Question

Income is a steady stream of money that people receive, while wealth is a stock of money that people have accumulated. For example, a paycheck represents income, while money in a savings account represents wealth.

Would you rather:

1. Have $1 million dollars in an account, but no steady income, or

2. Have a steady income of $3000 per month, but no wealth?

In which situation do you think you would be more careful about your spending?

Answer 1

I would rather have a steady income of $3000 per month , but no wealth than $1million in an account but no steady income.

In the 1st situation i.e . Have $1 million dollars in an account, but no steady income, I would have to be more careful about spending.

Because I have the option of spending $1million dollars, I can spend the money however I want. I can spend it all in 1 month or I can spend it in 20 years. How I spend depends on how careful I am abiout spending the money.

Hence , when one has $1million , they have to be more careful about spending.

In the second case, you get a steady income per month no matter how much you save or spend. You dont have to be careful spender in this situation.