This generation will be remembered for many things and will, in all likelihood, be the recipient of many generational nicknames, but in the context of money and finances the name “microwave mentality” fits this generation like a good pair of Levi’s. Raised by the ambitious Baby Boomers, Generation X’ers and the soon-to-be-spending-big-time Millennials have seemingly redefined the race to ‘keep up with the Joneses’. While their parents may have entered the somewhat formidable race to keep up their materialist appearances, this generation of credit crunchers is no longer happy with just keeping up. Conspicuous consumption is now all about winning the race and making sure the Joneses are left chewing dust in their three year old Audi Q5 which is, by the way, so yesterday.
The intrinsic sadness of the race to beat the Joneses is that it results in too many people spending money they don’t have buying things they don’t need to impress people they don’t like. The irony is too glaringly poignant to avoid. Rather than spending their hard-earned money on experiences which make them truly happy, their money is madly misdirected in their irrational quest for material one-up-manship. Driven by fear of losing the ill-fated race as well as envy of others’ flashy possessions, too many people exist from hand-to-mouth on the treadmill of what has now been termed ‘affluenza’ – the highly contagious human pursuit of money, wealth and material possessions. Sadly, what most competitors in the rat race fail to realise is that the race is not so much about acquiring material possession as it is about seeing who can become the most indebted with the least amount of retirement savings over the shortest period of time.
And if you think that this money mayhem is being driven from the top down, think again. The tweens and teens of the rat-racers are as much to blame for this spending frenzy as their overly-indulgent parents. The madness that some parents succumb to in order to address their kids’ demands for more, better, bigger and faster is borderline ridiculous, and it’s no wonder that the world is bleating about the cost of living. True to the nature of the ‘microwave mentality’, these kids want it all and they want it now. Not only is keeping up with the Joneses an expensive pasttime, it comes loaded with a plethora of psychological maladies that are hugely detrimental to the human psyche and which will persist long after the money is gone. Research is abundantly clear that, faced with incessant pressure to acquire more material goods and services, humans are bound to be afflicted by all or some of the following:
- An inability to delay gratification and tolerate frustration
- An ongoing difficulty to commit to anything that requires effort
- A false sense of entitlement
- A sense that approval is dependent on material possessions and social standing rather than on personal values
- Difficulty believing that people like them for who they are, which in turn leads to an inability to place trust in friendships
- Low self-esteem, diminished self-worth and lack of confidence
- A pre-occupation with the acquisition of material goods
- A decreased sense of responsibility and purpose
Human psychology in the realm of finance is nothing short of fascinating, especially when considering the results of a recent survey in Britain. When interviewing a group of 10 000 employed adults between the ages of 25 and 45, the overwhelming majority of candidates admitted that money only made them happy if they had more than their neighbours. In other words, the ability of money to make a person happy is directly related to how much a person has in relation to the rest of society. In contrast to these findings, research has also proven that most genuinely wealthy people achieved wealth by consistently living below their means. The maths is so basic it’s almost difficult to believe that needed to research it! Simply put, in order to achieve wealth, you need to spend less than you earn and save the difference.
The inherent problem with ‘affluenza’ is that it trades on two of the most dangerous human emotions in the realm of finance – fear and greed. Over and above the havoc that these two emotions can wreak in the investment markets, fear and greed are the essential ingredients that feed the human desire to keep up appearances and out-spend the Joneses. It’s fear and greed that cause humans to ogle the belongings of their neighbours and stoke the ambers of jealousy, as opposed to observing the homeless man and giving thanks for all that they have. Those afflicted by ‘affluenza’ are unable to look at people who live modestly and consider that perhaps they’re directing their surplus income towards a better and more secure retirement. Enter the ‘prosperity paradox’ – that in trying to keep up the appearance of wealth many people are in fact destroying any prospect of achieving financial freedom of any sort.
The Joneses, the media and our western culture will forever try and seduce us to surrender our values and betray what is most meaningful to us. Overcoming status envy is as simple as stepping off the treadmill. Establish your purpose in life by identifying what it is you love and value most, and then make your money work for you by channeling it towards your God-given purpose. When you find yourself doing what you love, honouring your value system and experiencing genuine fulfillment, it won’t matter that you’re embracing true happiness in last year’s jeans. Or in the words of the inimitable Dr Seuss, “Be who you are and say what you feel because those who mind don’t matter and those who matter don’t mind.”
Wishing you a wonderful Wednesday!
Categories: Lifestyle Financial Planning