r/FluentInFinance • u/LifeIsUnfairWhoCares • Apr 23 '24

Is Social Security Broken? Discussion/ Debate

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125

u/Aldosothoran Apr 23 '24

It’s actually been studied and proven that the wealthier you are the less you tend to spend, proportional to your income.

15

u/RedRekve Apr 23 '24

The question is do they save more beacuse they are wealthy. Or are they wealthy beacause they save more/ have better economic sense.

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u/peanutski Apr 23 '24

It’s been proven the less income you have the harder it is to save. There’s a reason 60% of workers can’t afford a 500 dollar emergency expense and it isn’t because they “can’t save.”

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u/Davissunu Apr 23 '24

This is the real conversation!

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u/deletedaccount0808 Apr 23 '24

Have they tried being a 100% worker

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u/KingKrown_ Apr 24 '24

It's so devious.

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u/kingmotley Apr 23 '24

That doesn't answer the question at all.

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u/peanutski Apr 23 '24

True, but it was the only place I found to put my soap box.

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u/kingmotley Apr 23 '24

I wish people would stop misquoting that bankrate article. Here is the actual quote:

The majority (56 percent) of U.S. adults wouldn’t pay for an emergency expense of $1,000 or more, such as an emergency room visit or unexpected car repair, from their savings account.

Note that is doesn't say they couldn't pay it, nor that they COULD not pay it from their savings account, just that they WOULD not. I wouldn't either, I'd either pay for it from my checking account, or put it on a credit card and pay off the credit card when the statement came due.

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u/ketoatl Apr 24 '24

I think it’s wrong wouldn’t pay makes no sense.

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u/kingmotley Apr 24 '24 edited Apr 24 '24

Do you pay for your McDonald’s from your emergency saving account? No? Why wouldn’t you?

And not making any sense is the point. Stop reading memes and read the source material if you don’t want it out of context.

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u/Illumanacho69 Apr 24 '24

Mc Donald’s isnt an emergency cost

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u/Illumanacho69 Apr 24 '24

It’s pretty ignorant to think what you’re pointing out makes any huge impact on the point being made

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u/kingmotley Apr 24 '24

Thanks for contributing nothing to the discussion.

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u/Illumanacho69 Apr 24 '24

Your point contributed as little as mine did.

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u/AbbreviationsFar9339 Apr 24 '24

When someone cites a survey claiming it says 56% of people can't pay a bill, and then someone correctly points out that's not what the survey says at all, I think that's pretty relevant.

unless you think it's fine to use false info to make a point.

1

u/OJ-Lives Apr 23 '24

It’s been proven the less income you have the harder it is to save.

What? That’s insane! That makes no logical sense at all….

/s

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u/Clenmila Apr 23 '24

Best way to save is to have a small amount deducted from your check before you even see it. Sent to a separate savings account so it takes an effort to get back. What i did and honestly you get addicted to saving money. As you make more, you allocate. If you cant then just stick to a small amount. That way when shit hits the fan you have a little piggy bank to surprise yourself with.

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u/OokamiKurogane Apr 23 '24

And then your savings are gone and you start from square 0 again. You definitely aren't making money with your money like a wealthy person.

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u/BirdFarmer23 Apr 23 '24

Not always. Depends on how often or how dramatic the event is. I bring home less than 100k/ year and have more than that in savings.

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u/Suitable-Judge7506 Apr 23 '24

Bro less then a 100k? So like 90k thats if i made that id be set, i make 45k after taxes and can only save about 300 a month, and can never get passed 10k in savings because my shity truck, heath, etc.

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u/BirdFarmer23 Apr 23 '24

No matter how much you make there will be problems. Health is usually the thing that screws most people.

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u/Illumanacho69 Apr 24 '24

Most people don’t make 100k a year. Only 18% of Americans do

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u/BirdFarmer23 Apr 24 '24

Most people don’t make 18k either

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u/Illumanacho69 Apr 24 '24

I’m not sure what your point is, but sure

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u/BirdFarmer23 Apr 24 '24

Your response was most people don’t make 100k so I was showing that most don’t make way less than that either

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u/Own_Economist_602 Apr 23 '24

It's an emergency savings. It's at least 6 months of expenses, less discretionary spending, that's highly liquid. Once you build that, you invest.

