Summary of the Key Points
This article highlights an counterintuitive phenomenon in real economics known as the “poor premium,” which challenges the common belief that the wealthy spend more and the poor spend less. In reality, the richer individuals often enjoy numerous free benefits and receive discounts on goods and services, while the poorer have to pay higher additional costs for the same items. The author uses numerous real-life examples from everyday travel, consumption, and living situations to illustrate this point, considering not only the direct monetary costs but also the hidden expenses associated with time, resource usage, and long-term wear and tear. The author offers a practical solution: ordinary people don’t need to wait to become extremely wealthy; by adjusting their consumption and cost-saving habits, they can avoid most of the unnecessary expenses.
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Detailed Explanation of Each Dimension
1. The “Poor Premium” is Not a Mystery; It’s a Form of “Reverse Exploitation”
Many people think that the “premium” refers to the extra money wealthy people pay for luxury goods. However, in the case of the poor premium, the situation is reversed: for the same services, the poor pay the full price, while the wealthy get them for almost free thanks to their privileges. For example, in VIP lounges at train stations and airports or in the executive lounges of luxury hotels, ordinary people have to pay for coffee and light meals, whereas those with premium cards can eat and drink for free, sit on sofas, and even use regular rooms without paying extra. Similarly, with credit cards, ordinary consumers incur 15% annual interest if they can’t pay their bills on time, while premium cardholders can earn points that can be exchanged for free flights and hotel stays, effectively getting discounts on every purchase.
In essence, this is a “rights-based screening mechanism” with low entry barriers. With a little effort to understand the rules, people can save a lot of money. However, most people who are financially strained don’t have the time or awareness to do this and end up paying the full price.
2. The Hidden Premium of “Lack of Time”
Many people don’t realize that “poverty” includes not only a lack of money but also a lack of freedom in time, which can be even more costly. This is especially evident in travel: ordinary workers can only travel on public holidays, when flight and hotel prices are much higher. Long waits in traffic and queues at tourist attractions result in wasted money and frustration. In contrast, those with more flexible schedules can choose off-peak travel times, getting discounts on flights and half-price hotel rooms, significantly improving their travel experience.
Even long-distance flights differ: wealthy people can fly in business class, sleep during the journey, and resume work immediately upon landing, recouping their time costs. Ordinary people, however, may suffer from discomfort in economy class and need several days to recover, wasting time that could otherwise be used for work or rest.
3. Many Unnecessary Expenses Stem from “Poor Thinking”
Many of the perceived disadvantages are actually the result of our own habits. For instance, buying cheap, low-quality goods can be more expensive in the long run due to frequent replacements and additional repairs. Cluttering our homes with unused items also wastes valuable space and money. Holding onto expired food or using poor-quality ingredients can lead to medical expenses that far outweigh the initial savings. These choices reflect a “mindset of thrift” that often leads to greater losses.
4. Ordinary People Can Avoid 90% of the Poor Premium
The author emphasizes that most people are not born wealthy, so there’s no need to wait to become rich to avoid these expenses. Here are some practical steps:
- Don’t strive for expensive premium cards; instead, earn points with regular credit cards to get free benefits like coffee, video subscriptions, or train discounts.
- Don’t focus solely on the lowest prices; choose durable, quality products that save money and time in the long run.
- Regularly dispose of unnecessary items to free up space and improve living conditions.
- Plan your travel off-peak to save on flights and hotels. Taking a few extra days off can result in significant savings.
In summary, by considering the total cost of time, health, and long-term expenses, ordinary people can avoid most of the unnecessary expenses associated with the poor premium. There’s no need to wait to become wealthy to make these changes.