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In this episode, Chelsea talks about how rich people's perceptions of what is "normal" is making life worse for the rest of us.

Cutting ties with lower-income friends: https://www.stylist.co.uk/life/friendship-wealth-gap-relationships-careers-money-finance-how-get-rich-change-personality/220098

Why rich people are jerks: https://thefinancialdiet.com/heres-how-money-can-turn-you-into-an-absolute-jerk/

Ability to pay bail vs. being sentenced: https://slate.com/news-and-politics/2020/01/new-york-bail-reform.html

Boomer inheritances: https://www.latimes.com/business/story/2019-11-29/boomers-are-thriving-on-an-unprecedented-9-trillion-inheritance#:~:text=While%20boomers%20as%20a%20group,over%20the%20last%2030%20years

Co-buying by the numbers: https://www.marketwatch.com/story/as-housing-costs-remain-high-parents-buy-homes-to-give-their-kids-a-leg-up-2019-01-04

Rent burdened populations: https://furmancenter.org/thestoop/entry/nyc-housing-insecurity-by-the-numbers

Silicon valley fad dieting: https://www.theatlantic.com/health/archive/2019/01/silicon-valley-extreme-diets-fasting/581566/

Food spending statistics: https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/#:~:text=In%202019%2C%20households%20in%20the,representing%208.0%20percent%20of%20income

Americans worrying about money: https://www.cnbc.com/2019/05/24/25-percent-of-americans-say-they-worry-about-money-all-the-time.html

Food anxieties: https://www.vox.com/first-person/2020/4/6/21207065/coronavirus-grocery-shortage-toilet-paper-yeast-insecurity

Extracurricular participants: https://www.theatlantic.com/education/archive/2015/01/the-activity-gap/384961/

On "meritocracy": https://www.nytimes.com/2019/06/12/opinion/meritocracy-tests-education.html

Getting things for free: https://www.distractify.com/p/rich-celebrities-free-stuff
https://www.moneyaftergraduation.com/easy-being-rich/

Being rich = confidence: https://www.marketwatch.com/story/incompetent-people-from-wealthy-backgrounds-are-more-likely-to-act-like-theyre-smart-and-people-believe-them-2019-05-21

Watch more of The Financial Diet hosted by Chelsea Fagan here: https://www.youtube.com/playlist?list=PLD30V46E07RR99cC0gCjKUbt-BKoDUcnc

The Financial Diet site: http://www.thefinancialdiet.com

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Hey, guys.

It's Chelsea from The Financial Diet. And if you have not already, please do not forget to hit the Subscribe button to keep in touch with all of the amazing financial content that we're giving you on a hot, fresh, weekly basis.

And also upgrade your life by hitting the Join button to join the very elite, mysterious, possibly cultish society of TFD. And today we are here to talk about one of my favorite topics, which is rich people and how they're ruining America. If there is one cliche about the wealthy that really rings true in practice on a sociological level, it is that they are out of touch about how wealthy they are.

And this is in large part because, generally, they associate only with other wealthy people. In a UK study from independent survey provider Vivatic, 1,000 people were quizzed on their, "experience with their wealthier and worse off friends to see how differing finances can tear even the strongest relationships apart. Shockingly, the report found that well over a third, or 39%, of those in the wealthier category have cut ties with hard-up friends due to incompatible lifestyles, suggesting that the material appeal of champagne brunches and designer labels are more important than close emotional bonds.

The research also showed that richer people categorically prefer to surround themselves with friends of a similar pay bracket with nearly half, 46%, saying that they deliberately try to socialize with people of equal means." Now, as some of you might have seen from other videos on this channel-- and if you haven't I highly encourage you to check them out, and I'll link them in the description-- I have had the unique experience that some of you might be able to relate to of working for very wealthy people when I was very low income and having that sort of interesting window into their lives. I worked for example as a secretary at a yacht club, which is a country club but worse, and was an au pair/nanny for several super high earning families. You really get an inside glimpse into the versions of these people that they're not really used to showing people outside of their tax bracket, and you quickly realize that so many elements of their life, which are unrelatable in every way to the average person, are perceived by them as being totally normal because of how much they've reduced their social pool.