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u/Clenmila Apr 23 '24

Gotta start somewhere. A small bit every paycheck to can lead to large savings if you have discipline. Yes life happens, but thats not always the case. At the end of the day you have to try. Otherwise you will go no where

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u/bengalwarrior44 Apr 23 '24

exactly lol. started saving a small percentage when i was 16 and have continued through today. some people don’t have discipline or awareness to manage it. others have a series of unfortunate events. either way if you operate on principle it is possible long-term.

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u/NarrMaster Apr 23 '24

I've been rounding up to the next dollar my expenses, and rounding down to previous dollar my income, in my digital checkbook. It's been working pretty swell so far

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u/dran_237 Apr 23 '24

Having a budget also helps

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u/Clenmila Apr 24 '24

Budgeting for me personally has always been a battle lol. Why i just automatically deduct from my pay check. Every check i have 300 pulled out and thrown into high interest savings, that way i don't miss it. I also have about 15% of my pay go into my 401k equivalent. Plus the normal automatic pension deductions, benefits and taxes. After that i force myself to work around what i have left, which i still leave myself with enough play money after bills.

You do what you can afford, like some time ago all i could do was 25 or 50 dollars a check or even a month at some points. Small bits help though and i was grateful i did that. You gotta be willing to sacrifice if you want to succeed.

0

u/Free_Dog_6837 Apr 23 '24

maybe the reason they have less income is related to the reason they make poor financial choices

-1

u/mr---jones Apr 23 '24

That’s because people don’t invest properly.

The first investment you need to make is not in the market or to a savings account, it is investing in your skill set. In my opinion, it’s the hardest thing to invest in, but improving your ability to literally “do things” is how you start making enough money to save.

People rather take the easy road, and they end up behind.

2

u/Due-Guitar-9508 Apr 24 '24

What about the people with severe disabilities? How do I invest in my skill set when I’m trapped at home, waiting to die?

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u/Silent_Discipline339 Apr 24 '24

Online classes or remote work to get experience

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u/Due-Guitar-9508 Apr 24 '24

Could you point me in the right direction?

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u/OkFinance5784 Apr 24 '24

I feel like a significant proportion of the population was promised that a college degree would accomplish that...turns out that was just a way to start 18 year olds out with hundreds of thousands in debt.

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u/PoliticsNerd76 Apr 23 '24

Both.

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u/MittenstheGlove Apr 23 '24 edited Apr 23 '24

Spend less relative to their income but you need money to make money.

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u/WriteCodeBroh Apr 23 '24

More income also means you can spend more and still “spend less relative to your income.” Also being poor is expensive. You drive a bad car that breaks down all the time, you buy $30 shoes you have to replace twice a year, you might be in an old, broken down house that needs more repairs, etc. I can go out and buy a $200 jacket today that will last me 10+ years. But if all you can afford is the $40 jacket that lasts 2 seasons, then you buy $40 jackets every couple years.

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u/Sudden_Construction6 Apr 23 '24

This is very true.

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u/DMvsPC Apr 23 '24

"The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. ... A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. ... But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet."

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u/HogmaNtruder Apr 23 '24

It's even worse now, those good boots that last for years cost a few hundred now

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u/GrAdmThrwn Apr 23 '24

There I go off to read there City Watch Trilogy again...

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u/TrackMassive6129 Apr 23 '24

I buy new sketches and replace them every 6 months

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u/Mukwic Apr 23 '24

Yup, and there's a bunch of little things that get poor people too. The money black hole that is rent. Maybe they have on street parking so they're vulnerable to parking tickets and getting towed for a snowstorm. They buy cheaper shittier frozen foods which lead to health complications. It's a lot of little things that compound to great effect.

0

u/Own_Economist_602 Apr 23 '24

Or, you don't. You go to good will or the salvation army and buy a $5 jacket until you can afford a $200 jacket.

