Daf Yomi, Marriage Counseling, Psychotherapy, Rabbi Simcha Feuerman, Torah and Psychology
The Psychology of Wealth and Savings
Our Gemara on amud aleph references a popular notion that wealthy people tend to be more frugal than poor people. As F. Scott Fitzgerald said, “The very rich are different from you and me.”
The psychology behind this statement is multifaceted. It may be an illusion stemming from a perceptual gap. To an impoverished person, a middle-class person might appear to be wealthy, while the middle-class person might feel far from wealthy and therefore careful with his money. Imagine an immigrant from a Third World country working for a working-class family as a housekeeper. They see the newly leased car, fancy electronics, and abundance of food as signs of extreme wealth. They must wonder why their employers are so careful when counting the wages to be paid. Yet, in the middle class, people who are living quite well relative to this person feel every penny.
On the other hand, there may be a degree of learned helplessness on the part of people who are impoverished. It doesn’t feel good to save a few pennies here and there when, inevitably, being part of the poorer segment of society, certain things will happen that will reduce or eliminate those savings. For example, a wealthy person can afford insurance and therefore protect against catastrophe, be it theft or health problems. A poor person cannot afford insurance, and therefore whatever car they drive, possessions they have, or even their house is precipitously subject to sudden loss. This provides a psychological disincentive for planning ahead because it feels frustrating and almost useless from that perspective.
On the other hand, people who have a certain degree of wealth often came about it as a result of caution and planning ahead—or, even if not, they maintain it through that process. They may indeed be more frugal and parsimonious than their non-wealthy counterparts.
In terms of current social facts, wealthy people are not particularly frugal and enjoy spending money, doing so proportionately more than poor people. However, they do seem to save more money, which is a different dynamic. Researcher Christopher D. Carroll (“Why Do the Rich Save So Much?”, The Johns Hopkins University) offers a creative and novel idea for why wealthy people tend to save more:
Rich people do not save more in order to have that money to spend at a later date in life, because the facts show that they save just as much and spend similarly when they’re older as when they’re younger. They also do not save for their heirs, because statistically, wealthy people with fewer or no children save the same amount. Here is the fascinating idea that explains why they save:
High levels of wealth offer status and power that are not dependent on consumption and continually rise far beyond the utility of consumption. For example, if someone is a millionaire, they can more or less afford the same quality of car as a billionaire. However, someone who is a millionaire has much less political clout than someone who is a billionaire. And wealthy people don’t need to spend money at all in order to have influence. Their fame, presumption of power, and “friends in high places” are not particularly dependent on how much they spend, nor do they need to do anything illegal such as bribing. Therefore, the more they save, the more power they have.
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Translations Courtesy of Sefaria, except when, sometimes, I disagree with the translation
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Rabbi Simcha Feuerman, Rabbi Simcha Feuerman, LCSW-R, LMFT, DHL is a psychotherapist who works with high conflict couples and families. He can be reached via email at simchafeuerman@gmail.com