If you hang around with troublemakers as a kid, chances are, you’ll go through at least a troublemaking phase yourself.If you pal with the studious folks, then you improve your shot at good grades and habits.
Does it work with money, too? Does hanging around with rich friends beget a larger bank account? Would hanging around with less-fortunate friends mean your chances at building significant wealth are lower?Monevator takes a look.
Surrounding yourself with rich friends is a well-known strategy for making more money.By spending time with rich friends, the theory goes, you will automatically:– See having lots of money as normal– Get over negative money beliefs– Think positively about growing your finances
To give a recent example, in a major study published in 2022 a team led by Harvard economist Raj Chetty studied the social networks of more than 70 million Facebook users to see if they could correlate their social capital with their financial wealth.As Business Insider reports, out of three ways of measuring social capital:
…the only one actually linked to upward economic mobility is friendships with people from a higher socioeconomic status.In fact, if lower-income kids grew up in areas that have the same economic connectedness as higher-income kids’ neighborhoods, their future earnings increase by an average of 20%.
There’s just one snag with the strategy of having richer friends, especially in childhood.I’ll illustrate it via a slightly stylized story about an ex-girlfriend.