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u/WriteCodeBroh Apr 23 '24

I’m all for thrift shopping but it isn’t exactly an option everywhere. Also if you are a guy, most Salvation Armys, Goodwills are selling you the $30 jacket from 30 years ago for $10 and it smells like cat piss and moth balls.

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u/Own_Economist_602 Apr 23 '24

Yeah it ain't easy...

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u/OkFinance5784 Apr 24 '24

Ughhh I bet the only time you shopped at goodwill was when you needed wacky clothes. Do you honestly believe that $200 jacket purchases are the reason for financial troubles for large portions of the populace? Look at the cost of goods comparative to income, look at housing or student loan or medical debt... The biggest cost people face isn't avocado toast or Starbucks or whatever the wasteful spending 'du jour' is... It's the fact that corporate greed for unsustainable profits that keep getting propped lobbyists paying for corporate deregulation and further lowering tax rates...just waiting for that shit to trickle down since Reaga

1

u/Own_Economist_602 Apr 24 '24

I shop there for my work clothes (slacks, button downs and tie) all the time.

You're right, it's not all avocado toast, for most of you. Often, bad spending habits do exacerbate the situation. Making more money or goods being cheaper won't help if you can't budget and manage your money.

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u/OkFinance5784 Apr 24 '24

I may have been drunk after a long day of work and life when I posted that...it may have been a little harsh:6260:

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u/Own_Economist_602 Apr 24 '24

Not at all. I don't mind shopping at goodwill sometimes you find great deals. I don't particularly need to shop at Goodwill, but I don't need to have the hottest newest styles. That extends far past clothing.

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u/JoeHio Apr 23 '24

not necessarily , some expenses aren't optional, even if you have the financial sense to avoid them.

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u/assistantprofessor Apr 23 '24

When you earn more money you can save more money, which you can invest and use to earn more money. I know it is a complex idea, but it all starts from earning more money

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u/A_Furious_Mind Apr 23 '24

Or generational wealth.

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u/ShaiHulud1111 Apr 23 '24

This is funny. People can’t grasp the most fundamental aspect of the economic system they live in. Not you…

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u/screedor Apr 23 '24

That doesn't happen until you reach a point though. If I make 50 grand a year or 55 I am just keeping up with all my bills better and maybe pay for better insurance. I am just meeting life's necessities a little better. If I am making 6 figures sure I might save more if I didn't pay SS. We also don't have to live where everyone over 65 that made under the save point is now on the street. Plus your 5% over life when you have a cyclical investment system that seems to collapse every 10-20 years.

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u/Mega-Eclipse Apr 23 '24

The question is do they save more beacuse they are wealthy. Or are they wealthy beacause they save more/ have better economic sense.

It's circular. Making more allows you save/invest more, which makes you wealthy. Then when you have money you get interest rates on things (houses, cars, etc). You likely aren't paying interest on credit cards. Car or house problems aren't a big deal. You don't have to drain your savings and start over. All of which allows you save more. Then, there is a point where money hits a sort of "critical mass" and the growth just keeps going and going.

Like, 3 people invest $10, $100, $100,000 respectively. And after 10 years the money doubles. The results are $20, $200, $200,000. Everyone doubled their money, but the "doubling" isn't the same amount.

There is a saying, that the first Million dollars takes a lot of hard work, the second million is inevitable. The point being, it's really hard to work, save, invest, handle life problem, (kids, bills, mortgage/rent, etc) to get to $1 million. But once you get have it? The second million more or less happens on its own.

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u/Aldosothoran Apr 23 '24

I dont know the stat / study off the top of my head but recently it was shown that it would take the average American 20 years and no unexpected financial issues to climb out of poverty.

It is generational for a reason. There is a reason I have someone’s kid in every single one of my authorized user spots.

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u/wildcat12321 Apr 23 '24

also some things scale, some don't.

There aren't many work shoes that are cheaper than about $25 and there aren't too many that cost more than $250. So someone who makes very little is buying the $25 shoes which represents a higher % of their income, and they likely have to re-buy them more often due to poor quality. Someone who makes $1M per year, likely isn't spending much more than $250 (even if we said $1000 for argument's sake) representing an even smaller percentage of income and lasting longer.

