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The value of things usually changes for rich and poor people according to their income. In fact, a lot of things are becoming more expensive for the rich. Like clothing, real estate, or food. But all these things are getting a little more expensive and rich people can afford them without any problems.
But there are things that are much more expensive for rich people than for poor people.
And these are some of them.
LIFE ITSELF
Life is cheap when you are poor and its expensive when you are rich.
These homeless people, even if they die nobody really cares, it ain’t a big deal.
How much is it worth to own a Premier League football team like Leicester City? On paper, Leicester City F.C. is worth around US$ 5.9 billion.
Khun Vichai was the former owner of Leicester Football club and also the founder, owner, and chairman of "King Power Duty-Free." a Public Listed company in Thailand. Khun Vichai, the former owner, had a net worth of US$4.9 billion (October 2018).
Khun Vichai lost his life in a tragic accident on October 27, 2018, in a helicopter crash after a football match when Leicester City played a 1-1 draw with West Ham at the King Power Leicester Stadium.
The funeral of Khun Vichai was attended by countless people while his body was laid in its wake to allow people from all over the world to pay their last respects, among others were members of the Leicester football team and the country's prominent figures including funeral waters bestowed by His Majesty the King.
Would anyone care if the homeless poor person above got killed in a road accident someday while making ends meet, let alone their funerals?
2. TIME
a) Ask yourself these questions:
Should you:
• Do your own household chores?
• Take your kids to school?
• Fly business class or economy? Or maybe even just stay at home?
• Commute to work or work from home?
• Go on holiday?
• Hire somebody else or do it yourself?
• Use technology rather than your own time to do a task?
• Take that meeting?
• Have that conversation?
• Or do anything for that matter?
Remember, that how much you are making, and how much your time is worth, is key.
Even though most sustainably wealthy people are frugal, one of the few exceptions is when it comes to time.
Buying time can more than pay for itself. Wasting 2 hours of time could cost thousands or more.
So sometimes getting somebody in to do tasks, like household help, can more than pay for itself.
In the same way that buying other people’s time, like employees, or using technology can help in business.
In comparison, if you are a student, who is more than keeping up with the work at university, of course, it is cheaper to do your own tasks.
When you’re poor, your time is worth very little to you; however, if you’re wealthy, you generally consider your time to be quite expensive. This is generally why wealthy people hire others to do the most basic of tasks for them, such as cleaning and cooking.
b) Should Conor McGregor do his own chores?
The man in the picture earned north of $30,000,000 in 2019 alone. Conor McGregor is one of the world’s biggest sports superstars.
If he washes his clothes by himself, spending 1 hour of his time, he will save $20 on hiring a housekeeper.
“LOL. WHY WOULD HE DO THAT! JUST PAY SOMEONE ELSE.” —you will say and you will be right.
But wait… in one scenario, he will spend $20 and, in another scenario, he will spend $0. Why will anyone choose the former?!
The reason is that we ignored the opportunity cost. In other words, we only looked at the money aspect of things.
If he does not hire a housekeeper, he also loses 1 hour of his time. How much is 1 hour of his time worth?
There are many ways to calculate this. For instance, we can divide his yearly income by the hours he worked—assuming a standard 8-hour workday—and he will get more than $10,000. Whatever figure we use, it is likely going to be significantly larger than $20.
“Wait, but he does not spend all his time on training for his fights! He also spends time doing nothing at home, surely? Everyone does!” — and you will be right again.
This time we ignored all the immaterial benefits too! For instance, by watching a movie and relaxing, Conor gets his strength back and, in turn, performs higher in his training. This, in turn, affects Conor’s income!
Even assuming a 1% rise in income, it is a huge difference, $300,000, which is far more than a housekeeper will make washing Conor’s clothes every hour per week.
c) When you’re poor: time is nearly worthless
When you’re rich: time is expensive and worth money
Many poor people tend to kill time rather than using their free time to invest in themselves which will allow them to grow wealthier. Poor people see time as not relating to money usually, and time can’t be traded for money. Poor people see their free time just to “kill.” Wealthy people make beneficial use for their future out of the free time they have. They view time as money essentially.
It is completely fine to have some fun and to kill time, but it is important to use time management where you also use some of your free time to invest in yourself. Investing in yourself is anything that can help you in the future such as getting a college education, reading books, learning how to become healthier, etc.
Think about it, would you rather work 8 hours per day making $20 per hour ($160 per day) or own a small business where you only work 1 hour per day generating you $20 per hour for 24 hours per day ($480 per day) as passive income?
Best yet, all 24 hours of your small business is passive income meaning that you did not have to put in an amount of work to make this money. Sure, you had to work one hour per day, but not all 24 hours to make this money.
This is why time is so powerful. As you see in the example above, you can either work at a job where one hour of your work is equal to $20, or you have another option where one hour of your work is equal to $480.
Many poor people do not think of this enough. This is why time is money and the wealthy people view time to be expensive because of the exponential amount of money that time can earn them depending on how effectively they use their time.
If you want to make more money, start valuing your free time and learn to turn that free time into passive income where you basically make money automatically 24 hours a day rather than
Making money only when you work for it.
