When I was young, the advice was to "save 10% of income". though even with that simple rule, most people (including me) failed to do so. And then, most people didn't realise (including me until later) that it was meant to be 10% of gross salary, before taxes. And back then, savings came with a better rate than today - so saving money in a bank now is useless and loses value against inflation.
You can never get wealthy from saving.
Well, never say never. But it is unlikely.
But one of the (many) problems with this advice is that as we earn more, we keep on saving the same flat percentage, and then spend more, rather than save more too.
For a simple example is:
Income 1 p/month = 1000
Saving
@ 10% = 100
Spending = 900
Income 2 p/month = 2000
Saving
@ 10% = 200
Spending = 1800
Percentage-wise, both our savings and our spending have doubled with the doubling of the income, but there is a full 900 more on the spending side, while only 100 more on the savings side. This means that if we were to live off our savings for a period of time, we would need 9 months worth of savings to cover one month of living. It would take 3 years of savings to cover 4 months of spending, and this doesn't take into consideration the inflation over that time. Our "lifestyle" has increased, but we wouldn't be able to maintain it for long on our savings if the income stops.
Yet, as we earn more we spend more. Sure, there are many reasons for this, but I wonder what I would have saved (or invested) if I kept living like a student no matter how much I was earning over the last thirty years. I am pretty sure I would be able to retire by now, especially if I had invested. And, what many don't take into account in regards to the investment, is that while there is risk, having those "savings" means being able to take more risks and take some opportunities that might be deemed too risky, if there isn't much extra. For example, if you had 100K in savings, would it hurt to spend 500 on Bitcoin in 2010?
What we should be doing is that as our earning increase, we can still increase our total lifestyle spending, but also keep increasing our savings and investment percentage. For example,
Income 1 p/month = 1000
Saving
@ 10% = 100
Spending = 900
Income 2 p/month = 2000
Saving
@ 30% = 600
Spending = 1400
Income 3 p/month = 3000
Saving
@ 37% = 1100
Spending = 1900
Income 4 p/month = 4000
Saving
@ 38% = 1500
Spending = 2500
Sure, that is not how our income increases, but it is to illustrate how we can make increasing savings and still significant increases to our living expenses that impact our quality of life. And then, factor in investment returns on the income savings, and it becomes a self-fulfilling prophecy of wealth creation. At some point, all of the income can be spent, and still the investment side of the equation keeps on growing.
However, human nature being what it is, many people will live "hand to mouth" no matter how much they earn. And I think that this is the case for many people on Hive, who in order to live their life, spend whatever they get from their rewards. This means that they are never investing into their own future here, and can never help distribute to people in their own communities either.
But eventually, income stops.
It is like retirement, where a person might have had a great life living off their work income, but if they haven't put enough (or anything) aside to live off after their income stops, they are left destitute and struggling. Their lifestyle enjoyed becomes an experience of agony, begging, and living off dwindling support and favours from others. It is not a glamorous retirement.
While I fully understand and appreciate the financial predicaments many find themselves in, often not completely of their own making, and therefore use Hive to make ends meet, it also raises questions. The main one is that if someone "needs Hive to live" what were they doing before Hive to live? And what will they do after if the income the need from Hive stops?
In my opinion, people shouldn't rely on Hive income to live, because it is far too unstable as an income source. However, if someone has "saved enough" Hive, I get spending some of it too in order to take advantage of various available opportunities. But for those without enough savings, spending all they get means that they might never be able to take advantage of opportunities, including the opportunity to support themselves through curation. There are plenty of accounts who are selling all they get, but if they had powered up half of what they have received so far, they would be able to earn just as much from their curation as they are selling today, plus be able to distribute to others in their various communities.
Isn't it short-sighted?
The argument is that a person needs to live now, but this still returns to the fact that people were surviving before they were on Hive too. Earning on Hive, spending half and investing half on the platform, would still leave them significantly better off than not having additional income at all, and it would mean having an increasing investment portfolio that could keep growing, soon increasing their overall earnings profile, and leaving them with stake that could see them in a far better position in the future, if the crypto stars align.
Of course, people can do what they like with what they earn, but I prefer to support people who are trying to support themselves and others too. It is a bit like the "give a man a fish" proverb, where rather than supporting people to live hand to mouth, the goal should be to support them to support themselves. But, that support needs to be "earned" and part of that earning is demonstrating that they can indeed find ways to increasingly support themselves, by building the habits and processes to do so.
If they aren't willing to go out and fish, should they still be given a fish a day?
I can't judge your life or anyone else's for that matter, as I can only look from my perspective and my experience. But, we all have our challenges and many of those challenges are financial, myself included. But I want to get into a position where I don't need to rely on others financially, where I have a good enough economic profile that what I earn from my investments is enough to cover my living expenses indefinitely. I don't need to live a fancy life, but I would like to my family to be comfortable and not have to worry about where their next meal is coming from. And what I like about Hive is that over the years, I think I have helped people along the same journey themselves.
What I do know is I can't save enough Hive to cover all I need in the future, unless the price of Hive increases significantly and stays there. But, I am taking the risk that it will increase in price and close that gap significantly. It might work, it might not - but what I know is that if I don't have any Hive, I miss the opportunity completely.
Taraz
[ Gen1: Hive ]
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