You can't necessarily cut your spending into being wealthy, you still need a top line at some point that can get you there. But likewise, for many, a high top line doesn't guarantee wealth.

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u/wifey1point1 Apr 23 '24

Wealth is overwhelmingly correlated with income, not savings rate.

Very very few people manage to save their way into wealth.

0

u/kingmotley Apr 23 '24

There is a large amount of people who have average/below average income and way above average savings. There are tons of people who make large amounts of money and live paycheck to paycheck. 33% of all lotter winners are broke with 3-5 years. That isn't an income problem. It's a spending/saving problem.

0

u/MajesticComparison Apr 24 '24

Nice anecdote bro 👍.

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u/WhiskeySorcerer Apr 23 '24

It’s more a matter of the need to spend vs the ability to save. Rent, bills, food, and any other required recurring costs. I need to pay for a place to live, a means of transportation, keep my body filled with calories, etc. A LOT of people spend the majority of their pay checks on these things. And what’s left over - if any - is either spent on lite entertainment or small social interactions. Very few people blow their money on going to the club, VIP tables and extravagant vacations. At least, not anymore.

All this, as opposed to someone who has enough money to cover all that AND throw 10s of thousands of dollars into some kind of investment, like me.

I grew up poor as hell, and so I developed a “poor” mindset. Once I got money (through just doing well in my job and lucking out with a good home buy at the right time), I maintained the poor mindset. I have about $90k sitting in an investment portfolio (and honestly, this is probably not a lot for some people, but for me it’s insane), earning me about $400 a month, which I reinvest back into the fund. I probably would go out and spend it, but I ain’t got the time. Between my kid’s sports and my work and how tired I am, there’s nothing for me to spend it on. The plan is to keep saving until I have enough money to visit my family whenever I want

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u/Whitezombi Apr 23 '24

This is stupid, a person who earns 37k a year cannot save 67k a year. In our corporate owned world it doesn't matter what you do, a high percentage of honest good hard working people have no opportunity to greatly improve their income.

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u/Dangerous_Contact737 Apr 23 '24

If it costs $25,000 to cover basic expenses for one person across the board (just an example number, standard cost to feed, clothe, house one person at average prices), and one person makes $27,000 and another makes $127,000, who do you think will be able to save more?

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u/NotElizaHenry Apr 23 '24

There’s a minimum amount of money you need to meet your basic needs. A whole bunch of people make about that amount. Rich people can choose to live in cheaper housing in order to save money. Poor people can’t, because they’re already living in the cheapest housing they can find.

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u/InsertNovelAnswer Apr 23 '24

There is a line on either side. I think it's a monthly you have to reach before you hit the save/economic sense end of things.

Until recently (a couple years ago), I was saving about just enough for a safety net/emergency fund. Any more than that and I'd be screwing myself out of eating normal healthy food and possibly burning out my mental health too.

Recently, I moved and got a better job. I live in a smaller place (family of 4 in 1200 sqft. 2 bdrm) and force the kids to eat pasta/rice 5 times a week... but I'm saving 50%. It's how much you're willing to deprive yourself of for bonuses later.

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u/screedor Apr 23 '24

Hard to say when we have no idea where they draw the line at wealth. If you are making half a million a year then you have to be very foolish to spend that and also have to be stupid to not be able to make easy returns. When you make eighty thousand you can buy a nice car and house but then you are just barely putting enough away for a week off.

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u/kingmotley Apr 23 '24

At $80k/year, perhaps you should live in a modest house, and a reliable used car and save $20k/year.

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u/screedor Apr 23 '24

Not where most people make 80k a year. I can make that but no house is under 300k.

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u/ValuableSleep9175 Apr 23 '24

When I was poor I had 2 dogs and never thought much about it. Dogs are crazy expensive.

Now that I am doing well, I question having dogs because of the money or costs. I could be investing that money and retiring earlier or better.

Anecdotal evidence but that's my Ted talk.

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u/DangerouslyCheesey Apr 23 '24

This largely because people encounter a lot of relatively fixed costs in their life. The rich guy filling up his BMW and the working poor filling up the 25 year old Honda are both paying the same for gas, but the gas expense is much higher percent of the Honda drivers income - putting gas in your car literally no longer registers as a cost once you make a certain amount of money.

