Why Being Rich Is Cheaper: The Cost of Poverty vs Wealth

It’s a common belief that the wealthy have an easier time during tough economic times. As many people suffered financially due to lockdowns and other pandemic-related issues, billionaires like Jeff Bezos, Mark Zuckerberg, and others saw their net worth rise by billions. This begs the question: why is it that the rich keep getting richer? In this article, we’ll explore how being rich is actually cheaper than being poor.

The Cost of Being Poor:

If you’re living paycheck to paycheck or are struggling financially, it can be incredibly difficult to get a loan from a bank. Banks want to lend money to people who are financially responsible and have the means to pay back the loan plus interest.

This is where credit score comes in. If you have a low credit score and low income, you may be rejected for a loan, making it difficult to become a homeowner. This can be a lifelong disadvantage, as owning a home is often the largest transaction in a person’s life.

The Cost of Being Wealthy:

On the other hand, if you’re wealthy, you have access to a wide range of investment opportunities. For example, with just $25,000, a wealthy person can make an investment worth $200,000 and get a mortgage to rent it out.

This is because the bank sees wealthy people as a lower risk and is willing to offer them better rates and more opportunities. Wealthy individuals also have the ability to use leverage to increase their investment power, allowing them to generate even more income.

Conclusion:

Overall, being rich is actually cheaper than being poor. The cost of being poor can be lifelong, as it’s harder to get a loan, own a home, or access investment opportunities. On the other hand, being wealthy allows you to take advantage of investment opportunities and receive better rates from banks, ultimately leading to more financial stability. While it’s not fair that the wealthy have such an advantage, it’s important to understand how the financial system works and how it impacts people differently depending on their socioeconomic status.