Cross Class Friendships: Why Having Friends with Money is a Good Thing for Long Term Wealth and Security
While you should never try to keep up with the Joneses, it may be a very good idea to be friends with the Joneses. A new study strongly suggests that the key to reducing poverty is friendships between the rich and the poor.
The research discovered that poor children who live in an area where people have more friendships across class lines significantly increases how much they earn in adulthood. The study, Social capital II: determinants of economic connectedness was massive. It looked at the Facebook friendships of 72 million people (84%) of U.S. adults aged 25-44.
This new research is another proof point that mixing with people who have characteristics that you desire can be a good thing.
Cross Class Friendships and Economic Connectedness Are the Best Determinants of Economic Mobility
It had been previously observed that some neighborhoods across the U.S. were better than others at achieving economic mobility, but researchers did not know why.
This new analysis finds that cross class friendships is the biggest determinant in doing better in life. Cross class friendships are more important than school quality, family structure, job availability, or a community’s racial composition.
And, the idea was tested in multiple different ways, controlling for different factors. The results were the same: the more economic connectedness, the better an area is at lifting people out of poverty.
Cross class friendships result in an increase in future incomes of 20% on average.
Cross class friendships occur at different rates depending on where you live. They are more common in some metropolitan areas like Seattle, Minneapolis, Salt Lake City & the San Francisco Bay Area and throughout the coastal Northeast. But, friendships between the rich and poor are less common throughout most of the Southeast. And, there are more mixed results in the Southern California region and in the Chicago area.
The New York Times has a map showing the prevalence of cross class friendships by zip code.
If you are reading this blog, you are probably not a child and you are less likely to be considered poor. So, you may think that the research doesn’t apply to your own economic struggles. However, there are parallels to consider.
Previous research has found that who you are friends with can influence your health and wealth. Studies have shown that people who have friends with high financial intelligence become more financially intelligent themselves.
- Have you ever teamed up with a friend for work outs and seen better results from the camaraderie? (If you have friends that work out, you are more likely to work out.)
- Has networking helped your career?
- Did you ever get great tips and support for raising kids on the playground after school?
Money is a somewhat taboo topic in the United States, but talking about it – especially with people more knowledgeable than you – can increase your know-how. Learning how other people manage their personal finances can help you do better. You definitely don’t want to keep up with the Joneses. You want to stay true to your own values, goals, and priorities. However, you may learn valuable lessons from the Jones that can help you achieve the life you want to live.
Not sure how to start the conversation? Get ideas from these articles:
The research does not delve into the why, but people theorize that exposure to different economic classes can expose you to useful ideas.
When you talk to different kinds of people, you gain tidbits that can help you succeed. People like you know roughly what you know. People unlike you will expose you to new ideas, concepts, ways of thinking, and more.
When you talk to different kinds of people, you gain tidbits that can help you succeed. People like you know what you know. People unlike you will expose you to new ideas, concepts, ways of thinking, and more.
There is no evidence that cross class friendships harm the economic prospects of the wealthy. And, some sociological research suggests that this type of relationship can increase empathy and creativity through exposure to different ideas and experiences.
For people who want clarity about their choices today and their financial security tomorrow, NewRetirement is a financial planning platform that gives people the ability to discover, design and manage personalized paths to a secure future.
The NewRetirement Planner was voted the Best Retirement Planner by the American Association of Individual Investors-AAII and Forbes Magazine calls it “a new approach to planning.”
Our goal is to make high quality low cost financial guidance available to everyone. More than 200,000 people representing more than $200 billion in wealth currently trust the system to make the most of their money and time. The platform can be co-branded or white labeled for partners. Additionally, the company provides API access to companies who wish to embed planning functionality within their own site.
A debate has simmered in the world of Alzheimer’s research and treatment: Should the disease’s definition be expanded to…