And that would be enough of a sociological problem if it didn't impact in such a major way how the rest of us live, because the wealthy have a super outsized influence on things like policy decisions, and lobbying, and corporate influence, and just generally dictating how society organizes itself. So what is normalized for the wealthy sort of de facto become normal for everyone else, even though it isn't. This can change our most fundamental perceptions about how people should be expected to live and navigate through the world.

So without further ado, let's dive into it with eight things rich people think are totally normal. Number one is life-altering mistakes aren't a big deal. Simply put, wealthy people do not have to worry about the consequences of making mistakes that people at lower incomes do.

If you've ever read a celebrity or multimillionaire, CEO, founder, whatever, Wikipedia page, you'll notice that any legal troubles tend to be quickly resolved and a minor footnote in their overall life story. Oftentimes, these can be legal troubles that would otherwise destroy a person's life. I'm not going to name names here, but there's like 50 celebrities who have killed a person while driving, including some of your faves.

Wealthy people just don't have the same level of caution and don't feel that they have to play by the same rules. As one TFD article by writer Allie Volpe put it, "According to research from 2012, over the course of seven experiments, upper-class individuals were more likely to break the law while driving, to make a habit of unethical decision-making, to take valued goods from others, lie in a negotiation, cheat to increase their chances of winning a prize, and endorse unethical behavior at work than lower class folks." And even mistakes that could get the average person into massive amounts of trouble can easily be waved away by the wealthier among us because, in many cases, they can simply pay a fine. 500 here, 1,000 there. It's nothing for them to just pay a fine or a bail to make sure that they don't have to deal with a problem in a prolonged way, even though that's more than most people have in their savings accounts.

And this bleeds into our narrative about bootstrapping, that we should all be able to make ourselves into a successful person no matter where we started on the socioeconomic ladder. But when you realize that the average cost of a single mistake along the way can be more than what an average person has in savings, you realize that the difference between being able to keep on on your desired path and being totally thrust into poverty or even homelessness is just a question of financial privilege. And yet, this perception of "you could learn from your mistakes and improve upon them" is pretty widely accepted as our cultural narrative, even though for many people it's simply not an option.

And one mistake can be totally devastating. And this bias in favoring people who are able to pony up the dough even applies in cases where both the wealthier and the poorer person actually face consequences. "A 2016 analysis in New York City showed that 43% of those charged with misdemeanors remained in jail until the end of their case, including 40% whose bail was set at $500 or less. Research has shown that defendants detained for the entire pre-trial period are more likely to be sentenced to jail or prison and for longer periods of time compared with defendants who are released to fight their cases from outside jail." We've internalized this cultural narrative that mistakes make us stronger, but that's only true for people who can afford to make them.

Number two is expecting an inheritance. There's a trend in personal finance media that has become essentially comical at this point, where you'll see a headline about a 24-year-old who paid off $200,000 in student loans and bought their first house, and it's not until the second to last paragraph that you read about the fact that their grandmother was hit by a bus and left them a massive inheritance, which, like, honestly grandma, work. And this is why people like Kylie Jenner, who was born into one of the most wealthy well known and well-connected families, can be considered a self-made billionaire because we've become, as a society, extremely forgiving of the idea of what it means to inherit.

I feel like every other day we're having to deal with a new celebrity's kid being famous. It's like, I don't want to see all your shitty kids in movies. Give us new celebrities.

And while building generational wealth may be a goal for many of us, it is hardly the norm. And the generational wealth gap has only increased in recent decades. "In 1989, the median household age 65 to 75 held almost eight times more wealth than families headed by 25- to 35-year-olds. By 2016, according to an analysis by the St.

Louis Fed, the median baby boomer had close to 13 times more wealth than the typical millennial. But while boomers as a group inherited trillions from their parents, most members of the post-war generation got nothing. About 20% of households have received inheritances, United Income's analysis shows, a share that has been flat over the last 30 years." Ultimately, we've become a society that is incredibly forgiving about the advantage it confers to be born on third base economically while ignoring the fact that for more and more and more of the American population, inheriting anything from your parents except perhaps debts associated with their funeral is increasingly unlikely.

