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Comment by davidhyde | Hacker News Reader

Your income level does not make you wealthy, it is your capacity to absorb financial speed bumps. At uni, I made less money than some of my peers but I felt wealthier than them. This continued into our professional lives and had nothing to do with our relative income levels. Back then I always had spare cash to spend when an opportunity arose. An unplanned weekend trip away, a celebratory night out, no problem. Sure I didn't have what they had. No car, I took the bus instead of flying home, had to have drinks before going out rather then buying them out, that sort of stuff.

The difference was that I saved money to have savings for the sake of having a financial buffer rather than saving for something that I wanted to buy. Don't live beyond your means, it's that simple. These loans are targeted at middle class Americans, not the poor and starving. They should be able to save.

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This brings up a tangential question I've had lately.

When I played video games (especially RPGs), I always ended the game with a mountain of unused resources at my disposal. I rarely used items, cash, etc, unless the ROI was plainly evident. Many of my friends would just burn through cash / items as soon as they had them, and were often in a bind during tough battles / situations. I wonder if this followed us into life.

I tend to be a saver, and have always lived below my means. Many of my friends struggle to make ends meet, regardless of their salaries.

So, I'm curious. Do / did you play video games? If so, did you end the games with a huge pile of cash, or did you burn through it as you went?

I almost always wind up finishing up games with a huge pile of resources left over. It's only natural; even hardened adventurers need to keep their retirement in mind while saving the world.

There was a studying showing that the trait behind this tendency towards saving, the ability to delay gratification, is present relatively early in childhood, and has strong predictive effect on success in life: https://en.wikipedia.org/wiki/Delayed_gratification#The_Stan... . Perhaps this implies that no matter how rich society gets, there'll always be people who just burn though whatever they earn. This would partially explain why people in poor countries like China and India are still able to save a greater percantage of their income than people in western countries who earn an order of magnitude more.

>Perhaps this implies that no matter how rich society gets, there'll always be people who just burn though whatever they earn. This would partially explain why people in poor countries like China and India are still able to save a greater percantage of their income than people in western countries who earn an order of magnitude more.

What's the connection there you're implying [1]? I would think that the higher (capacity to) save is an artifact of peer pressure/ecosystem effects. If a frugal person is still expected to have a big house, or else be seen as weird, that imposes a constraint that forces a lower savings rate than they prefer.

It's a hard Gordian knot to cut, but once everyone expects normal people to pay a certain expense, you can get stuck in that kind of bad equilibrium.

[1] between "some people always burn through everything" and "people in some poor countries have higher savings rates than in rich countries"

The marshmallow experiment is less about whether children are able to delay gratification, and more about whether or not they trust adults to deliver on the promises they make.

While I wouldn't want to attribute either cause as being more or less, it is a n interesting confounding variable that I wonder who the original and subsequent research accounted for it. Especially since it also applies elsewhere in life. For example, investing money is delaying gratification, but it is also a question if you think you will actually make money which is not guaranteed.

>this tendency towards saving, the ability to delay gratification, is present relatively early in childhood, and has strong predictive effect on success in life

This really resonated with me. As a child I use to eat my food "in order", saving the best part for last. Now I'm thinking about all the instances where I've delayed gratication in my life. I've always saved money at an above average rate but never really made this connection before.

There was some challenge to this experiment. Once family and parental education were accounted for, the difference largely disappeared after age 15.

I read elsewhere theorizing, that kids from more secure backgrounds will delay more likely as the delay has been rewarded in the past. Whereas, if every dinner is fighting over scraps, they will probably take the initial marshmallow

https://www.theguardian.com/education/2018/jun/01/famed-impu...

Unfortunately you can´t really do much with magnitudes of money - it´s all about the relative price level. Working in Silicon Valley with 6k/month income, and 4k/month housing expense makes you significantly worse off than the person with 4k income and 1k housing expense living in the midwest, say, who is consequently much more able to save. A similar comment applies with respect to comparing absolute prices between countries.

Something to always consider - all of that unused cash at the end is something you didn't do during the game (your life) that you probably could have benefited from.

Like Frank Capra's 1938 film, "You can't take it with you"

Unfortunately I don't have a death star to destroy every planet in the solar system. If I can't take them with me why can't I at least watch the biggest fireworks ever? So much wasted potential...

I think your metaphor falls flat because you can only take with you the things you own, as in literally throw it into the casket.

Also have similar spending patterns as the two of you, and played video games when I was younger. Yes, I had similar spending patterns in RPGs and particularly RTS games. I'd hoard resources to make sure I always had some when I needed them.

The thing is - in both video games and life, this is not always a good thing. In Starcraft, if you've banked over 1K minerals you are doing something seriously wrong; if you look at pro games, they rarely have more than a couple hundred minerals stored up, because they have a strategy that they're continuously executing and it involves burning minerals to convert into more minerals. Similarly, if I'd been willing to run with zero cash cushion, spending everything I made and locking myself into the corporate treadmill, I'd be a homeowner and have a net worth about 50% higher than I currently do. Optionality & security have a price; you trade efficiency for it, and it comes out of the standard of living you can maintain.

