I feel as if I have discussed this before. That people who
have lots of money are not truly rich. Instead it is about buying power.
But what is buying power?
What is it?: Yes it has to do with money.
In this case it is about the amount of things you can buy with the
smallest denomination of money. So if you look at the American past, a
movie used to cost ten cents, but now it can cost as much as $20 in some
places. As such, the buying power of an individual to go to the movies
went down. Same thing with respect to buying gas here in the United
States. A gallon of gas used to cost about $1.75 at most, but now it
costs $3.50 or more. This is a loss of buying power that reduces our
ability to spend on other things that we may want to buy, whether that be
necessities or on recreational items. Those who can afford to spend more
on other items whether that is due to better budgeting/saving or having more
disposable income are and can be considered richer as they can afford to spend
more without fear of possibly pinching pennies to get by. So a person
with a ton of money may not actually be rich as they may not have enough money
to buy things outside of what they deem necessities based on their lifestyle or
other mitigating factors. So no matter how much you have, you may never
actually be rich.
What influences buying power?: There are a few things. The
one you have the most control over is your budget. With careful planning
on expenses and taking opportunities to accumulate a more advantageous
financial position, you can gain in buying power. But if you spend on the
non-essentials, or do not monitor your money properly, then you will decrease
your buying power.
The cost of items also limit or enhance
your buying power. One influence is taxes on business, the shipping costs
for their products, manufacturing costs, and any government regulations that
are imposed on those items. All this increases the cost of an item and
makes it less affordable and can even limit salaries of those individuals
working. So people can be priced out of being able to afford a simple
lough of bread. You can also factor in the stock market as well, as like
with oil, investors can cause an items price to rise or fall, or even remain
stable in most cases depending on the situation. Though the stock market
typically acts as a stabilizing influence to prevent sharp price increases and
thus protects buying power.
Inflation is another problematic factor.
This one is caused by government and its manipulation over the value of
the currency in use in the country. By printing more money, the value of
the dollar goes down in the same way that an items price goes down if more
supply is created. So because the dollar is affected by the same supply
and demand factors on the market as everything else, if the dollar’s value goes
down, then prices of goods will naturally increase to accommodate the larger
sums of money needed to make those goods and for businesses to get a return on
their investment. As such, this is governments fault.
Conclusion: I am sure my explanation could be
more detailed in respect to examples, but this is the simplest and shortest way
I can explain it without it becoming a total headache for you may dear reader.
So I hope you liked the issue and gained a better understanding on who
the real rich really are, for it may even be you.
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