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The other day I received a notification on my smartphone from a major online retailer advising me that “We don’t want you to miss out on these amazing deals”. I dismissed the notification for what it was: an attempt to part me from my hard-earned money.
Most of us receive marketing messages of this kind every day. They are designed to tap into our innate desire to avoid loss and gain immediate gratification. Some marketing messages are obvious, but many others are more subtle.
Developing high self-esteem and daily control over spending is key to becoming and staying financially free. It sounds simple in theory, but it isn’t always easy in practice, as my own experience shows.
I was listening recently to a podcast interview of someone I know and respect. When asked what single piece of technology he couldn’t do without he named his noise cancelling headphones. Before hearing this I had never considered that I needed a pair of noise cancelling headphones.
As a professional speaker I travel a fair bit and I also write most days, so I told myself that I could do with a decent set of noise cancelling headphones to listen to music as I work and to block out background noise. I had told myself a story to give some logic to justify an emotionally driven purchase.
I duly logged on to the Which? app to find the best buys. I chose a top-rated model and clicked through to buy it from an online retailer at a cost of £325. The headphones arrived a few days later and I started to use them. I quickly felt stupid for buying them.
Quite apart from the amount of money involved — what was I thinking of, spending £325? — I felt very conspicuous wearing the headphones in public. As someone who doesn’t like overt displays of wealth, I felt that people might think I was trying to show off or seek their approval. The headphones also symbolised to me wasteful spending and my moment of weakness. I felt immense regret for my silly purchase and decided to return the item and request a full refund.
The retailer refunded me immediately, even before they had received back the headphones. Online shopping makes it easy to return things as well as buy them. But it’s far better to avoid impulse spending in the first place than to have the resolve to return regretted purchases.
Much of the media and marketing industry propagates the illusion that spending more means living better. However, there is an extensive body of research which shows that, beyond meeting basic lifestyle needs, people who have a highly materialistic orientation and lifestyle generally have a lower level of wellbeing than people who don’t. Research also suggests that some people are more susceptible to marketing and overspending than others.
Those who have not had their basic needs for security and safety met in childhood are much more likely to have lower self-esteem and feel the need to seek the approval and acceptance of other people when they are adults. This can manifest itself as an elevated focus on materialism, whether that’s earning money, buying possessions or seeking social status, recognition or validation from other people through spending.
We are also susceptible to a higher focus on materialism and associated overspending when we feel sad or depressed. Apart from a lack of nurturing in childhood or cases of clinical depression or severe mental illness, this can arise when we suffer an emotional trauma such as the death of a close relative, redundancy or acrimonious divorce.
A friend of mine splurged £63,000 — all his savings — on a flash sports car after his divorce when he was 54, despite living in temporary accommodation and having erratic earnings. Buying the car was a reaction to his need to feel better about himself following his ex-wife’s rejection and to have external validation from others, in the form of a succession of women he met via online dating.
Those who have the most extreme emotional deficiencies from childhood or a life trauma should seek professional therapy or counselling, to help them repair and improve their self esteem and sense of identity. It is only by feeling safe and secure emotionally that these individuals will be able to reduce the need for acceptance by others and the overspending that often accompanies it.
To reduce materialistic thoughts and desires there are two good questions you can ask yourself whenever you make big purchases and when you set up your yearly spending plan.
- Do I really want and need this thing for this amount of money now?
- What can I not now do as a result of spending this money on this thing?
Framing spending in terms of the opportunity cost — what it will stop you doing — is a powerful way to thwart the psychological games that marketers play to get you to spend now.
In a recent interview about his new book The Laws of Human Nature, US author Robert Greene explains that humans are irrational beings by default.
“We descended from chimpanzees. It’s the fact that we tend to react to what’s immediately in front of our face . . . And we tend to always want things to be easier to take the path of least resistance. We all have that lower part of our nature and it’s a lot stronger, but at the same time, there’s a higher self that we’re straining to become. And maybe I’m being optimistic, but I’m saying that everybody has that desire to reach the higher self.”
Reaching your higher self involves being intentional about your money choices, whether that relates to working, spending, borrowing or investing. There are many things that you can’t control about money but what you can control is your attitude to it and your daily actions.
So why not make 2019 the year when you aim to miss out as much as possible? Reducing your materialistic tendencies is highly likely to make you happier — and the good news is it will cost you nothing.
Jason Butler is an expert on financial wellbeing and author of “Money Moments: Simple steps to financial wellbeing”; Twitter: @jbthewealthman
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