Although you should never try to follow the Joneses, it might be a very good idea to befriend them. New research strongly suggests that the key to poverty reduction is friendship between the rich and the poor.
The study found that poor children who lived in neighborhoods with more friendships beyond their classrooms had significantly higher incomes as adults. of studySocial Capital II: The determinants of economic ties were huge. The study looked at the Facebook friendships of 72 million U.S. adults (84%) between the ages of 25 and 44.
This new study is yet another proof that associating with people who have the traits you desire can be a good thing.
Cross-class friendships and economic ties are the best determinants of economic mobility
It has previously been observed that some regions within the United States are better at achieving economic mobility than others, but researchers did not understand why.
This new analysis finds that cross-class friendships are the biggest determinant of a better life. Cross-class friendships are more important than the quality of schools, family size, job availability, and racial composition of communities.
This idea was then tested in several different ways, controlling for various factors. The result was the same. The stronger the economic ties, the better the region is at lifting people out of poverty.
Cross-class friendships increase future earnings by an average of 20%.
Friendships that transcend class differ from country to country.
The frequency of cross-class friendships depends on where you live. It is more common in some metropolitan areas such as Seattle, Minneapolis, Salt Lake City, and the San Francisco Bay Area, as well as throughout the Northeast coast. However, friendships between rich and poor are less common in most parts of the Southeast. Results are also more mixed in the Southern California and Chicago regions.
In the New York Times, map Shows how friendships extend beyond class by zip code.
How this study applies to your life
If you’re reading this blog, you’re probably not a child, so you’re unlikely to be considered poor. So you might think this research doesn’t apply to your own financial struggles. However, there are also similarities to consider.
Previous research has shown that who you make friends with can influence your health and wealth. Research shows that people who have friends with high financial intelligence are more financially intelligent themselves.
- Have you ever teamed up with a friend to work out, and the camaraderie led to better results? (You’re more likely to work out if you have a friend to work out with.)
- Has networking helped your career?
- Have you gotten any great tips and support for parenting on the playground after school?
Money is a somewhat taboo topic in the United States, but talking about it, especially with someone more knowledgeable than you, can increase your know-how. Learning how others manage their personal finances can help you manage them better. You definitely don’t want to follow the Joneses. You want to stay true to your own values, goals, and priorities. But you may learn valuable lessons from the Joneses that will help you achieve the life you want to live.
Not sure how to start a conversation? Get ideas from these articles:
Why do cross-class friendships affect economic outcomes?
The study doesn’t delve into why, but it theorizes that exposure to different economic classes can expose people to useful ideas.
Talking to different types of people will give you tips to help you succeed. People like you know roughly what you know. People who are different from you will expose you to new ideas, concepts, and ways of thinking.
How do cross-class friendships affect the wealthy?
There is no evidence that cross-class friendships hurt the economic prospects of wealthy people. And some sociological research suggests that these kinds of relationships can increase empathy and creativity by exposing people to a variety of ideas and experiences.
About Boldin
Boldin is a financial planning platform that provides the ability to discover, design, and manage a personalized path to a secure future for people who want to define their choices today and their financial security tomorrow.
The Boldin Retirement Planner was named Best Retirement Planner by the American Association of Individual Investors AII, and Forbes magazine called it a “new approach to planning.”
Our goal is to make high-quality, low-cost financial guidance available to everyone. Today, over 200,000 people with over $200 billion in assets trust this system to get the most out of their money and time. The platform can be co-branded or white-labeled for partners. Additionally, the company provides API access to companies that want to embed planning functionality within their sites.
