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Spending too much on keeping up with the Joneses

A popular quote about money and happiness states that while money cannot directly buy happiness, it can provide the means to enjoy experiences and possessions that can bring happiness. For example, one might use their wealth to buy a luxurious yacht, which can then be used to access and enjoy the natural beauty and relaxation of the ocean, bringing happiness as a result.

If you have a lot of money, it is true that you can spend it on luxurious items that bring you happiness. However, for most people, our spending is typically on everyday items like clothing, gadgets, and cars.

According to the Australian Bureau of Statistics (ABS), consumer spending is influenced by factors such as job security and economic conditions like interest rates and inflation. When the economy is doing well, it leads to increased consumer confidence and more disposable income. However, it is also important to consider the emotional aspect of consumer spending, with marketers often using phrases such as “be the envy of your friends” or “today only” to evoke feelings and drive purchases.

In our consumer-driven society, we often feel pressure to keep up with the latest trends and possessions of those around us. Everywhere we look, whether it be on television, online, or on social media, we are bombarded with advertisements and sales pitches. Influencers on social media, who often receive lucrative deals from advertisers, can also influence our purchasing decisions.

It may appear that the constant barrage of advertising in the modern world can easily lead us to lose control and end up in debt.

Unlike Yacht-guy from the quote, our finances may be more limited, but there are still ways we can stay in control of them.

Ways to ensure you stay in control of your finances

Budget

Creating a budget and sticking to it can help you make more mindful spending choices and improve your financial situation. Instead of viewing a budget as a tedious task, consider it a tool for enabling you to live your best life. By being mindful of your budget, you may choose to forego small, unnecessary expenses in order to save for more meaningful purchases and investments in the future.

The government’s SmartMoney website offers a free calculator to help you create a budget that works for you.

Debit, not credit

It is recommended to use a debit card instead of a credit card. A debit card can be connected to a bank account or have funds loaded onto it. In either case, the money spent is from your own account rather than borrowed from the bank, preventing overspending. There is also no interest to pay on the transactions.

Furthermore, it is advisable to avoid using Buy-Now-Pay-Later schemes as they can lead to accumulating significant debt without realising it.

Payment plans

Many utilities and insurance companies offer the option to set up a regular payment plan, where you pay a fixed amount on a regular basis. This ensures that you always know how much you will be paying and the payments are automatically processed. Your gas or electricity provider can assist you in setting up a regular payment plan.

Avoid social media

Have you ever noticed that after searching for something on Google, like camping equipment, you start seeing ads for tents and camp stoves on social media? This is because algorithms on the internet track your searches and help advertisers target you with ads.

We understand that it can be hard to avoid social media, but if you’re easily influenced by targeted online advertising, it may be best to limit your exposure to it for a while.

Pause

Before making a purchase, it’s important to consider whether the item is something that you really need or if it’s just a status symbol. Advertising is designed to appeal to our emotions and desire to fit in, but buying things we don’t need can put us on a repayment plan for months. Take a moment to think about whether the item is worth it before making the purchase.

If you think you need help with managing your finances, visit MoneySmart.gov.au and download their online guide, Managing your money. It contains helpful tips and advice for maintaining a budget and achieving your financial goals. Remember, as David Lee Roth once said, “Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.”