A common belief in our society is that “standard of living” is directly correlated to the “amount of money you spend on yourself”. In other words …. Higher you spend on yourself, your family or friends – the higher is your perceived standard of living. Conventionally, the one who drives the most expensive cars, lives at the best address, dines in the best restaurants, throws the best party and holidays at the most exotic locales … has the most talked about lifestyle and standard of living. The reality TV circuits globally are full of examples for this type of talked about ‘celebrities’.
The problem with this thinking though is , we are permanently led to believe that we need more money to have a high standard of living. What we have already is either blissfully ignored or taken for granted and what improves our standard of living is that next purchase, that next holiday or that next facebook update that is liked by all.
There is ,of course, nothing wrong in spending on yourself. This is one of the most basic form of self-preservation. What is important to see is the motivation behind this spending. Broadly there are three categories of spending worth exploring:
- Spending on needs: This is the basic life preservation spend. The most important of this category is the food-house-shelter spending needed for security and well being of an individual. Anything on ensuring continuity of life or preservation of these basic needs (eg education, transportation, healthcare… etc) are also in the same category.
- Spending on wants: These are on what you ‘miss’ but are actually not already included in the ‘needs’ category above. As a society gets richer, majority of the spending is on the ‘wants’ category. To be in the business, Advertisers have learnt the trick of making you miss more, so you’d start consuming more. For example – I miss the comfort/experience of ‘seeing my favourite v-music awards show in 55 inch LED TV with Bose speakers’ or I miss/need the ‘bragging rights of a new Paris holiday/Armani dress among my facebook friends’ – so what do you think I would do next, other than buying my misery away with the above purchases?
- Spending on everything else: This is the most dangerous of all – impulsive spending on things you don’t need or don’t care – and it usually ends up in you feeling foolish, guilty or broke!