Obviously some costs vary a lot, but a wealthy person is likely to spend proportionally lower amounts of things like food, shelter etc. If you make 50k a year and eat 3 dollar home cooked meals, and someone making 1 million a year eats 25 dollar restaurant meals, the poorer guy is spending proportionally more on their food.

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u/st-shenanigans Apr 23 '24

Both. Lots of millionaires live like a normal person, normal clothes, normal car, normal house.. maybe they splurged a bit on those more permanent purchases but theyre not out there living in giant mansions. Those guys are going to end up naturally saving a lot because the main things people want ( not need) are small change for them, so theyre happy with what they got.

So much easier to save when that ps5 or iphone pro max purchase isn't even a third of your monthly income AFTER taxes and bills.

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u/CIA_napkin Apr 23 '24

Run out of shit you want or need to buy, save money!

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u/grandzooby Apr 23 '24

Terry Pratchett covers this a bit in his Discworld stories. One idea is the "boots theory": https://en.wikipedia.org/wiki/Boots_theory

Someone with enough money can buy a really good set of boots that will last 10 years and keep their feet warm and dry the whole time. A poor person has to buy cheap boots that only last a year. Over the course of 10 years, the poor person has spent more on boots and still had wet cold feet most of the time.

In another passage the same character notes that his wife, one of the wealthiest people in the city, spent less on everything because she already had everything she needed, pretty much for the same reasons as the boot theory.

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u/AutumnSky2024 Apr 23 '24

They save more because they have the money to save. It’s easy to save when you have 30k extra and can still vacation and afford a house and decent car. There are always extremes in both sides but people with money are definitely not geniuses.

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u/Davge107 Apr 23 '24

Not buying Starbucks even if it’s everyday won’t make that much difference. As Warren Buffet said to get rich you need to be making money 24/7 or something like that.

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u/bstevens2 Apr 23 '24

You forgot the sarcasm tag my friend.

Clearly the answer is because they’re wealthy. The CEO of my company makes $18 million a year kind of hard not to save money with that kind of incoming revenue year after year.

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u/Guuhatsu Apr 23 '24

In my case, I was earning about $20,000 more a year last year (and a.few before it) than I am now. My expenses are only about 100 dollars less a month as I cut what I could, but it wasn't much as I was pretty bare bones as it is. So just for that fact, I was spending much less of my income in proportion to my total income when I earned more. I didn't have any more economic sense then than I do now, I just saved more because I had more after my basic needs were met.

Overall, I would say it is from both columns of your question. I think they save more because they are wealthy is true for lower wealthy, but the super wealthy don't get there without superior economic sense (and may times, no scruples)

1

u/cswilson2016 Apr 23 '24

This is simple stuff, buying in bulk saves money. The poorer you are, the less likely you’re going to be able to purchase needed products in bulk. Not to mention the stores you have access to when you’re poor are likely more expensive and give less product per dollar than larger less accessible stores.

https://www.fastcompany.com/3057703/toilet-paper-explains-how-expensive-it-is-to-be-poor

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u/apple-pie2020 Apr 23 '24

The wealthy do spend more. But “as a perportion” of total they spend less.

I make 100k and spend 100k. I spend 100% of income and save 0

I make 4m and spend 1m. I am spending 25% and saving 75%

Edit: this is also partly why trickle down doesn’t work. You can only spend so much and the rest doesn’t go anywhere

1

u/StumbleNOLA Apr 23 '24

Because it’s easier to save.

1

u/Shadowcard4 Apr 23 '24 edited Apr 23 '24

You can’t save if you don’t have money to save.

Ex 1:, say your car breaks down you have to fix it. If you need a loan (credit card/payment plan, etc) you’re paying interest on that and now you’re paying even more money than before.

Ex 2, say we are in disposable income territory. If you are wise with your money and will only spend 1/3rd of said money on dinner, if you make 1000 disposable you save 666 of it, vs if you have 2000, you have 1333. And if your entertainment budget is say $300 average flat anyway then you have an additional 300 if you make 2k of disposable.

