This Is a Financial Planner's Response to "My Friends Can Afford Things I Can't"
One scroll through Instagram will most likely leave you with a barrage of emotions: Why can everyone afford the Gucci sunglasses except for me? How can people my age and in my income bracket stylishly decorate their apartments and themselves? How is everyone always on vacation?
The overarching theme is a perceived lack thereof; a feeling social media is famous for inducing. But on a realistic note, why is it that the people we follow on social media (bloggers and influencers excluded) seem to be able to afford music festivals, trips abroad, and stylish new clothes while we can only budget for one of the three?
NerdWallet's Liz Weston addresses this phenomenon in a new piece for Business Insider, pointing out that when it comes to money, "you can have anything you want. You just can't have everything." She adds that "the new car, that house, and that exotic trip are the shiny end results of a series of decisions hidden below the surface. What we don't see, typically, are the trade-offs—or their consequences." In other words, you see what others want you to see, especially on social media.
There's an economic term for this kind of comparison-based spending: Conspicuous consumption. First coined by economist Thorstein Veblen in his 1899 book The Theory of the Leisure Class, it's essentially the idea that you make purchases in an effort to send social signals about your financial status. "Measuring ourselves against others can … lead people to waste money on things that aren't really important and miss out on the things that are," writes BI.
To curb this kind of spending and be able to afford what you want (instead of blowing your paycheck on whatever crosses your path), certified financial planner Lisa Kirchenbauer recommends defining your financial goals. Doing so can "help people change their behavior," she tells BI. "If they want early retirement, for example, they may discover their high spending and low savings make that impossible. If they want their goal badly enough, they're more willing to cut spending on stuff they care less about."
Head over to Business Insider for more, and share your tips for limiting "conspicuous consumption" in the comments.