The following definition is from The Psychology of Money and Self-Control by John C. Maxwell.
The “income effect” is a phenomenon in which people are more likely to spend their earnings in the way they want to spend them. This is because money is like a drug in that it makes us do what we want. It’s like taking a drug that makes you put on makeup or go out and kill a bunch of people. If you take that drug and then you are able to do what you want to do, you become more self-controlled.
In the past, I’ve been in favor of the “pay for success” approach to our world. That is, if we have the ability to make money, we should have the ability to make our own money. This approach would be more effective when we can’t make money. In other words, we should have the ability to earn more money rather than less. Unfortunately, this is the wrong approach to take.
The income effect is when you get money for doing something that you do not want to do. When you make more money, you feel that you have more authority and less responsibility. This is true for any kind of authority. The people who have the most authority in the world, they are the people who do what they want. People who are in control of their lives, they are self-aware. They dont have to control themselves to be in control.
The only problem with the income effect is that if you have a lot of money and you want something you don’t, you tend to do what you want whether you want to or not. The key is to make your goal something you want to do and you only have to do that once. If you want something for four hours every day, you’ll want to be in charge of your life. If you want something for two weeks in the summer, you’ll want to take over the world.
Do you actually have to put money in your pocket to get a job? Yes you do.
Yes that is true. This is a tough one. It is generally accepted that the more money you have, the less money you have to spend. That is true unless you have some kind of “bad spending habits”. For example, if you have $10,000 in the bank and you spend it all on yourself, you’ll spend more than you make.
So what you essentially have is this double dose of self-awareness: you have a lot of money in the bank and you spend it all on yourself.
If you want to know how much money you make or pay your bills on a daily basis, you must stop doing something stupid like spending all your money. That is because people have been spending money on themselves far too often for too long and are now spending it on frivolous things that they use to make money. If you do that you will be spending your money on frivolous things that you do not use to make money. You need to go back to the basics.
I think that the income effect is the most important one, and it’s a concept that we have been using to help us understand money in the past. We all know it, but I feel like it’s still something that people don’t really know about. To make money you need to make a decision. You can make a lot of money easily if you choose to spend it wisely.