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Spending Less: Why so much push-back?
By admin | October 5, 2007
I have noticed over the past several months a (minor) push-back against the idea of spending less money. I cannot figure out why this is? Of course nobody outright say they disagree. (It is difficult to disagree with my main concept of “spend less money than you make”).
But people still seem uncomfortable regarding the idea of cutting money that they are spending. I have some guesses why this is the case:
1.) People zero in on what they are not comfortable with:
A few weeks back I wrote an article on Ways to Cut Your Entertainment Budget. I offered several ideas that I believe to be extremely practical but I can imagine there are some people who would be uncomfortable with some of my suggestions. One being to cancel the gym membership that you might not be using or lowering the cable package and heaven forbid not have the DVR. But if someone were uncomfortable with one of my suggestions they would throw all ideas out and decide that spending less money is not for them.
2.) People believe that spending money makes the youthful:
I like this argument because it is 100% false. When people tell me that they are spending money now because they are young but will not spend as much when they are older I laugh a little on the inside.
Side note: It is IMPOSSIBLE to give financial advice to someone who is not asking for it. The only way you can help is if they realize a need, you cannot force them of this. I still do not know what it looks like to show someone of their need (you would think any unsecured debt whatsoever would be an indicator that they are in need but this is not the case)
Anyway, when people hide behind youth for spending money it is funny to me because the habits that are being created in this foundational time in life will carry on far into adulthood. If you have a full time job and are not saving money you NEED to cut some expenditures out of your life (yes that might mean get rid of the car or get into a smaller house).
3.) Equating Material Goods with Happiness:
If this were the case then Hollywood would be the happiest place on earth instead of hearing countless stories of depression from celebrities that appear to have everything they could want. This is not the case. Everything you have right now is enough to be “happy” with. When you get more, that is not what makes you happy. This story from Timothy Ferris’ The 4-hour Work Week illustrates what I mean:
An American businessman was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them. The Mexican replied only a little while.
The American then asked, “Why didn’t you stay out longer and catch more fish?”
The Mexican said, “I’ve got enough to support my family’s immediate needs.”
The American then asked, “But what do you do with the rest of your time?”
The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life, senor.”
The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds buy a bigger boat. With the proceeds from the bigger boat you could buy several boats; eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you would run your expanding enterprise.”
The Mexican fisherman asked, “But senor, how long will this all take?”
To which the American replied, “15-20 years.”
”But what then, senor?”
The American laughed, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.”
”Millions, senor? Then what?”
The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos…”
From Timothy Ferris’ The 4-hour Work Week
4.) Lastly People do not see how spending less can improve their financial situation:
I know this one sounds crazy but it is true. In America we have the concept of “we have to make more” to improve our financial situation and forget about the flip side to that. You can either spend less or make more; both have the same effect. If you read The Millionaire Next Door you are taught characteristics of the “average millionaire.” Most of us view millionaires as being someone with a high income that spends a lot of money, but that’s actually just a myth caused by pop culture. Throughout the book millionaires are described as being frugal much more than are described driven to make money, there might be something to that.
Topics: Budgeting |
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