Stories | December 15, 2009

Location, location, location

Why where you live could damage your wealth more than you thought

The age old adage to live within your means gets a home renovation-sized makeover in a new blog post.

Free Money Finance blogs that buying a home above your means could be "the greatest detriment to building wealth".

Where you live is key to building wealth
The author takes an extract from the book Stop Acting Rich and Start Living Like a Real Millionaire that advises living in a wealthy suburb may rub off on other spending habits. It says: "If you live in a pricey home and neighbourhood, you will act and buy like your neighbours."
So, not only are houses more expensive in desirable areas, it says, but neighbourhoods also influenced homeowners' remodelling plans. They may have an impact on the decision whether to buy new yard equipment or have a professional gardener. 
In a blog for eZonomics, Investors Chronicle economist Chris Dillow also notes the huge influence peers have on people's choices. Dillow cites Dutch research that found having a neighbour win a car "has the same effect upon the decision to get a new car as a €10,000 windfall".

Women decide when to move home
Meanwhile, researchers in the United Kingdom claim women have the final say when it comes to moving house. The Essex University study, which used information from more the 4,000 households, found couples were more likely to move if the female partner disliked the neighbourhood. Head researcher Dr Mark Taylor said: "The study does not tell us why that is, but we can make some educated guesses. Mine would be that it is about relative amounts of time spent in the home or neighbourhood. On average, it is the woman who spends more time there."

eZonomics team
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