Number 3 is having a Deus Ex Machina relative. As I mentioned before, when you live in a place like New York City, you get increasingly used to knowing people who have relatives who happily fund their lavish lifestyles well into adulthood. And this is especially true if you work in an industry that is typically perceived as more glamorous, and therefore, in many cases, pays worse.

I'm not going to go into too much identifying detail here, but when I worked at a media company in Brooklyn, one of my coworkers who earned-- I mean, assuming she didn't earn more than I did, which I don't think was possible given the circumstances-- probably about $30,000 a year, and lived in an industrial loft that was, like, the size of a small warehouse and wore designer clothes to work every single day. She also went to the Gossip Girl high school and once told us that they all went to Bungalow Eight before their high school homecoming, which sounds illegal. And yet, you associate with people like this in various elements of your adult life and both have to pretend as though you're playing on an equal playing field, when obviously you are not.

And wealthy parents aren't just helping their adult kids with things like their monthly rent. Sometimes they're buying them things like full-on starter homes. "Co-buying, where multiple, non-married buyers are listed on the sales deed, has become increasingly common in some of the country's most popular housing markets. Many of these transactions involve parents helping their kids buy a home, or buying a home for them altogether.

In San Jose, California, nearly half of all housing sales involve co-buyers as of the second quarter of 2018, according to a report from Attom. Other cities where 25% or more of sales involve multiple buyers include San Francisco, Honolulu, Seattle, Miami, Boston, and even Durham, North Carolina. Moreover, more than one out of four mortgage buyers who took out a Federal Housing Administration-insured loan received assistance from a family member to afford their down payment." So basically, even the systems we're designing to help level the playing field as people enter adulthood are being undermined by the fact that some people are getting help from mom and dad.

And when you realize that in housing markets where, listen, everyone needs to be able to find a place to live if they work in that housing market. I mean, here in New York, where are teachers and nurses and firefighters and all of the people who make New York City turn supposed to live? We're creating entirely artificial markets in this way, and doing very little to oppose it.

Because even, for example, if on certain homes we put an income cap on whatever the person needs to be making in order to qualify to buy the home in an interest to keep a more middle-class population in the building, you could often have people who, on paper, only earn a fairly low salary but whose parents can afford to give them the entire down payment. And yet we are not addressing these inherent inequalities in our housing law. And this is during a time when America's wealthiest cities have been facing housing crises for years.

In New York City alone, more than half of households with an income between $15- and $30,000 are severely rent burdened, AKA paying more than 50% of total household income in rent. Number four is having a suspect "wellness" routine. Rich people do seem to be more proactive about their health in general.

But that's usually just because they have more disposable income and time with which to focus on their health. The wellness industry is now worth billions of dollars, and it's because, for many people, it has gone from just being about being physically fit and as healthy as you can be in your body to creating a sort of aura of wellness that confers status and self-control and affluence and aspiration. And even though most of us don't necessarily participate in the group school of being well, that kind of dubious wellness culture has infected society at large, whether or not you can afford to opt into it.

And sometimes these wellness practices, "are downright dangerous." Take Twitter CEO Jack Dorsey for example, who tweeted that he had been, "playing with fasting for some time, regularly eating all of his daily calories at dinner and occasionally going water only for days on end. While researchers are hopeful that some types of fasts may be beneficial to people's health, plenty of tech plutocrats have embraced extreme forms of the practice as a productivity hack. On his Twitter account, Dorsey doesn't mention anything about long-term disease risk or even weight loss, which is a purported benefit of fasting that's gained the practice a lot of attention over the past several years.

Instead, Dorsey focuses on how much time slows down when he hasn't eaten anything. Considering the demands of his job, it's not surprising that a longer day would be important to him. Silicon Valley is, by and large, always looking to find a way to do a little bit more work." Now, here's the thing.

I'm someone who's practiced the 18:6 method of intermittent fasting for years, and it has had many benefits for me. But not eating for days and days on end until your very perception of time begins to be distorted sounds like you're just basically dying. But when the rich and famous adopt these practices, it's easy for them to become normalized in the culture.

And although this does have a lot to do with our obsession with productivity in America, it also points to the idea that once people have reached such a level of physical and financial comfort, they may go to even more extreme ends to just feel something, which is probably the mark of a society that ain't doing too well. Number five is buying items without looking at the price tag. Most of us probably have had some experience with the feeling of worrying about what's in your bank account.