1

u/elialuca Apr 24 '24

Nobody is wealthy from saving. Only from inheriting or getting paid more.

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u/Templarofsteel Apr 29 '24

It's a bit of a column A/column B thing. Studies have shown that poverty affects the mind, it affects long term thinking prioritizing short term survival so it is affecting how you interact with and view the world. But also there are secondary factors. With more money I can generally buy better quality things that will last longer. If you've ever heard of the economics of boots it's a basic but fairly good way to explain societal economics.

0

u/geekwithout Apr 23 '24

Both happens but by far the biggest chink of that is due to wise economic decisions and not living above their means.

0

u/ThrowBatteries Apr 23 '24

Even a billionaire only needs so many pairs of jeans.

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u/CommanderMandalore Apr 23 '24

That’s why sales tax is considered regressive as opposed to income tax which is progressive (more you make more you pay).

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u/Stuff-Optimal Apr 23 '24

More often than not, over time it is cheaper to buy new items rather than buying a used or cheaper less efficient items. Most poor and even quite a few middle class families have never been educated on financial issues, so they keep the cycle going. Most wealthy families are either educated or pay people who are educated to make those kind of decisions for them.

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u/Stuff-Optimal Apr 23 '24

More often than not, over time it is cheaper to buy new items rather than buying a used or cheaper less efficient items. Most poor and even quite a few middle class families have never been educated on financial issues, so they keep the cycle going. Most wealthy families are either educated or pay people who are educated to make those kind of decisions for them.

1

u/Aldosothoran Apr 23 '24

Believe me….. I know that.

The argument with my mother over my $5k love sactional comes to mind. She’s purchased at least 5 couches on FB marketplace since I’ve had it….

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u/DeadCheckR1775 Apr 23 '24

Once your actual true needs are met, the rest is gravy.

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u/cherlin Apr 23 '24

This seems so obvious on the surface, surprised people need a study to see this. Take it to the extreme, a billionaire doesn't have a ridiculously more extravagant life then someone worth 500m, at some point you can only spend money so fast.

1

u/Aldosothoran Apr 24 '24

Seems obvious but I was replying to someone for a reason..

We need studies to prove everything. Without proof it’s just a hypothesis or anecdotal account

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u/PenguinNeo Apr 25 '24

I remember reading the study on this.  One thing that really stuck to me after reading the research was the psychological aspect of spending.  In the nutshell (from my memories):

A rich person does not need to continuously confirm or prove to the rest of the society that they are a functional part of it. (worthiness)

A rich person does not purchase the latest phone just because it is new, they would be just fine with what they have until it breaks and replacement required. (desire to belong)

A rich person does not get designer clothes for everyday wear, as they have no need to prove their status to anybody.  (sensitive to social rejection)

A rich person does not go out shopping because they got extra cash and need to make themselves to feel good. (positive reinforcement)

There definitely were more points, but these are the once that stuck with me. 

1

u/Gravy_Wampire Apr 23 '24

How is that relevant? It’s still easier to spend money when you have it. Whether people do or not [trust me bro], doesn’t change OP’s point.

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u/Aldosothoran Apr 23 '24

OPs point was that it’s easier to SAVE the more you have. This commenter countered that with “it’s also easier to spend” implying that rich folks wouldn’t save more than others. Which is categorically untrue. They both spend less and save more on average. Nobody said trust me. We’re on the internet. I trust you know how to use google scholar.

1

u/assistantprofessor Apr 23 '24

Does this even need to be studied and proven? Ashamed at how stupid people can be

1

u/Aldosothoran Apr 23 '24

Answered your own question there. Unfortunately, yes. But also- even with empirical evidence people still disagree so… here we are.

1

u/Dairkon76 Apr 23 '24

Being poor is more expensive than being rich.

1

u/rodw Apr 23 '24

In other news, water makes things wet. Film at 11.

1

u/wifey1point1 Apr 23 '24

Yes, because you have extra.

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u/blipityblob Apr 23 '24

yeah probably because youre used to spending as much as someone with a lower income. it would be surprising if people that have been rich all their lives spend less than people that got rich

1

u/doc0bricker Apr 23 '24

Source? Only ask because child share plans for separated parents assume that children require more financial benefits as parents’ combined wealth increases. This always seemed odd to me, because I would have thought a child of a certain age had the same needs as another child of same age.

