From the Praxis blog.
Let’s say you want to do something awesome. Maybe you’re interested in being a part of a startup or an entrepreneurial business. Maybe you’ve got a creative side, and you’d jump at the chance to work on a movie script. The less cushy your current life, the higher the chance you’ll be in a position to answer when opportunity knocks. The lower the cost of exit, the easier exit becomes.
A lot of young people just starting out in their careers feel pressure to scratch and claw for a few thousand more in salary and keep up with friends who are moving into nicer houses, driving nicer cars, eating sushi every Tuesday, and shopping at trendy places. There’s nothing wrong with any of these things, but if you have a stomach for more risk than the average person, and a desire to do some really cool stuff, you might want to resist the urge to upgrade your lifestyle. Your relatively low income can be a huge asset.
Even the most frugal and self-controlled among us have a propensity to adopt a standard of living right up to our capacity (sometimes beyond). It makes sense. In fact, it’d be a little weird if you were raking in cash and sleeping on a park bench, just waiting for the opportunity to use your capital. Living in the moment is fine. The thing is, there are so many ways to happily do this. I’ve found that, whatever the income level, once it’s above a certain very low baseline, you can organize a pretty happy life around it. The higher it goes, the more you spend and it is damn-near impossible to go backwards.
I knew a guy once who had a great job, making more than any of his peers, but at a place that pressured employees to upgrade their cars, houses, etc. He soon found himself in a lifestyle that only that well-paid job could sustain. Then the job turned sour. He wanted out. But how to convince his wife, his kids, and himself to downgrade the car, the monthly budget, the mortgage? Some of these things couldn’t be done at all on short notice. His high income was not a source of freedom, but a chain, preventing him from doing what he wanted.
So you’re young and and your income is low. That’s a huge advantage for you. That means if your friend tells you she wants you to help launch a new business, but you might not get paid for the first six months, you can probably swing it, since you’re already accustomed to eating Ramen and you have no DirecTV to cancel. Some of the best and brightest are incapable of jumping on great opportunities because they’ve earned decent money quickly, then hemmed themselves in, unable to ever downgrade their short term quality of life. If you can, you have a competitive edge.
Obviously, no one wants to stay forever on a diet of canned chicken. But when you’re young, and at the beginning of the discovery process of what makes you come alive, it’s helpful to be free from a huge list of material needs. You’d be surprised how much an early high income can stall further progress towards your goals.
So if you think you’re poor compared to your friends, smile. When you consider all your assets and liabilities – your skills, interests, strengths, weaknesses, capital, time, flexibility, etc. – include on the asset side of the ledger the fact that you don’t really need much money to maintain your current quality of life. It may come in handy when the chance to do something amazing, and far more rewarding in the long term (materially and otherwise), emerges and you’re ready to jump while your buddies have to turn it down to stay with a job that pays for their $15 “happy hour” cocktails.
by Peter Diamandis and Steven Kotler. It illustrates why I think worry about and policy efforts aimed at changing differences in income between rich and poor are dumb, destructive, and miss the point by being stuck in a dead paradigm.