Why the wealthy spend less on luxury: the 70/30 rule in finance
Last year I started to take fitness and lifestyle more seriously. Quite a few experts I know talked about diet being more important than exercise. As exercise makes us feel hungrier, and it isn’t realistic to sustainably try to starve yourself, I was told most fitness coaches tell their clients they need to change eating habits.
Therefore, 70%-75% of the progress people make in terms of their weight will be down to diet, and only 25%-30% relates to exercise. This surprised me a bit, and I am sure surprises many people.
It got me thinking. One of the things I have noticed since being in the finance industry is that many high-income individuals aren’t wealthy.
I know numerous people who are worth $2M on an income of $50,000 and others have close to zero wealth but are on huge expat packages.
One person I know has consistently made $15,000 per month after tax for about 20 years in South East Asia, and yet has only about $100,000 to his name.
How can this be true? Well, the truth is good spending habits are actually the biggest source of wealth, compared to earning more. Michael Jackson was close to bankrupt despite earning around a billion dollars in his careers.
To carry on reading — https://adamfayed.com/why-the-wealthy-spend-less-on-luxury-the-70-30-rule-in-finance/