Why 🚨 more income but never enough?🛍

Hello, 🙋🏻‍♂️ Meet me First LivingWealthy, have your friends ever encountered this problem, despite the increase in our salaries, but the increase in expenditure and the increase in income? In fact, there are theoretical, economic and human behavior reasons that explain why "income increases and expenditure increases." What is it? Let's go see.

✨ Law of Expanding Wants (Law of Expanding Demand)

As income increases, the level of human demand increases accordingly.

From eating full → wanting to eat well

From living → wanting to be comfortable

From having a phone → wanting a better machine.

"The urge will expand based on a new income base."

✨ Consumption Smoothing (Theory of Smooth Consumption)

Humans like the quality of life to gradually improve, do not like it to decrease, so we often modify the behavior of using money to enhance the quality of life.

Cooking, Eat Yourself → Dining Out

Use buses → Use private cars

We often adjust spending higher to maintain a new standard of life.

Relative Income Theory (Relational Income Theory)

We judge our own status from those around us, colleagues and social media.

As our income increases, we want to spend in line with our social group so as not to feel lower than others. It avoids feelings of social inferiority. "This behavior is called the Demonstration Effect."

✨ Hedonic Adaptation (Happiness Adaptation)

Positive changes in life, such as income, buying new things, happiness gains temporarily, but eventually we adjust happiness back to its basic level.

This adaptation requires us to seek new things or higher quality of life to stimulate happiness, which is the driving force for increased spending.

✨ Behavioral Economics - Mental Accounting -

Humans do not manage all money in the same lump, but divide money into mental accounts according to source or purpose. As income increases, humans have a new source of money in their heads.

Salary increase = use increase

Bonus = prize money

Extra income = unreal money. Use more.

"Causing as revenue increases, the cost increases by ignorance."

✨ the missing Scarcity Mindset.

Scarcity mindset is the idea that believing that they do not have enough resources or fear that they are scarce, that makes humans use their minds to manage their resources.

📉 when earning low = think a lot before using because wanting to save

📈 increased income = easier to decide to spend money. Don't feel like spending money and then hitting life.

So "as income increases, the sense of scarcity begins to disappear."

✅ concluded as revenue increased.

- Increased quality of life

- Own expectations rise.

- Costs increase accordingly.

- Become a new, irreducible standard.

✨ How do your friends feel when they pay more? You can come and talk under the comments.

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