3. Education
When you are poor, you are bound to go to public school for free. If you are very lucky, you may get to go to a private school on a scholarship. Additionally, you can get a substantial scholarship to university. Even with scholarships like the Pell Grant, if you don’t work through college, you’re still highly likely to end up in pretty significant debt, BUT the nominal amount you and your family pay will be dramatically lower than more well-off families (that being said, it is worth pointing out that student from a truly wealthy family will have their tuition paid for by their family. So even though the poor student is paid less nominally, they are still worse off financially when they get out of school than a student from a wealthy family). For a poor person who is trying to continue their education in an informal manner, they will most likely buy a book (I buy mine used for under $4 on eBay).
When you are rich, you are bound to attend pricey private schools. This can be $10k+ for just elementary. There are private boarding high schools that cost as much as elite universities ($50k!!!). Also, when you attend that elite private university, you are not likely to get many scholarships due to your wealth (this is all on average). And what is the quickest way to secure a high-earning job? An advanced degree. Whereas the poor students are more likely to start working after high school or, if they are lucky, their undergrad, students with rich parents can delay their entrance into the workforce further by pursuing an advanced degree in Medical or Law School which is multiple more years of pricey tuition. Following school, a rich person looking to continue their education in an informal manner would attend a pricey seminar or hire a private tutor by the hour.
4. COMPASSION
When you are poor, compassion is cheap.
When you are rich, compassion is expensive.
If you’re rich, it’s harder to be able to afford to help, there are just too many demands on your resources. Am sure you’ve seen this with people around you or close friends who suddenly become super-rich, they shut down and lose their compassion, even to old friends, because there are just too many people vying for their resources.
Being not super-rich, i.e., “money is NOT a concern”, makes it easier to connect with all types of people.
It's very hard for a super-rich person to spend normal time with poorer people. They can never have those kinds of relationships.
5. Taxes
a) At least, in theory, taxes.
Adam Smith wrote in the Wealth of Nations: “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”
Also: "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue but something more than in that proportion", because a tax on "the luxuries and vanities of life [which] occasion the principal expense of the rich… would, in general, fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable."
Your last marginal dollar gets taxed the worst.
The entire system works that way.
If you make very little, you’ll pay the smallest in proportion to what you’re making.
If you make a lot, a good deal of what you are making goes to taxes.
Why?
Because if you’re earning over a million dollars, every dollar you make after a million is diminishing in value at an exponential rate.
So those dollars are being taxed at the largest percentage.
Adam Smith thought that it was a great idea to tax the rich at unreasonable proportions. His thought process was that those who have earned so much have done it thanks to the infrastructure and society that enables them. Hence, providing enormous tax for “the revenue which they respectively enjoy under the protection of the state.”
In theory, the progressive tax system makes sense. In practice, politicians are crooks, and humans are corrupt – so our system is ridden with loopholes and exploits.
b) Income taxes. If you are poor enough, it will be 0 euros. If you are rich, it will be a very significant percentage of your income (up to 45%).
c) And something people do not always think about; Tax Returns. When you are poor you often have simple or easier returns.
The richer you are the more likely you are to own more and more Taxable assets such as Brokerage, properties, etc. The wealthier you become the greater typically diverse your investments. Some even have to deal with multi-State filling and others multi-country filling.
The more you own the more you have to pay out in tax preparation.
6. GOOD HEALTH
My experience is not from being poor to rich but from not earning student to one making some basic earning after college.
When we were young and maybe not rich, good health is affordable and never a concern for us. We had limited options to eat because of the availability and affordability of food and health care.
But when we start earning, the LIFESTYLE changes: eating food which is good in taste but not much healthy and less of physical activities which still keeps on decreasing with time and not much of priority unless we face a health issue. Then we start paying for health via medical expenses, paid gyms and clubs, and looks for simple organic food which to is but costlier in terms of SELF CONTROL and money.
The price would have remained NULL if followed the good eating HABITS inculcated in childhood with a regular fitness activity as part of the lifestyle with the mantra of Health is Wealth.
Private hospitals are better and cost way more than public hospitals but, in some countries, public health care is just as good as private health care.
7. ACT OF GIVING
It always seemed to me that it was cheap meaning “without a second thought” to give when I didn’t have really anything to give. People’s expectations of what I could give them were low. It was easy to give.
When you have money, you don’t even know what to give people because you’re always thinking that they're expecting more from you than what you’re giving them. You always feel like what you’re giving them is not enough. No matter whether I donate, volunteer. I’ve always felt like if I can’t completely “fix” the need. I am not doing enough.
I’m not rich, but I’m not poor anymore either. I will say that when your income goes up so does the cost of everything else.
8. CHILD CARE
For example, In France, the price you pay for daycare depends on your income, if you are poor, it is almost free.
There are also many countries that give welfare benefits to the poor. The rich receive none of these benefits.
9. RENT
Also, again In France, if you are poor, you get something called Aide personnalisée au Logement (APL). It is a housing benefit that can cover a very important part of your rent.
The rich on the other hand can’t get or claim any of this help.