I think people just have a certain set point for the amount of risk they're willing to run, and it's probably partially genetic and partially from watching how your parents react to risk and internalizing that.

Another gem!

I rarely spent a dollar in video game economies, but I attribute that to most video game economies not rewarding it well. It’s hard to design that, because players can find themselves out of cash and that might create dead ends if it’s necessary.

Though perhaps the Sims or tycoon games suggest otherwise. I was always running broke in those.

I've had to force myself to use that ammo/elixir/etc. because I'd do the same. Playing something like DOOM (2016) where you're constantly swapping between weapons due to ammo running out helped. Or play everything on hard

I really appreciate this analogy - it's a new way to look at things and it probably is right.

I like playing real time RTS games and if I'm not spending everything (i.e have a lot of villagers and spend resources) it means I'm not optimizing enough. In real life, that is sort of where I am now.

I am not the OP, but I do play games. And I tend to hoard the hell out of everything I find in the game (especially in RPGs). And I do tend to have a lot of unused inventory by the end of the game.

At the same time, I don't do well with money, I eat out too much, drink too much, make impulsive purchases (mostly gifts and hobby related things, but still) and generally do not watch my budget very carefully.

I don't think video game experience translates very well into real life. In a game, going through tough fights without using any healing or other expendables feels like an extra challenge, going through life without going out for beers or a diner date or without wasting a couple of hundred bucks on a fancy VST plugin or a cute RC toy for some friend's kid does not feel that way.

Seconding. I too always ended RPG games with inventory full of stuff I opted to save for actual emergency and not just some final boss. But it didn't translate to real life - I'm not exactly an impulsive buyer, but not all that savvy with money either (my current personal finance strategy is ensuring I spend less than I earn, and trying to increase how much I earn). In the past, I've experienced running out of money while being so burned out I could barely hold a job, and I vowed to never live through it again.

I think games are too different than life. Having saves changes a lot; e.g. I can refrain from using a powerful healing item in a fight and try to micro or luck my way out instead, because if I fail, I can reload and try again. I've noticed that in roguelikes, I'm more likely to use items - those games are harder and have permadeath. Also, in modern games I'm also more eager to use collected items, because the experience these days is so streamlined that I can rely on the game to provide me another powerful item just in time.

Life, unfortunately, doesn't have saves, and is not balanced.

You haven’t fought that boss in real life that made you use half of your inventory and you still died which turned you into the video game hoarder you are today. Once I came close to homelessness I realized I too must hoard my money.

Related. One day you'll be dying. And you'll have a whole lot of savings you didn't use. Fun you could have had. Will you wish you'd spent it, or will checking out with money in the bank give you pleasure in itself?

My theory is that some people has an innate ability to be happy without spending much money. They don't travel much and don't eat expensive food ... and that's just fine for them.

On the other hand, some (most?) people NEED lots of money to be happy. Their nerve systems are just low-efficiency in terms of how it is capable of converting a chunk of money into happiness.

I grew up in North Georgia where the rural and ghetto areas are poor, not middle class, and everyone has a subprime loan. It usually goes like this: you run up your shitty interest rate credit cards on car repairs to get to work, you come across this refinance service that will pull your 3-5 1000$ credit cars into one payment and reduce what they're paying by 80-200$. They're excited and don't even notice that it's 20% interest for 5 years. They realize after a while but they just say that they'll refinance once their credit score has improved after building their credit. Their car has another issue and now they have more credit card debt and a subprime loan.

I know you think it's mostly middle class but I grew up in dirt poor white ghettos and I could write a book on how many people make this mistake. Surviving sucks.

Your capacity to absorb financial speed bumps today is (among other things) a result of your income level yesterday.

I am often surprised how people whose income is the same or greater than mine live in stress, because each extra euro of income is immediately translated into an extra euro of consumption, and there is no reserve for a rainy day.

However, I am not surprised when the same thing happens to people with incomes much smaller than mine. Sometimes I am instead surprised how these people manage to survive at all. (Well, obviously, if I'd ever got in the same situation, I would probably gradually learn a few tricks I don't know today.)

Most people I know who make less than $50k a year and are between the age of 19-25 have better money management skills / perception of money than my peers making $100k and up.

Many have similar social lives, I think it boils down to perception and realizing what it's really like to go broke. Most people who don't come from means know the emotional / mental value of not freaking out about money constantly, while those who come from money or just spend like there's no tomorrow seem to feel like buying out to their ego's delight will lead to a life they want. It's bizarre to watch. Some of my friends think it's normal to have $40k+ in credit card debt or $80k+ in student loans and still have a $100 gym membership and blow money like crazy. Again, bizarre to watch.

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