A college graduate who recently got his first “real” job received this bit of financial advice from his mom: “Don’t spend your money on things; spend it on making memories.”
The gist of this advice stems from what people who live long lives say on their death bed – that the things they treasure most in life are the people they share it with and the experiences they remember. Consider for a moment that the memories we tend to value are unique vacations, the time we sat up the whole night talking to our future spouse, or the backyard barbeques we had one summer with our favorite neighbors before they moved away.
Occasionally we might hearken back to a favorite possession, such as a first car. But more often than not that first car was a clunker that enabled a lot of fond memories. By contrast, how often do you hear people say their favorite memory is the time they bought their first new car and its subsequent $350 monthly payment? Almost never. In fact, we tend to buy our most expensive possessions because we grow up and need certain things – such as a nice house near good schools and a reliable car to commute to work.
But high-tech gadgets? The notorious gourmet coffee fix? Multiple television sets that send family members scurrying to separate corners of our homes after dinner? These purchases frequently emerge due to external influences, such as the desire to have what our friends have, to make a good impression, or simply for convenience.
According to industrial psychologist James Dion, our basic human nature need for gratification often drives overspending. As an advisor to the retail industry, Dion starts with a deep understanding of what makes people do what they do and then advises businesses on how to capitalize on it.
For example, he cites the latest addiction to gaming apps for mobile devices. “Consumers enjoy and engage with games because they are fun and entertaining and satisfy a basic need for reward, status, achievement, self-expression, competition and altruism, among others,” Dion observed.
Perhaps if we consider our motivations behind “needing” a new smart phone or tablet (when our current device meets our needs just fine) we can work on curbing spending behaviors as hard as retailers work to exploit them.
Recently, the National Endowment for Financial Education and the Financial Planning Association compiled a list with input from more than 300 financial planners on how you should prioritize personal finances. Topping the list was living within your means – an exercise in self-knowledge and self-discipline.
It’s simple. Some people are thrifty, others like to spend money. These values and behaviors are often shaped by our social world – the way we were raised, the influences of our parents and peers, the economic state in which we live. Also, too, is our own innate nature. Consider: If you had all the money in the world, would you live a quiet, unassuming, non-material lifestyle? Or would you buy a lot of stuff?
Obviously, none of us has “all the money in the world,” so it’s important to follow the ancient Greek aphorism, “know thyself.” Understand when you tend to overspend – on vacation, when you’re stressed out, when you’re around certain people – and take measures to counter those behaviors. For example, plan to spend a day at a museum with your perennial shopping buddy instead of hitting the outlet malls.
Whether just starting out or re-evaluating lifelong habits to adapt to today’s economic scenario, it’s important to save and grow your assets wisely to ensure you can continue making memories throughout your lifetime. Please give us a call for support and strategies to help you do just that.
Source: Woods Blog Old