When it comes to money, most people are under an illusion. This - TopicsExpress



          

When it comes to money, most people are under an illusion. This is not a provocative statement to denigrate anyone. Im being literal, e.g., Assume you are a building engineer working for a property management company making $100,000 per year. You get a 2% raise, so now you are making $102,000 per year. Most people would say they are better off after the raise. But if inflation is 3%, the $102,000 salary is worth only $98,940 in purchasing power relative to where you started. You got a $2,000 raise in nominal terms but you suffered a $1,060 pay cut in real terms. Most people would say you’re better off because of the raise, but you’re actually worse off because you’ve lost purchasing power. The difference between your perception and reality is money illusion.
Posted on: Fri, 14 Nov 2014 21:41:48 +0000

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