10. PICKING UP MONEY
You know when you randomly see a quarter or dollar on the ground. If you were to just pick up a quarter every 5 seconds then it would be $3 per minute which would be $180 per hour. Not bad.
I remember hearing about how Bill Gates loses money by picking it up. Why because he was averaging $22,000 per hour. Anything that would detour him from his normal habits would be a financial loss. When is Bill going to see someone had dropped $25k on the ground?
11. JOY
When you are poor, there are so many opportunities for a delicious little moment in life. Winning a $20 gift card, getting a free coffee at Starbucks, getting a $0.50/hour raise after only working at a job for a month. Those are all cause for a luminous bit of joy, hope that life is not so endlessly bleak after all.
But when you are rich, those same moments either mean so little or have already been dulled in time. To someone worth multiple millions, $20 is not going to make any difference in his day, not even $200 or $2,000. Indeed, it may take winning a $20K or $200K prize to bring even a faint glimmer of easy joy. Otherwise, wonderful gestures of generosity are so commonplace from people eager to please that they are taken for granted or even worse, expected. In time, as those moments of joy go farther between, the rich person can only attempt to recapture a taste of joy vicariously through helping others in need. Hence, philanthropy.
So, while the rich may have a seeming monopoly on material goods and fine experiences, they still reach, fingers outstretched, longing for joy, only to close them often empty.
12. ENTERTAINMENT
When I was poor, I had to entertain myself for virtually no money. Take the kids to the park: free. Attend a free concert: free. Watch the sunset: free. Sitting on the shore watching ships sail by free.
But that’s never good enough when you have money. The kids “need” to go to Disney. Movie theater instead of borrowing a DVD from the library. Tickets to a touring music show instead of whoever is playing free in the park this weekend. 18 holes of golf instead of driving balls in the park. Taking the kids to the beach or the mountains on spring break instead of them sitting on the sofa playing video games. Sailing by, watching people sitting on the shore.
I like free things. My wife and I still spend many hours sitting in a park reading books and watching the creek roll by. But I also like the more expensive things. I especially enjoy giving my grandkids the experiences that I could never afford to give my own kids. I want them to realize that there are more things available than Happy Meals. I want to equip them for a very competitive world.
It may seem strange, but poor people are rarely bored, while the richer a person is, the more boring is to live. The poor person will be happy to go to another country, but for the rich person it is just a routine and so on. These two things are incomparably more expensive for the rich than for the poor.
13. FOOD
Well to have a burger in MacDonald’s when you are poor would cost you just under $5 but like a rich person and you went into a top-class restaurant for one it would cost them around $30.
Also, a rich person you won’t want to be seen dead in a Mac Donald’s! So, it would go for most food and meals.
14. CLOTHING
With clothing, a woman jumper (Walmart) is around $25 and you wouldn't want to be seen dead in Walmart, or in one of their jumpers as a rich person.
But you would like to be seen in a say Zara one that would set you back for just under $900.
15. BUS RIDE
But I believe that almost everything will become more expensive the richer and more critical you become.
A bus ride? no more buses for you. a chauffeur-driven car would be your choice then, so the car would set you back what $ 72 thousand to one hundred thousand and the chauffeur a year say $30 thousand, to bus ride in NY at say $5 per day that around says $1,500 per year.
16. ALCOHOLIC DRINKS
Spirits. A 1.75 container of vodka in a plastic bottle will set you back about ten to fifteen dollars at my local liquor store. Of course, it's made with grain alcohol and is basically a step up from rubbing alcohol. Rum and whiskey are a bit more expensive, but you can likely find a brand with a name like "Jason Samuel's" or something else derivative for a comparable price.
But when you're rich, people want that Johnny Walker black (edit: I mean blue!) label or something that was steeped in oak barrels in Northern Ireland for 5 years and costs as much as a car payment. It's smooth—it tastes great—but surprise! Now you're poor again. Expensive wines, champagnes, etc. only the best for the rich.
17. LOVE
As in like TRULY being loved.
Even most rich people end up marrying people who are just there for their money and riches and as soon as it starts dwindling, now it's divorced, and all of a sudden now you aren’t romantic or funny as you used to be.
It’s harder for you to know if it's true love you get from people when you are rich unlike when you’re poor.
18. SECURITY
Rich people have a lot to lose so they might need security/feel insecure hence hire the best security while that’s different for the poor.
Or maybe the poor may live in dangerous areas with petty crimes, unlike a gated community/suburbs where crime is less and police are likely to respond in case of emergency.
19. LONELINESS/HUMAN CONTACT
A common scenario where a rich guy lives with his small family in a very big mansion, where most of the time it’s just them or their few friends who are also with small families and mostly busy so they don’t visit each other that often hence just spending most of their times lonely with less human contact vs a poor family that lives in a village or overcrowded slum,
With big families and most of their friends near them hence less loneliness and way more human contact.
This is expensive as it might affect the rich psychologically, mentally…
20. RECEIVING/GIVING
Like gifts, when you are rich, you’re expected to give more like in donations, charities, and the poor don’t necessarily have to give out that much. This is expensive to the rich
Since they have to give even when they can’t.