Being worried about your balance at the checkout line in the grocery store, for example. According to the USDA, "In 2019, households in the lowest income quintile spent an average of $4,400 on food, representing 36.0% of income, while households in the highest income quintile spent an average of $13,987 on food, representing 8.0% of income." So what does this mean? The wealthy are spending much more on food overall, but it constitutes a much lower proportion of their total income, illustrating the point that they likely have to spend much less time worrying about how to budget this entirely necessary expense.

According to one 2019 Gallup poll, 25% of Americans worry about money "all" or "most" of the time. And this extreme disparity between who is constantly worried about money and having enough and who is never worried about it at all, between people who have to spend an outsized portion of their income just to survive versus people who barely tap into their income in order to buy these necessities, is part of how we get that really shamy culture around our various spending habits. There are plenty of personal finance experts who will finger wag at you if, for example, your grocery spending exceeds a certain portion of your overall take-home pay without acknowledging the fact that only for a certain lucky few in the population, spending under that amount is even a possibility.

Essentially, when it comes to what is considered a necessity versus a luxury, and what are the ideal portions of our income we should be spending on these things, it really just comes down to who has the money to do it. And the reason why many people don't realize the privilege in not having to worry about what an item costs is because it's one we barely talk about. Felisa Rosa Rogers, a writer who has experienced food insecurity, wrote back in April of 2020, "I'm part of a Facebook group where people are documenting their quarantine cooking.

There's a sense of solidarity and camaraderie in the deprivation and in substitution. But this shared experience is very different from the quiet struggle of people who are used to going without. Income-based food insecurity doesn't usually appear on social media.

People aren't humble-bragging on Instagram about having to feed the kids mayonnaise and ketchup sandwiches. Poor Americans suffer their food-based anxieties and silent shame. Number six is growing up with helicopter parents.

Generally speaking, money equals opportunity, which is why we tend to associate specific extracurricular activities and hobbies, especially for children, with wealth. Think things like fencing, dressage, tennis, skiing, et cetera. But even many normal seeming extracurricular activities have become fairly exclusive.

According to one study featured in Voices in Urban Education, "In 1972, roughly 61% of low-income high school seniors and 67% of their more affluent peers participated in one or more athletic extracurricular activities. A decade later, participation rates rose to about 65 and 73%, respectively. But by 1992, while 75% of upper and middle class seniors reported participating in extracurriculars, involvement among disadvantaged students dropped back to 61%.

By 2004, the number for low income seniors was down to 56%. Participation in sports echoed those trends, though the falloff didn't happen until '92 when involvement rates among low-income seniors fell from 30% to 25% a decade later. We tend to make stereotypes about the millennial generation, that we were raised with hyper-competitive helicopter parents who had us involved in everything, that we became obsessed with the all-important participation trophy, that we were shuttled from activity to activity, when this is very much not a portrait of how many kids grew up, myself included.

But that perception of everyone having had that shared experience of parents who were obsessed with our every move and scheduling us down to the minute obscures the extreme privilege experienced by those who actually did have that upbringing. Often, for many children, being shuttled from activity to activity was a very conscientious choice to help them get into a good college and eventually land a good job. In fact, loading up on extracurricular activities is actually a way more popular route for rich parents than loading up on things like tutors and prep courses.

And it's no surprise that in many of these extracurricular activities, you are, by nature, going to be surrounded by other kids from similar families whose parents also want to make sure they're loaded up with tons of hobbies. From one New York Times article about meritocracy in America, "the student who is captain of the sailing team, president of the robotics club, and who spent a summer building houses in the global South will likely look more 'holistically' valuable than a poorer student who has not had the resources to do similar activities. Who is more likely to be a star violin player or to have completed a summer internship at a fancy magazine: a poor student, or an affluent one?

At the end of the day, we have a tendency to associate someone who grew up doing all sorts of activities as being an inherently well-rounded person, when, increasingly, that likely just means their parents were rich. Number seven is getting more things for free. When it comes to celebrities basically drowning in free stuff, it's usually, on the part of the product or service, a simple marketing calculation.

