Because it's impolite to broadly share what one earns, people find other ways to signal wealth and elevate status within their community. Nicer cars, nicer houses, nicer clothing etc. are just some of the ways one can signal wealth to one's peers. However when overdone, wealth signalling can lead to unnecessary and excessive spending, even to the point causing significant debt and significant loss of wealth.
Since it is part of human nature to seek status in one's community, I am not immune to participating. However, I realized long ago that I wasn't going to be able to win in every front. For most things, we choose to buy only what we need. So signalling wealth happens for only a few things. Here are some areas where I think we spent more than "need" required:
To note, I am not trying to justify our spending choices. I just wanted to acknowledge that even though I try to buy only what I need, I have spent some of our money to "elevate status," which is part of human nature. Some wealth signalling is probably normal. However, signaling wealth with every purchase or at the expense of important needs can lead to financial disaster.
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This is not financial advice. Please consult a professional advisor
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6 comments:
Unless you want to live like a monk, there will always be some non-essentials in your life: eating out, going on holiday, buying books, eating more than a cheap subsitance diet etc.
The issue is keeping the "finer things in life" under control. I give myself a fixed budget each year for luxuries (overpriced wine and the like). So long as I stick within the budget I do not lose any sleep about spending the money.
And don't forget the American love affair...the car! We waste more disposable income for the excitement of impressing someone at a stoplight that we will probably never see again in our entire lives.
@ Trainee Investor,
Great point. If non-essential expenditures are limited and budget, it can actually be very healthy. The challenge is to not let it get out of control:-)
@ Dimes,
I can empathize with the alumni contribution requests. I get several letters a year. Also, I agree with YMMV. The older I get the less importance my alma mater seems to have :-)
@ Frugal Dad,
I fully agree. To me, the waste is especially large with 48 to 60 month payment plans.
Spending more than absolutely necessary is fine at times as you said (if one can afford it). I just don't understand spending based on wanting to "elevate status." I don't see how anyone's status is elevated based on their possessions and/or spending. The qualities that impress me have to do with a person's character--not with their spending.
If you've never tried it, I recommend Tanguary Ten over Sapphire Bombay. Ten is the best gin I've ever had.
Lazy Man,
Thanks for the tip. I have not tried Tanqueray Ten yet. I'll be sure to get a bottle the next time we go to the liquor store.
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