Today we will be talking about how the hard times affects the people with different income levels in society, The Riches, The Poor’s & The Middle Class.
Before we start let’s clear, what it’s means when we say Rich or Poor or Middle Class.
If you are in the top 20 percent of the earners, you are rich, you have multiple sources of income, you can maintain your current standard of living for the rest of your life, without working a single day from today.
You are financial literate, you know what you are doing. Work is optional for you, you actually like what you do, you don’t have to think while shopping because you can afford it, there is a big difference between buying and affording, you are happy with your current reality, and wants to go further on the road you have been travelling so far. So now you got the idea what it means to be actually rich.
If you are in the bottom 20 Percent, you are poor, you are most likely to be illiterate, you don’t have a good paying income source, you unable to meet your daily necessities, you struggle every single day to put the food on the table, you are forced to work by your situations & you particularly don’t like what you do.
Now comes the Middle Class, if you are not in the top 20 percent and in the bottom 20 percent you are in the Middle Class, you have a high paying job, you are well educated and have a undergraduate or post graduate degree, you are good in what you do, you live on paycheck to paycheck and have some saving, investments aside for the future, you have a retirement plan, but you have to keep working to maintain your current standard of living, you enjoy good food, clothing, an mileage car, which you can afford. You got the picture, right.
In time’s like Lockdown or National Emergency, Economies slows down, GDP slows down, Stock Markets goes down, overall economic activities slows, resulting in a halt like situation, because of it money flow comes down to the minimum level causing a reduction in demand for luxury goods, and the normal goods too.
In times like this everything goes on sale, property price goes down, stock markets tanks. You can buy anything on discount and these discounts are not like the others which you sees on the shops, while passing down the road, these are the real and heavy discounts,
For example a property which was of £100,000 before can now be available for £40,000 or £50,000, Stocks which were trading on £2000 can now be available at a price of £900 or £1100 or close enough.
The property is the same as it was before, the stock is the same as it was before, the one thing which has changed is the price, and the cause of change in price is The Perception of the peoples, Middle class peoples.
That’s when Rich starts buying.
These are the times when rich peoples goes on shopping assets, because the assets are now cheap, which will make them even more rich in the times to come.
Whenever there is a depression or recession, there is a transfer of wealth.
Now talk about the the poor, how this affects them.
Poor people’s are not in the position to do anything, their situation becomes worse than before, and are totally depends on the policies of the government, for there necessities.
Now comes the majority of the population, the Middle Class,
These are the peoples who are most affected by these situations in both ways, it mostly depends on their Financial situation, education and Their Perception of Reality. If they perceive the situation rightly beforehand and prepare for it, they can join the upper club otherwise lower club is also waiting for them.
What do we mean when we say that
1. As you are well educated, formally, you are earning good, you’re in a better position than the most, you should educate yourself and understand how the things works in the economy, how these changes affects you, so read more, learn more, educate yourself Financially, because when you know your numbers, you will do great.
MONEY IS A NUMBERS GAME, WHEN YOU KNOW YOUR NUMBERS, YOURS CHANCES TO WIN THE GAME INCREASES EXPONENTIALLY.
2. You can live your life as you are living, without knowing what is happening around you, in the economy. And let it leave to the fate, and do nothing. But when it will hit you, you will join the bottom club, and you can’t blame others for this because everyone has to take the responsibility for themselves.
Aim Institute of Economics 