it though, ask around!
Ever wonder why so many bankers, doctors and lawyers are Jewish? It’s because Jews value education. Adults establish early savings for their children and put them through the best schools money can buy. As a result, Jews earn more money in higher paying jobs, then repeat the cycle with their own children.
Alright, so they are pretended with better opportunities from early on, what else?
Jewish Investment Behavior
Since investment behavior is engraved early on in life, adulthood builds on to a strong foundation.
Fact: Jews prefer financial assets vs. real or fixed ones.
Stock ownership occurs much earlier in life than for most people. Unlike a typical investor of another religious affiliation, Jews invest in financial assets before buying a home. This is meant to create continuous cash flow and allow for ongoing investment (Rich Dad, Poor Dad ring a bell?). Full disclosure: affiliate link.
Combined with generally better incomes and better investment opportunities through developed social connections (most often from attending services), those of Judaic faith enjoy faster accumulation of wealth and more control over debt.
Other Important Wealth Factors
Keister also hypothesizes that later child bearing and more time spent on helping children develop helps establish better financial foothold for kids.
Makes sense, right?
On top of that, communal exposure to social development creates a network of trustworthy and strong ties that can help financially at a later time.
What Can We Take Away From This?
I’m not suggesting you should drop your religion and take up Judaism. However, you simply can’t argue with basic facts about financial behaviors that set people up for a wealthy life:
- Save early, save plenty.
- Educate your children about financial management and establish their future by investing in their education.
- Be involved in your family’s financial well-being through constant communication and participation.
- Consider investing in yourself before bringing new life into this world only so that your child faces the same financial struggles as you.
- Consider investing in financial assets before jumping into real estate or fixed assets (especially when you’re young).
- Don’t discard religion – after all it helps build important bonds that will aid you in your quest for financial independence.
Fact: you don’t have to be Jewish to do as they do.
With that, I’d like to finish up this rather long train of thought that in all honesty deserves a much deeper discussion that what is possible to cover in a blog entry. For a full study and its findings I highly recommend checking it out here (PDF).
Finally, I’d like to conclude that these are my personal observations of what I found to be a very fascinating subject. I’m not an expert in investing and give no specific advice. Also, If I offended anyone in any way, I apologize in advance as this post was meant to look at financial connections to one religious group and not to offend any specific group of people.
For those looking for a good book on investing, check out The Intelligent Investor by Benjamin Graham (in collaboration with Warren Buffett). Full disclosure: affiliate link. He was one of the few investors who got away with profiting under the worst of market conditions. It’s a fantastic read, and a great start if stocks are not your thing yet.