Am I the only one thinking "no shit sherlock?"
The rich have the luxury of working on future income flows while the rest of us work to live now. How is this news to anyone?
And those examples are just not practical for most people in real life.
The rich have the luxury of working on future income flows while the rest of us work to live now. How is this news to anyone?
And those examples are just not practical for most people in real life.
If you don’t know how to manage money, you won’t keep it.
Roughly 1/3 of lottery winners go broke within a few years, which is a much higher rate than the population in general.
Reading thru the article, it is clear that the PP’s comments are incorrect (“ The jist is that if the poor had more money they wouldn't be poor anymore.”)
[0] - https://www.cnbc.com/2017/08/25/heres-why-lottery-winners-go...
So, not so special, and I would argue a good proxy for the population at large.
[0] - https://news.gallup.com/poll/193874/half-americans-play-stat...
[1] - https://www.cnbc.com/2019/12/12/americans-spend-over-1000-do...
- it's a sudden spike
- money is not linear in many ways
Give people time to get used to different income levels and they are less likely to go bankrupt.
Oh and show them that even through they might think they are rich now they are not, and it's easy to accidentally spend what the have gotten. Many people have wrong ideas of when someone is "rich" compared to "just being wealthy".
The average person who wins $1 million in the lottery sees a new house, car, vacations, maybe a boat. A wealthy person would see it as an extra $30-40k a year in passive income. Of course, people with this mindset generally don't play the lottery, because they do the math.
https://www.investopedia.com/terms/s/safe-withdrawal-rate-sw...
There's no reason why a lottery winner necessarily can't make this transition, but as soon as they win the lottery, it's probably too late to teach them. They're going to quit their job, tell all their friends and family, and eventually the money runs out leaving them with an appetite for consumption they can no longer afford with their meager income potential. That's why it destroys people's lives.
On the other hand, if you gradually earn $1 million, or even make risky but calculated long term investments that pay off, you don't wake up one morning to suddenly find yourself with a massive amount of money. You watch your net worth creep up slowly over years or decades. Even if a person like this started by fantasizing about all the stuff they can buy with that much cash, the longer accumulation period gives them time to learn and reflect on what they really want, and therefore are more likely to use this wealth more intelligently.
It's the sudden, unexpected windfalls of cash beyond what a person is prepared to handle that are dangerous, not the absolute amount or the person handling it.
In the same way, a rich person suddenly becoming poor would lack the skill to stretch out their near-zero resources, while one that is conscious of a slow decline will not only stretch out their reserves longer but also be far more used to living frugally by the time they hit that same near-zero level.
And it's not like it's too hard either, you just need some guidance. A distant acquaintance had a frankly obscene amount of Bitcoin laying around from back when CPU mining still made sense and the first thing he did when he realised what he had was sell enough to hire the best financial advisor he could find. He now owns a house, a startup incubator, several rental properties and I don't think he's sold much more of that BTC than what he did originally.
Exactly - who doesn't understand that?
Most entrepreneurs are the last ones to get paid.
The key here is that both started out with a huge income for someone just starting out - $200k. If you are making $30k/year, this advice doesn’t really apply - you likely can’t even take advantage of 401k yet. This is for those that are lucky enough to have something to save.
I suppose if you define being rich by being able to save more than 1k USD per month, a lot of people are gonna be it ?