An opinion on money and spending

September 14th, 2007 • Related • Filed Under

I am often surrounded by people who are talking about how they just casually bought a new pair of heels or their ingenious plan to save up for that HDTV. The world is such that whoever has the means to achieve something will most likely use it. However, life is more complicated than going by the “If you can, why not do it?” philosophy. With a combination of what I have, observed, figured out, and have been taught, I have come up with the following opinions in regards to money and spending.

1. Do not mix up what you want and what you need. It’s a trap that most city-dwellers fall prey to. Have you ever looked at an item in the display and said “Oh, I must have that!” or seen someone else do so? According to Maslow’s Hierarchy of Needs, the order of importance of human needs descends like this: Physiological, Safety, Social, Esteem, Self-Actualization. Products like jewelery belong in the Esteem category, meaning its basically attained to make one feel better. Its fine if you can afford it, but if you find yourself starving after buying that iPhone, you might want to shuffle your priorities.

2. Is the value is more than its price? The value of a product is not confined to its price or its cost; it can be the resell value, its profiting potential, or the level of appreciation by the user. Looking at these aspects can determine if what you just purchased is money well spent. Resell value is its potential worth when selling to someone else, possibly with profit, like textbooks or real estate. The profiting potential is how it can help the user to somehow gain more than the money spent; an example being a guitar for a musician, software for a freelance designer, or a camera for a photographer. If you cannot or would not get something out that item, ensure that it has great value to YOU. A true Star Wars fan can justify collecting authentic merchandise. If you ever learned microeconomics, you’ve probably heard of similar concepts.

3. Gift certificates and its real worth A gift certificate is a convenient alternative to buy a gift for someone else, giving the recipient freedom to choose what is desirable in a specific store. However, to put it bluntly, gift certificates/cards are just like money, only more restrictive and has an expiry date. If you really cared about that someone else, wouldn’t you get something more thoughtful like a full item that suits his/her tastes?

4. Don’t be fooled by your wallet. Plan ahead on how much cash you put in your wallet. Having too much may cause you to spend more than you need, or on impromptu shopping. While its safe to have enough on you to prepare yourself for emergencies, the general rule of thumb is to think (as much as possible) before acting. A credit card can be hazardous to an impulsive person. If you are confident that you have high self-control, then prove it to yourself.

Coming from a upper-class family does not equate to a privilege to spoil yourself. If you never have to work because you don’t need to, what good are you in this world? Does the hungry, overpopulated world need another filthy rich man who buys millions of dollars’ worth of possessions that they barely use? You may not be filthy rich, but you can do your part to keep the balance from tipping over, i.e. the poor getting poorer.

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