COMMON CENTS (SENSE)
Normally I’d write about business issues as it pertains to bookkeeping. However, I’ve decided to stir the pot so to speak. With all the news about the downturn in the economy, I though it best to focus on some serious soul searching elements of our behavior as consumers. Enjoy the article.
The more we work the more money we earn. The more money we earn, the more things we buy. Which came first, the chicken or the egg? The real question is which came first, the desire for consumption or higher earnings? This is a real paradox. There is an argument to support each as being first. But when you examine closely, does it really matter which came first. More importantly what are you going to do about the situation? What I’m really talking about here is getting honest about our financial lifestyles. Individually, consumers struggle in their own rights to stay ahead of potential financial disasters. With the economy in the condition it is today, many are taking special attention to national and global financial states. Is it because now we believe that the world feels our personal struggle? Or, are we now anxious that our perceived “cushion of comfort” has deflated?
Consumerism has reached new heights, as we find reasons to validate the choices we make. From a psychological viewpoint, one could say that our spending habits are directly related to our desires to achieve certain social status. We surround ourselves with successful people, hoping that in some way the success will “rub off” on us. In the meantime, we spend our time and energy trying to emulate what we think is success! In the short and long run, this leads to more consumption; more meals at restaurants, buying gifts, attending special functions to network, etc. Yes, I know, it takes money to make money, but at what point do we do some serious soul searching about whom we are and what our life’s purpose is? Does it really involve acquiring the best of the best through consumerism? How important is that Lexus, or the Fendi suit, or even the Dolce & Gabbana bag?
Keeping up with the Jones’ has turned the American dream into an American nightmare. Our spending habits have become our alter-egos. We have convinced ourselves that more is better. Look at how major companies have warehoused everything from purchasing cars, to grocery shopping, to outsourcing skilled labor from other countries. At some point the bubble will burst, just like the “dot com” bubble burst in the late 1990’s. Looking at our economy today, that bubble has burst again. Why is it that during times of prosperity we forget that what goes up eventually does not stay there? We ride the wave of artificial enthusiasm for as long as it will carry us. Not giving any forethought into being prepared for the cycles that the economy experiences and its impact on our lifestyle. We’re like kids in a candy store, eating all the candy we can right now, not thinking of the tooth ache that comes later.
Our perception of needs versus wants is much skewed. We are in complete denial about our spending habits and how they are directly related to the social statements we make. Even on a national scale, we can compare the spending habits of major corporations to our own households. For example, the mortgage crisis. Mortgage brokers were mesmerized by their own wheeling and dealing in unique products and the profits to be realized from selling them. In turn, the consumer, who purchased these mortgages, thought they could increase their social status by buying more house at cheaper interest rates. The end result, everyone is suffering. The mortgage industry has gone practically bankrupt as consumers are facing an all time high in foreclosures. Each side was looking only at the here and now, and forgot to prepare for the inevitable cycle.
What can we do to stop the madness?
1. Do some serious soul searching about your true purpose in life. Does it really include all the things that you’ve acquired?
2. Always have a plan, or need I say a cushion of your own. Pay yourself first.
3. Be in control of your spending habits instead of them controlling you. Impulse purchases are not an option, ever!
4. Always live below your means! Remember the Jones’ are an illusion
5. Find creative ways to save money that can include the family, such as starting your own garden, cooking more fresh meals at home together, or having game/movie night vs. going out.
6. Make sure your home, if you have one, is weather sealed to save energy.
7. Re-cycle. It’s a must for our environment. Our future generations need an earth that will continue to sustain them.
8. Join forces with an associate and barter your talents and services.
9. Stop riding on the emotional momentum of the media. It’s like having someone else living your life for you. Make sound financial decisions and stick with them no matter what is happening in the world.
10. Stay healthy mentally and physically. We perform best when our bodies and minds are in sync.
It’s all a case of mind over matter. Take control of your life and your finances. Stop playing the victim role every time an economic downturn happens. Stand strong because we all have “Common Cents”.
Jacqueline E. Ford
Financial Strategist
JE Financial Services
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Just wanted you to know that I loved this article Jacqueline!