Having a chic, aspirational celebrity being photographed with your product or doing your thing is going to create an enormous amount of buzz and desire around your brand that you might not otherwise be able to generate through traditional advertising means. Tale as old as time. But what about people who are rich, but not famous?

In many cases, the rule is simply that the more you spend, the more you get for free. For example, perks that come with airline loyalty or credit card reward systems. I'm someone who, up until COVID, obviously, flew considerable amounts every year for various work and personal needs, and who also used both a business and a personal card that were lined up with my airline of choice, which is why-- and they're actually rolling it over through 2021 thanks to COVID-- I'm a Platinum Medallion member with Delta, and I have hundreds of thousands of SkyMiles.

What does this mean in practice? That over the course of the year, I actually end up spending less on airline tickets than I used to at a different time in my life when I had a lot less money to spend up front. Why?

Because, through using these rewards programs and loyalty programs, many of the tickets that I get throughout the year, or even upgrades within those tickets, are totally free to me. And it's not just with things like airline miles. Having more money can also mean paying lower fees.

It is not uncommon for checking accounts to charge $10 to $15 in monthly fees but to waive this expense if you maintain a balance of at least $5,000. Only a rich person could afford to leave $5,000 earning no interest in a checking account for the sake of avoiding a $10 fee. A poor person will always have to pay the account fee because it's unlikely they'll ever have $5,000 to spare, which is assuming they even have an account, as many as 25% of Americans are completely unbanked.

Basically, many of the best tips and tricks over how to save money in the long term boil down to having more money to spend in the short term. And while, yes, if you do have the disposable income, getting really good about things like rewards and miles and loyalty programs will benefit you in the long run, the extremely high startup cost for doing so is rarely acknowledged. And the fact that this is how rich people just live and do everything has made it more and more normalized for the rest of us, even though, in practice, it's absolutely not the norm.

Lastly number eight is getting good job opportunities regardless of competence. And I'm not even in this point going to go into how children of wealthy families tend to land jobs through their well-connected family members, even though that is a massive thing. I'm literally just going to talk here about the inherent confidence given to you by growing up wealthy.

Two professors of management and organizational behavior tested this idea in a series of four large studies with a sample size of over 150,000 people. "In one mock job interview, they found that 'higher-class individuals were more overconfident.' The overconfidence, in turn, made them appear more competent, and therefore more likely to 'attain social rank.' In other words, they were more likely to get the job. And even when people from working class backgrounds ascend the career ladder, they're often still left earning less than their more privileged counterparts in what is referred to as the 'class ceiling.'" According to a UK study from 2016, "Even when people who are from working class backgrounds are successful in entering high status occupations, they earn 17% less on average than individuals from privileged backgrounds. This class-origin pay gap translates to up to $11,000 in lower annual earnings." This is why it is so important to remember to weight for class privilege when you are thinking about things like hiring decisions.

It is so easy to default to the people who went to elite schools all their life and sailed through various graduate programs and got those fancy titles and ascended to fancy companies without considering the pathway that was cleared for them to do so, and the attitude they brought into every room they walked into. Going out of your way to find people who are from those lower income backgrounds, who did have to go farther and work harder to get half of what those people did, is a good way to ensure that you're not just repeating some of these oppressive dynamics in your own life. Yes, it may take you long to fill, for example, a hiring position, but ultimately, if we want to start changing the default settings that we operate on in terms of how we perceive people, how we perceive credentials, how we perceive resumes, it can only be done at the individual level.

It's one thing to talk a big talk about diversity. It's another thing to not even consider class as one of those axes of diversity. At the end of the day, although most Americans are not wealthy, the way the wealthy move through the world shapes almost everything around us, from policies to financial wisdom to expectations in job interviews.

And while it can feel overwhelming to fight against some of these things, and, yes, a lot of it will have to be done at the policy level, in our own lives, we can start to correct for our underlying misconceptions, our biases, and our tendency to favor the experience of the privileged. Checking the inherent privilege around even the most basic assumptions can be a great step to making sure that we're not unwittingly recreating an oppressive class dynamic. But until next time, comrades, don't forget to hit the Like and Subscribe button, and the Join button, and to come back every Monday, Tuesday, and Thursday for new and awesome videos.

Bye.