Hi kids,
Today I want to talk to you about the ways you are being manipulated to spend more than you have for things you don’t need.
Here are a few things you may not know.
In the study of behavioral economics, businesses are becoming better able to convince you to be better consumers. They want you to buy more stuff and buy bigger and more expensive stuff. The mantra is ‘consume, consume, and consume some more’.
What this has done is create more stress, more dissatisfaction, and more unhappiness. It has also created the need to hold down two jobs to pay for an ever-increasing debt load. This is all so you can live up to a fictitious dream created by ad agencies. And it is all so you can line corporate pockets.
Don’t believe me? Read these stats and weep.
https://www.valuepenguin.com/average-credit-card-debt (Read this if you are a statistics nut like me.)
What are you giving up by having debt?
Your most valuable asset: time. Time with your kids. Time to take a nature walk. Time to spend with the people you care about most. Time to spend with your significant other.
Time is your most valuable asset. A car, as well as any other commodity, can be replaced, but once you’ve spent a minute, it’s gone forever.
So why do so many of us forego our most valuable asset for those shiny new commodities? It’s because we’re sold on the idea that we need those commodities in order to be happy. That’s the great American lie.
Here’s what we need:
Food, water, shelter, and sleep are what all humans need to survive. That is followed by our emotional needs. Extra stuff doesn’t really fulfill either our basic or our emotional needs. The extra stuff is nothing more than the result of someone convincing you that you should have it. Now I’m not saying it’s somehow wrong to have wants if those wants are tempered with reason.
A sad, but true story.
This is the story of Sally and Jim (names changed). Both have functioning brains, both are talented, and yet, you would never guess it based on their behavior. Jim has had a good high paying job for years and yet they have accrued over $50,000 in debt over and above their mortgage. They have 0 in savings and have taken every dime out of Jim’s 401K. So now it’s approaching the time for Jim to retire, but neither of them is willing to cinch in their belts to pay off their debt. Mama Vic wants to slap some sense into them, but that isn’t going to happen. Sally thinks that somehow everything will be just fine.
Mama Vic says, “Good luck with that. Maybe a rich uncle will die and leave you a ton of money. Oh wait, all your uncles have already died.”
Another example of this kind of self-destructive behavior is happening with Jesse and Mike. This couple is in their early 20’s and each have a minimum salaried job. Mike is brilliant. However, he was never able to control his impulses. He preferred to party rather than study his college classes so failed out of school. He spends every extra dime he makes on nonessentials. Jesse hasn’t attempted to begin her education at a college or skill center. Fortunately, they have no kids. Yet.
If these two kids don’t gain marketable skills and learn to curb their spending, they’re doomed to a life of forever trying to scratch out a living. When it is time for them to retire, how much toward their retirement do you think they will have saved?
I get really snarky when I see this behavior and I see a lot of it in the United States.
Hopefully, these examples impressed upon you the importance of thinking wisely about the choices you make.
Here are questions to ask yourself before you spend your money:
Why buy a new car when you can save thousands of dollars buying a low mileage used car?
Why buy dozens of pairs of shoes? I only have two feet. I need a pair or two of good walking shoes and a pair or two of neutral colored shoes for more formal wear.
Why do I need a TV in every room in the house?
Why does every member of my family need a smartphone? Oh, could it be so my kids can spend their time texting when they should be paying attention to what their teacher is saying, or worse when they are driving?
I could go on, but you get the idea. You see, purchasing a TV or smartphone isn’t where the debt ends. Even if you pay cash for these conveniences, there are those pesky monthly bills associated with them. Remember, every dollar you spend must come from somewhere.
Some ad person has convinced you that it’s “important” to have these commodities and the credit card companies have made it easy for you to get them right now. It’s temporarily painless when they get you to forget about saving up for your wants. However, it can be financially devastating.
Know the real price of your wants
Let’s pretend you are making $10 an hour. If you have a phone bill of $50, that’s 5 hours of your time every month or 60 hours a year spent on that luxury some advertising agency or your idiot peers have convinced you to give up. Of course, if you’re making $50 an hour at your job, your time cost drops to 1 hour a month. It’s all relative.
It’s easy to see how you could suddenly find yourself having to work two jobs just to pay for your luxuries. When this happens, you no longer have time for your family or to do any of the many other things which bring you joy.
In the United States, as of 2017, 77% of Americans own smartphones including their associated monthly fees. Yet, roughly 30% of American workers earn $10 or less an hour. Somebody convinced these folks that they needed a smart phone. Hmmmm, I wonder who that would be? Seen any iPhone commercials lately?
(In this example, I’m using the smartphone, but it could apply to any other luxury as well.)
The takeaway
- If you really want a luxury item, save up for it.
- Consider any monthly costs associated with that item and look at your cost in time
- If you don’t have the willpower to pay off your credit card(s) every month, get rid of the credit card(s). These two families are doing just fine without a credit card.
- Teach your kids to work for and save for their wants. That’s called being a parent preparing a child for the world they will face in the future.
- If it still works well, keep it. Just because the new gadget has an extra bell or two doesn’t necessarily make it better despite what the ad says.
- If you don’t have the necessary skills to earn a good living, gain those skills. It’s never been easier and cheaper than it is right now. I’m going to show you how to do this in a super short book I’m writing that will step you through the process. If you’re interested in being notified when it comes out, join the Mama Vic family.
- Be grateful for all the wonders and conveniences you have that that your great grandparents couldn’t have imagined possible. Check out what comedian Louis CK says about this.
Okay kids, don’t be duped by the great American lie. Realize your most valuable asset is your time and spend it wisely on those things that are truly important. I care for each one of you and want you to have a healthy, wealthy and wise life.
