4 ms·

It is interesting that people spend their money more or less on the same things proportionally, regardless of their wealth and income. Two exceptions: Richer pe

by dgb23 4y ago

It is interesting that people spend their money more or less on the same things proportionally, regardless of their wealth and income. Two exceptions: Richer people spend more on education and long-term assets that generate further wealth. There is a threshold where you have enough so to speak and can start investing in the future. I would say this is typical for the middle class. There is potential to spend in a smarter way here. You get more opportunities, social currency etc. But being poor is expensive. You have to spend money on subpar quality products because you need them. You pay interest on different forms of debt, which keeps you down. You are constantly worried about the next large bill and are being pestered by bureaucracies and owners (banks, state, landlord etc.). So below the threshold you get pushed down, above the threshold you get lifted up. It takes incredible effort and discipline to pass the threshold from below. > 2. How to deal with chronically indebted people who can't or won't save money? 1) There's two aspects to this. One I described above and I'm pretty sure this represents the vast majority of cases. Cover the basics with free education, cheap housing and good infrastructure and allow debt forgiveness or just give them money or interest free loans. Basically make sure that the lowest points in the graph (OP) is livable and dignified. This way everyone gets more opportunities to do really good stuff and everyone benefits from that across all layers. Plain and simple. 2) There are also people who are just wired to fuck this up for whatever reason, they need more support and care than anyone else. If they are uncooperative you have to let bang their head into the wall and hope they learn from the pain. You can't help everyone though. It has to be a two way street.