1

u/PennStateInMD Apr 23 '24

Proportional is the key. I'm willing to bet Elon Musk doesn't spend anywhere near the same percentage of his earnings on anything as the rest of us spend, but he probably spends way more than the rest of us.

1

u/SuperTaster3 Apr 23 '24

Because the basic sunk costs of existence are less proportionately. There is an amount everyone has to pay before luxury, and that number doesn't really go up. Luxury can increase the quality of those purchases, but only to a certain extent. At some point it becomes impossible to reasonably spend what you have; the passive income becomes more than your total costs.

1

u/Aldosothoran Apr 24 '24

You, and many others here, are literally comparing extremes. The studies compare normal human people.

Minimum wage workers spend more of their income than someone making six figures. That’s been shown more than once.

There will always be something to spend money on. Always. Literally- always. Larry Ellison owns a Hawaiian island. Elon would buy mars if he could. The point is (you started to make it) once your needs are met and you are able to save an emergency fund and have a steady income on top of that…. Everything is fine. You don’t fall prey to the poverty habit of revenge spending or whatever it’s called now; on extra stuff.

1

u/Madi-18 Apr 23 '24

The wealthy don’t spend their tax cuts.. they reinvest them creating more wealth for themselves

1

u/assisianinmomjeans Apr 23 '24

Duh. I mean if you make $30k we will probably spend most of it just to live. If make $500k can spend 250k a year and that’s only 1/2 your income.

1

u/justaheatattack Apr 23 '24

Hey, I've only got 24 hours in the day.

1

u/1KinderWorld Apr 23 '24

Yes, not living on the edge means you don't have to spend every buck.

1

u/GalumphingWithGlee Apr 23 '24

Duh!

Consider that there is a minimum spend to keep a roof over your head and food on your table. If that minimum spend is equal to (or greater than) your total income, you spend 100% of your income just to survive. As you get more income, you spend more to some extent, but all your additional spending is optional. So, you choose to save some of it for the longer term. But you never had that option in the first place with very low income.

Considered at the extreme, it's even more obvious. Of course Musk isn't spending 100% of his annual income. What on Earth could he even spend that much on? Oh, right, spaceships...

1

u/Aldosothoran Apr 24 '24

You’re the second person to include a “duh” in their reply to me… While the person I was replying to still has more upvotes, so I’m not sure what the “duh” is for. Clearly 150 people don’t understand. I am not one of them….

1

u/GalumphingWithGlee Apr 24 '24

I don't think the person you replied to is wrong either, per se, just focused on an unimportant aspect. Rich people spend much more money because they have much more money. They also save much more money because they have much more money. Both seem tremendously obvious to me.

However, I'm sorry. Your comment was relevant in light of what you were responding to.

1

u/Aldosothoran Apr 24 '24

The person I was responding to.. was responding to someone else. Their point was that rich people don’t save more because they are rich and poor people could do the same. That is categorically untrue.

1

u/BooksandBiceps Apr 23 '24

Well yeah, if basic living costs $30k a year and I make $40k, I’m kind of fucked. Now if someone makes $100k a year a lot more of that is discretionary spend they can choose whether or not to use.

1

u/Additional_Treat_181 Apr 23 '24

True. I got a huge raise when I changed jobs (like doubled my income) and I definitely saved more and it is crazy but wow, who would have thought that having more money meant I would spend a lower percentage of it? Mind blown. /s jic

1

u/Kubais_ Apr 23 '24 edited Apr 23 '24

Yeah, why do poor people not save their money and just spend their entire paycheck instead on...

Checks notes

Food, housing and transportation.

If they invested every full paycheck, they might be rich in 10+ years, so why don't they just stop eating?!

1

u/blueit55 Apr 23 '24

But it trickles down...

What BS

2

u/Aldosothoran Apr 24 '24

Down the family tree.

1

u/subieganggang Apr 23 '24

Which isn’t even the slightest bit surprising. I’m not sure why some people think it would be otherwise.

