Hello there reader,
Happy summer season!
Not long ago - last year at the same time - the things I spent most of my money on were probably not that different from the way you managed yours.
Online communities, a cozy desk chair, an extremely giga fast internet connection to ensure that there will be no lag when streaming the second season of whatever show was now most popular? Probably yes. Since our homes were the only physical reality we were experiencing, it was smart to make some upgrades to our fortresses - which were simultaneously our dungeons.
Now things are starting to recover. We can - or at least in most of the countries - go out!
And while now is a good time to spend the hard-earned cash you've saved during the cold winter and the months of isolation on outdoor experiences. The book I recently read provided a lot of insightful arguments on what not to spend your money on.
Curious to know the main thing we spend our money on?
It's this: Spending money on things only to showcase to others how much money you have.
It sounds bizarre. Why do I want to cough cash for things only to make myself more likable and potentially look premium in the eyes of others? The answer is simple: to feel better.
We are social animals. Besides food, water, and shelter. We need social validation. We need reinforcements from others that we matter.
And how do we go about doing this? Most commonly, we spend money to showcase our self-worth. We wear bright colors and get bigger homes to express ourselves and give a glimpse to others of how our bank accounts look.
Male peacocks tirelessly show their feathers to exhibit their extravagances. We do not different. We add more luxuries to our lives and more bling on our wrists. The goal is the same: make ourselves more attractive in the social dynamics, hoping that this will lead to more future gains for us. Actually, this simple human characteristic is responsible for the fast growth of the now popular social media platforms.
But how is this habit of trying to prove to others that we matter by getting more expensive things is influencing the outflow of our money?
Well, let me tell you this, it's surely not makings things better.
And it's not only you and me. It's everyone.
As reported in the book The Psychology of Money by Morgan Housel:
"Singer Rihanna nearly went bankrupt after overspending and sued her financial advisor. The advisor responded: “Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?”
The book The Psychology of Money is now part of my Thinkers Club membership. I've created a workbook based on a title that will help you re-think the way you approach spending.