bko 4y ago
> So below the threshold you get pushed down, above the threshold you get lifted up. It takes incredible effort and discipline to pass the threshold from below. At the very low end you could be pushed down. If you can only afford $5000 for a car, it'll be expensive in the long run. But its also true that on the high end you get pushed down as well. If you have a lot of money and feel the need to buy an expensive car that's no more reliable than a much cheaper car. Plus you have to pay more for insurance, maintenance, etc.
- Applejinx 4y ago
  That really doesn't count as being pushed down. That's you burning money for fun. I know what that's like too but it sure doesn't count as the Man keeping me down, you're describing one hell of a 'first world problem' that doesn't really make sense in the context of this discussion. Wanting a 5 million dollar car doesn't count as getting pushed down. And its unreliability isn't really in the same context as depending on the $5000 (or $500) beater. If your 5 million dollar car conks out, you are more frustrated than endangered: no thing that you do is seriously at risk, as you'll have alternate ways to get to work etc., including the random acquisition of the same $5000 car, which to you is pocket change, beneath consideration.
  - hansword 4y ago
    https://twitter.com/search?q=0th%20world%20problem https://twitter.com/search?q=0th%20world%20problem - it seems like hundreds of people have independently coined '0th world problem' to name such non-inconveniences. Edit for two Examples: * I want ice cream but I don’t want to actually leave my apartment and none of the grocery stores have delivery slots open for the rest of the day. * Champagne cork flying damaged my priceless artwork
  - bko 4y ago
    > That really doesn't count as being pushed down. That's you burning money for fun. I know what that's like too but it sure doesn't count as the Man keeping me down, you're describing one hell of a 'first world problem' that doesn't really make sense in the context of this discussion. Maybe its fun burning money, working a job you hate, spending time away from your friends and family, working till you drop dead. I don't know I'm not rich. > If your 5 million dollar car conks out, you are more frustrated than endangered: no thing that you do is seriously at risk You have a very weird perception of things. First, there are no $5 million cars. Have you ever met someone with money? Are they chill about trashing their property? Oh I totaled my $150k car, no big deal! I have an infinite amount of money. People go broke all the time. Take it from a literal billionaire and former CEO of Goldman, Lloyd Blankfein: > “I can’t imagine how all this is going to come out when you publish,” he says, looking fleetingly concerned…. Blankfein insists he is “well-to-do”, not rich. “I can’t even say ‘rich’,” he insists. “I don’t feel that way. I don’t behave that way.” He says he has an apartment in Miami as well as New York. But he abjures most of the trappings. “If I bought a Ferrari, I’d be worried about it getting scratched,” he jokes. No one has enough money or doesn't care about burning money. https://dealbreaker.com/2020/02/blankfein-sanders-trump https://dealbreaker.com/2020/02/blankfein-sanders-trump
hansword 4y ago
> spend their money more or less on the same things proportionally I guess I must be misunderstanding you, because this seems obviously wrong. A very poor person spends ~100% of their income on nutrition and shelter, and their investment rate is 0%. A very rich person spends ~0% of their income on nutrition and shelter and their investment rate approaches 100%.
- dgb23 4y ago
  It's counter intuitive but its roughly the same percentages for most things. You'd be surprised at just how much a rich person spends on food, shelter transport etc. typically they will pay for very high quality, labor intensive and exclusive things. The difference is really just education and investment.
  - dahart 4y ago
    > It’s counter intuitive but it’s roughly the same percentages for most things. Do you have evidence for this claim? I don’t believe it’s true. Take food, for example, the US government publishes the fact that food spending as a share of income declines as income rises. https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=58372 https://www.ers.usda.gov/data-products/chart-gallery/gallery... https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/ https://www.ers.usda.gov/data-products/ag-and-food-statistic...
- bluGill 4y ago
  A rich person lives in a mansion, and a poor person in a cardboard shack. And everything inbetween depending on wealth. Adam Smith observed years ago that when people get more money they typically spend it on 'better' housing. You will die, some religions will let you take it with you, but none that are popular today. So you may as well spend whatever you earn on things that you think will make you happy.
  - dahart 4y ago
    Adam Smith was well aware that the rich man spent a smaller percent of his income on his mansion than the poor man did in his shack. The rich person also has, statistically speaking, a year’s income in liquid cash, a few mil in stocks and bonds, some expensive cars, maybe a boat, some expensive sports hobbies, a travel budget, good food at all times, and a will to divvy up all the wealth among their children.
dahart 4y ago
> It is interesting that people spend their money more or less on the same things proportionally, regardless of their wealth and income. Where are you getting this from? It’s definitely not true when it comes to savings and investment. It’s not true for food, as I linked below. Its not true for travel. It’s not true for housing either. Why do you believe this? https://www.ssa.gov/policy/docs/research-summaries/housing-expenditures.html https://www.ssa.gov/policy/docs/research-summaries/housing-e... “Low-income families spent a far greater share of their income on core needs, such as housing, transportation, and food, than did upper-income families.” https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2016/03/household-expenditures-and-income https://www.pewtrusts.org/en/research-and-analysis/issue-bri...
- dgb23 4y ago
  I wish I could pull it up, it had much more coarse grained categories than what you linked and long time periods. It might have been a meta study. For example in one of the links they discriminate food away from home etc. It's not the one I'm remembering but it looked a bit like this one: https://flowingdata.com/2018/02/08/how-different-income-groups-spend-money/ https://flowingdata.com/2018/02/08/how-different-income-grou... It looks rather proportional. But I have to admit, here housing is fatter at the low and. Personal insurance/pension gets fatter the more you move up. Education is interesting as it is fat at the very low end, gets thinner for a bit, but after the lower middle gets fatter again continuously. It also cuts off after 200k yearly income, so there's that.

by dgb23 4y ago

bko 4y ago

> So below the threshold you get pushed down, above the threshold you get lifted up. It takes incredible effort and discipline to pass the threshold from below. At the very low end you could be pushed down. If you can only afford $5000 for a car, it'll be expensive in the long run. But its also true that on the high end you get pushed down as well. If you have a lot of money and feel the need to buy an expensive car that's no more reliable than a much cheaper car. Plus you have to pay more for insurance, maintenance, etc.

