Welcome Back Young Friends, Today’s letter is inspired by a message that someone sent me at the beginning of the year. On the surface, the message was about Birkin bags. But at the root, the message was about conspicuous consumption. In case you don’t know what a Birkin bag is, it’s a handbag. These bags are made by Hermes, and are considered the most expensive handbags in the world. In fact, they reportedly range in price from $9,000 to hundreds of thousands of dollars.
What Is Conspicuous Consumption?
Conspicuous consumption is what it is called when people purchase something expensive, mainly because they want you to see how wealthy they are, or to make you think that they are wealthier than they actually are. Put another way, people buy luxury goods as a way to display social status to others, sometimes with a goal of provoking envy in other people.
So, a handbag, which is an item designed to carry things like your money, credit cards, your phone, and other daily essentials does not need to cost thousands of dollars. Purchasing one that does is an example of conspicuous consumption.
Another example of conspicuous consumption is buying a Ferrari or Lamborghini car. These cars cost hundreds of thousands of dollars. Since driving from point a to point b does not require a car that costs as much as either of those expensive cars, it conspicuous consumption to buy them. Purchasing one is sometimes done as a way to attract dates.
In short, conspicuous consumption is the desire to show off one’s wealth or social status in a public way.
What Encourages Conspicuous Consumption?
There are a variety of things that encourage conspicuous consumption. Some of those things include:
- Advertising and marketing campaigns are everywhere. They encourage us to buy expensive things.According to what I’ve heard, we see about 10,000 ads per day online. 10,000! That’s a lot! That’s 10,000 times that you are being told things like: Buy this, if you want to be like this celebrity. Buy our product because we share your values. Or, buy this if you don;t want to miss out, you want to be cool.
- There is a desire for social status or keeping up with the Joneses. For instance, there is a trend now where young men will leave the sleeve label on a suit blazer, as a way to show off the brand. FYI: Those labels are not design elements. The labels are meant to be removed.
- Social media influencers encourage their followers to buy things. In fact, you can even buy things through an Instagram account, directly from an influencer’s feed by tapping on the photo and tapping on the words “view shop.”
Four Reasons To Avoid Conspicuous Consumption
No Conspicuous Consumption for You: Influencers Don’t Care if You Go Broke
While you may feel very connected to the social media influencers that you follow, the feeling that they have for you are not the same. Influencers will show off things that are expensive because it is part of their branding. But, even more important, they show off items because it benefits them to do so. They are affiliates of various brands. This means when you purchase things through their links, they earn money.
Many influencers are paid to make posts showing products, and to mention their products. When they are paid for posts, it doesn’t even require their followers to use a link to make a purchase. For instance, reportedly, Kim Kardashian is paid at least $500,000 for a post featuring sponsored content. Additionally, influencers don’t even buy all of the products that they show. Companies will give influencers products, so that the influencers can show the items in posts.
The bottom line is, influencers are showing products because it helps them, the influencers. They do not know you and care about you or your budget. In short, they don’t care if you go broke.
No Conspicuous Consumption for You:
You Are Not A Billboard for Brand Names
When you wear clothes and carry products with large logos, you are essentially a walking billboard for those companies. But, are those companies paying you? If you are paying for those products, you are basically paying the companies to act as free advertisers for their products.
Side Note: Look, if you are going to be a walking billboard (which it could be argued that we all are), be a walking billboard to promote your personal brand. Present yourself in a way as to help your career.
But keep in mind that your brand is more than the products you wear, carry, and use. Your personal brand includes things such as how you speak (Are you expressive or emotive?), your facial expressions, and even your manners.
No Conspicuous Consumption for You:
You Have Better Things To Do With Your Money
Many millionaires purposely look poor. While there are multiple reasons for this, there is one main reason for this. They prefer to use their money wisely. So, instead, they use their money in ways that will grow even more money. Many millionaires started early in their lives to focus on making good decisions about how to use their money to grow it, so that later they can achieve that millionaire status and live the lifestyles they desire.
I encourage you, especially in the decade directly after you graduate from school, to use your money the way that these millionaires do.
Here is a reported statistic. According to an article on LifeHacker, a dollar saved in your 20s is worth ten dollars saved in your 50s. This means that you’d have to save ten times as much in your 50’s to achieve the same amount. Now, past performance does not guarantee future returns. But, money that you save early definitely has the advantage of having the time needed to compound. So, I’d rather see you spend your money in your early years for saving and investing, than on buying super expensive stuff.
No Conspicuous Consumption for You:
You May Become A Target
Because of all of the attention drawn by luxury goods, you may end up with attention, but not the good kind.
Wearing and showing these items can make you a target. The items can make you the prey of criminals. You may get robbed or your home may be burglarized.
Some criminals seeking to profit from people’s desire to look rich create counterfeit items. So, you may end up inadvertently buying fake versions of brand named goods.
Bonus Reason To Avoid Conspicuous Consumption
Avoiding conspicuous consumption is better for the environment. Companies and influencers have a vested interest in encouraging you to buy more. “The more the better” as far as they are concerned, because their focus is on separating you from your money, and putting it into their bank accounts.
But, consider the emissions and waste created as a result of those products. From the manufacturing, to the packaging, and to the shipping of those items, producing goods contributes to straining the environment. Even the eventual discarding of products is bad for the environment. By reducing our consumption in general, we can help the world.
I am not suggesting that you shouldn’t buy anything. I am just suggesting that you buy less, and be selective. Also, when you need something, consider buying pre-owned items. ( I am a huge fan of pre-owned cars. Mine is 21 years old at the time of this writing.)
There you have it…five reasons to avoid conspicuous consumption.
So…Conspicuous consumption is not for me. It’s a no for me. No, thank you.
Whatever you choose, I am rooting for you to ultimately have financial freedom, in which you won’t have to worry about how to survive if you lose a job, etc.
Avoiding conspicuous consumption will help you get there, and has the added benefit of helping the environment. You can do it!
Hugs,
Rich Mom
Looking to read more? You can out these posts:
Building Wealth In Your Twenties
Having Fun While Building Your Wealth
What is the Difference Between an Emergency Fund and a Rainy Day Fund?
Becoming a Credit Card Deadbeat
Who is Rich Mom?
If you stumbled upon this post and you are wondering who Rich Mom is, check out my “About Rich Mom” page.
Also, please note: I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also, remember that past performance is not a guarantee of future performance.
The information shared here is not intended as financial advice, just entertainment and entertainment.