3. How To Save More Flashcards
(44 cards)
What are the two main factors attributed to rising obesity in the Western world?
Improper diet and lack of exercise
What did anthropologists discover about the Hadza tribe’s daily energy expenditure?
They burn roughly the same number of calories as sedentary counterparts in the U.S. and Europe after controlling for body size
What happens to the human body’s total energy expenditure over time with increased physical activity?
It adjusts based on physical activity levels
What was the conclusion of the review of studies on exercise and fat loss conducted from 1966-2000?
Increased physical activity leads to more fat loss in the short term, but not in long-term studies
What is the equation that defines savings?
Savings = Income – Spending
What does the data suggest about cutting spending versus raising income for saving more money?
Cutting spending has inherent limitations compared to raising income
How much after-tax income did the bottom 20% of U.S. earners have in 2019?
$12,236
What percentage of their take-home pay have the bottom 20% of earners spent on necessities since 1984?
More than 100%
What was the average monthly spending on food, healthcare, housing, and transportation for the bottom 20% of earners in 2019?
$1,947
What are the average monthly spending amounts for the bottom 20% of earners in 2019?
- Food: $367
- Healthcare: $238
- Housing: $960
- Transportation: $382
What was the average after-tax income of the 20th-40th percentile of U.S. households in 2019?
$32,945
How does the spending pattern of higher income households compare to lower income households?
Higher income households spend a smaller percentage of their income than lower income households
What is the term used to describe the phenomenon where each additional unit of consumption brings less benefit?
Diminishing marginal utility
What does the law of the stomach illustrate in terms of spending?
Each additional unit of consumption brings less joy than the previous one
What is the biggest lie in personal finance regarding wealth accumulation?
You can be rich if you just cut your spending
What is often neglected in personal finance advice regarding how authors got rich?
High income and low spending
What did the London School of Economics paper titled ‘Why Do People Stay Poor?’ conclude?
Lack of initial wealth, not motivation or talent, keeps people in poverty
What is a poverty trap?
A situation where lack of money prevents individuals from gaining training or capital for higher-paying jobs
What should you focus on to save more money according to the text?
Tightening up spending where possible and increasing income
What is human capital?
The value of your skills, knowledge, and time
What are some methods to convert human capital into financial capital?
- Sell Your Time/Expertise
- Sell a Skill/Service
- Teach People
- Sell a Product
- Climb the Corporate Ladder
What is one downside of selling your time for income?
It doesn’t scale; one hour of work equals one hour of income
What is a pro of selling your time/expertise?
Easy to do with low startup cost
What is a con of selling a skill/service?
Requires development of a marketable skill
