Do people really go out and spend money immediately if they get raises? Personally, if I get a raise, I may treat myself to something nice, but then I immediately go back to my old spending habits so I have more money to save.
I always just said, expenses rises to meet income, + 25%.
If you want to guarantee an expensive lifestyle, it’s best to obtain it as immediately as possible.
People spend your easy money and enjoy youth IMO.
Is it more important for people to feel happy, or secure?
Modern medicine is advancing all the time. You could be old an grey for many years. You could live to be 170. If you live to 170 and save well you could retire at 65 and live the last half of your life with more income from savings to enjoy life than if you work until 170 and spend every penny as you make it.
Of course you could also die in the next few minutes. You need to find that balance.
Also, your statement is false. The average higher-income person saves both more money on an absolute basis ($ amount) and on a percent-of-his/her-income basis.
I think this is one of the books that everyone over the age of 15-17 should read as it gives a crash-course on the fine art of making money.
This book, together with the minimalists’ work influenced me to change my work style and other habits and now I feel more focused, clutter free, and with significantly more €$£¥ in my pocket.
Additionally, he operates a real estate "investing" school that advocates and instructs semi-legal, morally questionable predatory practices.
It is openly modelled after Trump University, Trump being Kiyosaki's business mentor and aspirational avatar. They have authored at least one book together.
Nobody remembers conversations they had word for word an hour afterward, let alone decades.
Yeah, it's 90% trivial platitudes about "buy low, sell high" and "invest your money wisely", and then a few pages about how he actually made his money (if that part is true, anyway): Haunt foreclosure auctions to flip the houses. Skeezy.
Drop natural population growth toward zero. Import one million low skill, very low income persons per year.
Welcome to the non-merit, non-point based immigration system treadmill of never getting anywhere because you perpetually flood your system with cheap replacement labor.
Tens of millions of Americans moved from the middle class into the top two economic tiers since 1970. And we replaced them with vast amounts of low cost imported labor. If you keep doing that, you will not see meaningful wage growth at the median, you'll only see it in the top tiers.
Most other developed nations are once again correct: the US should move to a common sense points based immigration system. We could merely exactly copy Canada on immigration, and that would dramatically improve the conditions for workers at or below the median.
What would I do with more income? Well, I'd probably save some of it, use some of it to pay down debt, and spend some of it. I don't have to be spending 100% of my current income for that to be true.
>The average person spends almost exactly as much as they make as income rises.
Placing your wants in check does wonders to keep cash in your pocket. If some people burn through their cash to feed their conspicuous consumption then obviously that doesn't mean they are poor or in need.
Looking at my companies parking lot, I see BMWs, Mercedes, Range Rovers, Escalades, Maserati, Porsches, and tons of new cars, etc I'm in Detroit of all places. We're not getting paid like that!
Most people have new iphones, ear pods, the other day I was in a meeting with about 12 people, 9 of them where wearing iwatch. I can assure you that for the majority it's a fashion statement more than a need.
You can "buy" that explanation or not, but there's a lot of research and evidence backing up the idea that a huge fraction of the western world lives essentially paycheck to paycheck, and it's not because all of them are less financially savvy than you or I, who just happen to get paid well above average too.
A good TV and nice phone are not usually the kind of expenses that drive people into having no savings. If I go grab an example from t-mobile...
A brand new, shiny iphone x for somebody with good credit is gonna run us $30/m. That's kinda pricy, so let's go a few generations back and get a refurbished iphone 6s plus - they won't let me go to older generations. That'll cost $22/m. So sure, yes, that cost adds up - but $8/m extra in savings is not going to be the difference between somebody living paycheck to paycheck or suddenly being flush with savings.
Never mind reality TV - _actual_ reality is that a large percentage of the population of basically every first world, western, developed country is paid at such a level that any raise is just going to go directly back into the economy because they aren't paid enough for savings to be a high enough priority to happen. This isn't financial illiteracy - both of us put a _lot_ before savings, it just happens that once we've done that we still have a bunch left over. Lots of people don't.
Of course that $8/month difference isn't much savings, but it is a lunch out vs heating leftovers one day. Or you can eat leftovers everyday, save that $8/month on the phone and use all of that savings to buy membership at a golf club. This is your life and your choice, what do you want?
People don't live paycheck to paycheck by choice, usually. Savings first is not an option if it means not paying rent, bills, or food.
How much savings you need is an open question of course. To live as above without income doesn't require a lot of savings, so you start saving less and add some luxury.
It doesn't really matter if you spend your raise or not. If you put your raise in the bank, the bank will spend it by either lending out more money or investing it.
For the same reason, for the economy it doesn't matter much if the company spends its money on employees or on shareholders.
Unless you are saving in the mattress, the money is still in the economy