Applejinx 4y ago
That really doesn't count as being pushed down. That's you burning money for fun. I know what that's like too but it sure doesn't count as the Man keeping me down, you're describing one hell of a 'first world problem' that doesn't really make sense in the context of this discussion. Wanting a 5 million dollar car doesn't count as getting pushed down. And its unreliability isn't really in the same context as depending on the $5000 (or $500) beater. If your 5 million dollar car conks out, you are more frustrated than endangered: no thing that you do is seriously at risk, as you'll have alternate ways to get to work etc., including the random acquisition of the same $5000 car, which to you is pocket change, beneath consideration.
- hansword 4y ago
  https://twitter.com/search?q=0th%20world%20problem https://twitter.com/search?q=0th%20world%20problem - it seems like hundreds of people have independently coined '0th world problem' to name such non-inconveniences. Edit for two Examples: * I want ice cream but I don’t want to actually leave my apartment and none of the grocery stores have delivery slots open for the rest of the day. * Champagne cork flying damaged my priceless artwork
- bko 4y ago
  > That really doesn't count as being pushed down. That's you burning money for fun. I know what that's like too but it sure doesn't count as the Man keeping me down, you're describing one hell of a 'first world problem' that doesn't really make sense in the context of this discussion. Maybe its fun burning money, working a job you hate, spending time away from your friends and family, working till you drop dead. I don't know I'm not rich. > If your 5 million dollar car conks out, you are more frustrated than endangered: no thing that you do is seriously at risk You have a very weird perception of things. First, there are no $5 million cars. Have you ever met someone with money? Are they chill about trashing their property? Oh I totaled my $150k car, no big deal! I have an infinite amount of money. People go broke all the time. Take it from a literal billionaire and former CEO of Goldman, Lloyd Blankfein: > “I can’t imagine how all this is going to come out when you publish,” he says, looking fleetingly concerned…. Blankfein insists he is “well-to-do”, not rich. “I can’t even say ‘rich’,” he insists. “I don’t feel that way. I don’t behave that way.” He says he has an apartment in Miami as well as New York. But he abjures most of the trappings. “If I bought a Ferrari, I’d be worried about it getting scratched,” he jokes. No one has enough money or doesn't care about burning money. https://dealbreaker.com/2020/02/blankfein-sanders-trump https://dealbreaker.com/2020/02/blankfein-sanders-trump

hansword 4y ago

> spend their money more or less on the same things proportionally I guess I must be misunderstanding you, because this seems obviously wrong. A very poor person spends ~100% of their income on nutrition and shelter, and their investment rate is 0%. A very rich person spends ~0% of their income on nutrition and shelter and their investment rate approaches 100%.

dgb23 4y ago
It's counter intuitive but its roughly the same percentages for most things. You'd be surprised at just how much a rich person spends on food, shelter transport etc. typically they will pay for very high quality, labor intensive and exclusive things. The difference is really just education and investment.
- dahart 4y ago
  > It’s counter intuitive but it’s roughly the same percentages for most things. Do you have evidence for this claim? I don’t believe it’s true. Take food, for example, the US government publishes the fact that food spending as a share of income declines as income rises. https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=58372 https://www.ers.usda.gov/data-products/chart-gallery/gallery... https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/ https://www.ers.usda.gov/data-products/ag-and-food-statistic...
bluGill 4y ago
A rich person lives in a mansion, and a poor person in a cardboard shack. And everything inbetween depending on wealth. Adam Smith observed years ago that when people get more money they typically spend it on 'better' housing. You will die, some religions will let you take it with you, but none that are popular today. So you may as well spend whatever you earn on things that you think will make you happy.
- dahart 4y ago
  Adam Smith was well aware that the rich man spent a smaller percent of his income on his mansion than the poor man did in his shack. The rich person also has, statistically speaking, a year’s income in liquid cash, a few mil in stocks and bonds, some expensive cars, maybe a boat, some expensive sports hobbies, a travel budget, good food at all times, and a will to divvy up all the wealth among their children.

dahart 4y ago

> It is interesting that people spend their money more or less on the same things proportionally, regardless of their wealth and income. Where are you getting this from? It’s definitely not true when it comes to savings and investment. It’s not true for food, as I linked below. Its not true for travel. It’s not true for housing either. Why do you believe this? https://www.ssa.gov/policy/docs/research-summaries/housing-expenditures.html https://www.ssa.gov/policy/docs/research-summaries/housing-e... “Low-income families spent a far greater share of their income on core needs, such as housing, transportation, and food, than did upper-income families.” https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2016/03/household-expenditures-and-income https://www.pewtrusts.org/en/research-and-analysis/issue-bri...

dgb23 4y ago
I wish I could pull it up, it had much more coarse grained categories than what you linked and long time periods. It might have been a meta study. For example in one of the links they discriminate food away from home etc. It's not the one I'm remembering but it looked a bit like this one: https://flowingdata.com/2018/02/08/how-different-income-groups-spend-money/ https://flowingdata.com/2018/02/08/how-different-income-grou... It looks rather proportional. But I have to admit, here housing is fatter at the low and. Personal insurance/pension gets fatter the more you move up. Education is interesting as it is fat at the very low end, gets thinner for a bit, but after the lower middle gets fatter again continuously. It also cuts off after 200k yearly income, so there's that.