I quite often get an idea for my blog through conversations, and this one is the result of one such chat with a friend, post an intensive exercise session, when the topic of spending habits came up. We have common friends, who we both believe, spend more than they should, and what’s worse is that (in our opinion) most of it is for show. To keep up with the Jones's rather than through a genuine desire for a particular product or service. Without getting judgmental, this is not an uncommon trait. A vast swathe of people, derive their self-esteem through their material possessions.
We all complain that this is a material world, but let us be honest, the world does judge us by our spend. Whether we like it or not, our worth is measured by the objects that we own and that surround us. We have all been seduced into this way of thinking by slick marketing and product hype in the media. Children who have mobiles are obviously better off than children who don't. Children with smart phones are better off than children with normal cell phones, and so on. We want better schools for our kids, better cars for ourselves, bigger houses etc., etc.!
One area that spend has exploded in, in the last couple of decades is on children. Whether it is education, toys or food, the focus has shifted firmly to one level above ones means. The Marketers have hit on the right nerve, by targeting the emotional angle that kids entail and milked it to its maximum. Even sensible middle class people, who probably deny themselves the small luxuries of life, cannot resist the siren call of indulgence when it comes to their children. The best clothes, latest accessories and an inability to refuse their child any wish, characterises the 21st century family.
As an example I see so many people now ferrying their infants in fancy perambulators, which cost as much as a small car. They come with built in suspension systems, brakes (brakes seriously!!!), adjustable heights, tires the size of an SUV and of course tire pumps. I really wonder whether they think that the baby notices the difference. These are used for a couple of years, after which they are either stored or given away. On the other hand, we were probably carried around on our parent’s hips, and our children were trundled around in the most basic prams available in the market. I remember we travelled half way around the world with one where the front wheels would not swivel, and we got good exercise as a result, and my daughter was none the worse for wear.
The other example is evident on any trip to the Mall, as you see today's children attired in the latest hot brands and accessories. Styled hair, make up, branded designer clothing, expensive shoes and the latest gadgets, all at their folk's expense. I really wonder whether their parents have ever had a conversation with them on the value of money, being independent and having discipline. But even more is my inability to understand how anyone can enjoy flagrantly spending other people’s money. Where is their sense of self pride and self-worth, or is it that they see this as an obligation that their parents have to fulfill?
The American model of life and excessive spend has now become so endemic that I doubt that people are even aware of the trap that they have sprung on themselves. Easy credit, low interest rates, and peer pressure have resulted in almost all of us having huge loans over our heads. Whether it is for cars or houses, education or household appliances, we borrow money to fund our desires and the Banks are laughing all the way to the .... uhmm Bank?
"Today, there are three kinds of people: the haves, the have-not's, and the have-not-paid-for-what-they-have's." - Earl Wilson
Money has become such a symbol of status, that living within ones means, and saying that one cannot afford something is almost heresy. People of limited means who actually endeavor to live within those means, often find themselves on the fringes of society. Secretly envied (probably), but publicly disdained.
Additionally, affordability is a very difficult concept for many people to understand, especially when the advertisements have got you by your emotional balls. For most people, potential future earning (however uncertain) is a guidepost for affordability. Revenue streams, unpredictability of expenses, inflation, future cash flows etc. are not concepts that most people want to wrap their heads around. And I say fantastic! More power to them!
As America’s spending power wanes, the new powers in the East, like China and India will take on the mantle. I cannot speak for the Chinese, but India is following so closely in America’s footsteps that soon it will be stepping on its toes. Branded clothes, fancy restaurants, shopping holidays, expensive cars all jostle for the Indian Diasporas attention. The culture of consumerism is spreading all over, and with it will come the next great economic boom, as the purveyors of fine objects will suck in this money to feed their factories and their shareholders.
And frankly, as many feed this engine of economic growth, others who prefer to sit on the sidelines and invest in the corporations and companies that manufacture those products, will gain from the valuations. For people who save, the next big investment break is just around the corner, as todays spoilt Teens enter the marketplace with their insatiable greed for "stuff". If this generation can live so extravagantly on their parent’s money, I can only imagine their profligacy as they start earning for themselves.
Now if only we could identify the next big fad or hit product, we could be sitting pretty and raking it in!
Savers like spenders, worriers like avoiders and planners marry dreamers.
~ Olivia Mellan
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