Living Beyond Your Means When You’re Not Rich

Michael I. Norton is an associate professor at Harvard Business School. He is currently co-authoring books on money and happiness.

In an American survey recently, my colleague, Dan Ariely and I discovered that Americans are largely underestimating the degree of inequality in American wealth. According to recent data, it is estimated that the richest 20% of America possess 84% ​​of total wealth, but this group is estimated to be only 59%.

More importantly, when we asked them how to distribute wealth, they said they wanted more equitable distribution and that 20% of the wealthiest had only 32% of their wealth I said to us. All the groups we studied approved several inequalities, but their ideals far exceeded the current level.

So, why do not Americans seek redistribution when considering an equivalent US consensus?

First, the expansion of US consumer credit has enabled middle class and poor Americans to outperform their assets by increasing their debt. You may think that there is nothing for people with "net assets zero". However, in fact, zeroing net assets means more and more (car, television, even home) - but there are lots. Therefore, even people with zero net assets or minus net assets can live in America's dreams, do better things than parents, and follow these.

Second, poor Americans' beliefs on social mobility, although there is much evidence that they are scarce, to policies that seem to be beneficial to them, for example to earn money and to have more people It will respond negatively. Why does the poor object to rich taxation? Many people think that themselves, or at least their children, will eventually become rich, so taxing rich may be like taxing themselves. As a result, even the word "redistribution" has a negative meaning.

My colleagues and I have investigated whether educating Americans about current wealth inequality (by showing charts and images) may increase their support for policies to reduce this inequality It is. Furthermore, we are studying various forms of redistribution, such as raising minimum wages and long-term intervention such as narrowing of education gaps.

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For many people, marriage and accompanying economic growth may mean your life transcends individual personal abilities. But once your spouse's income and heritage wealth is gone you will be obliged to create your own budget. Fortunately, even in the forties, I have enough time to save for my retirement. If you need help, please check out 40 ways seriously to increase your savings after age 40. I do not have time to break the habit of a bad relationship that will make you disappoint. Whether your partner is a habitual liar or not, you divorce in your 40s can end these bad habits, whether you do not listen to each other. Better yet, you will have plenty of time to build a new, healthy one

The gap between rich habits and poverty habits is phenomenal. If you are already rich, you may have stuck with these rich habits. Integrating what you ignore will further promote you. But please be relieved. If you are doing right now and you do not pay attention to these principles, it will catch up with you. Most people in the economic struggle live beyond their abilities. Their expenses exceeded their income and their debts overwhelmed them. If you want to end your economic difficulties, you need to acquire savings and budget habits. Some reasonable ways to budget your monthly net salary are as follows.