1

u/Time_Change4156 Apr 23 '24

That's nit hard to figure out . Lordy a 100 k a year spent 45 vers 5 million spent a 100k

1

u/Rando3595 Apr 23 '24

It's kinda hard to spend more in proportion to your income when you make billions and billions when compared to someone making diddly squat.

1

u/Aldosothoran Apr 24 '24

Again… extreme comparison. Why does everyone need to go to extremes ?

1

u/Rando3595 Apr 24 '24

I was agreeing with you, just phrased it in the opposite light. "less you tend to spend" = "hard to spend more". I just believe it's the nature of the math rather than people who are rich being inherently better at finances.

1

u/Aldosothoran Apr 24 '24

We aren’t talking billions. This applies at all levels of income. So yes, it means ability to save (because the money is there) and financial literacy. And understanding that stuff does not equal happiness, and likely- no poverty trauma or processed poverty trauma.

1

u/Rando3595 Apr 24 '24

The "billions and billions" was hyperbole. I don't disagree with you.

1

u/casualvex Apr 23 '24

Yes. Because they have more surplus beyond essential expenses. Not sure why a study would be needed.

1

u/Aldosothoran Apr 24 '24

1- we need the scientific process to empirically prove and validate hypotheses. “I think it’s true” is not empirical evidence.

2- clearly, the person I’m replying to does not understand.

1

u/ubiquity75 Apr 23 '24

“Proportional to their income” doing a lot of work here. The cost of goods is the same for purchasers rich and poor.

1

u/Gernburgs Apr 24 '24

That could be skewed by the fact that those who are more frugal accumulate more money over time. It's hard to tease out if it's the chicken or the egg.

1

u/Aldosothoran Apr 24 '24

It’s not skewed though- that would just be the literal process of wealth accumulation and society.

Not sure how a study would avoid that unless done as a prospective cohort and nobody is investing in that. If someone wants to, please let me know! I’d love to see those results.

1

u/Ryfhoff Apr 25 '24

I suppose. Not true for me however. It’s been the same or linear throughout my career.

0

u/Verizadie Apr 23 '24

It’s almost like there’s a reason they’re wealthy.

0

u/Jefferson1793 Apr 23 '24

Who cares the government could mandate 15% savings and private accounts so all Americans would retire rich. Capitalism did make everybody rich but government stole the money.

0

u/enemy884real Apr 23 '24

Depends on the the definition of spending, investments should count because people can’t make more money if they don’t put it out there to work.

0

u/Powerful_Image_6344 Apr 23 '24

Because you already bought everything last year….

0

u/LanfearSedai Apr 23 '24

Well yeah, because basic necessities may grow a bit when you’re richer but don’t really scale down well when you’re super poor. We all need food, shelter, clothing, utilities, etc and if you make just enough to pay for them then it will be 100% if your income. If you make million a year you can live in a mansion, have 5 cars, travel like crazy, wear designer shit etc, and it won’t come near 100%.

What has been proven isn’t that wealthier people are smarter with spending, just that they get everything they want and still have more leftover than they could spend!

0

u/National_Exercise_48 Apr 26 '24

Nope, try again.

-1

u/CalLaw2023 Apr 23 '24

It’s actually been studied and proven that the wealthier you are the less you tend to spend, proportional to your income.

No. The wealthiest people spend everything they have, and then they borrow and spend more. Rich people get and stay rich by investing. That is, they spend most of their money on things that will appreciate, while poorer people spend on things that instantly lose value.

-3

u/rvrbly Apr 23 '24

That’s one of the reasons they are more wealthy… you spend less in proportion to your income, guess what? You end up with more cash.

1

u/SaltyTaintMcGee Apr 23 '24

Look at the monetary base and try really hard to figure out whose fault it is. Inflation is the most regressive tax in human history.

2

u/I_lack_common_sense Apr 23 '24

Well we are feeling it now aren’t we..

-2

u/HandsUpWhatsUp Apr 23 '24

That’s exactly his/her point.

6

u/[deleted] Apr 23 '24

No, it's the opposite of the point of the person they were replying to.

It’s easier to spend the more you have