Luxury, status, and desire are the main things which have been explored for decades. This topic has been intensely discussed by experts trying to find the connection between money and happiness for more than two decades.
Most people purchase goods which they don’t even need as a way of communicating their current status to others. But this only gives them happiness for a short period.
So, have you ever been caught up by this trap? Have you ever purchased a product that you don’t need, and you are probably still paying for it? Are you one of those persons of whom Warren Buffet believes that “one would soon sell the goods they need if they start purchasing items they don’t need”?
This write up will inform you of the significant reasons why you would buy luxury items you can’t afford, and what you should do to stop the habit.
Many consumers consider cheap goods as inferior due to inconsistency. Most of them would instead purchase a particular asset by taking a loan, just to experience the joy of having it. This is based on how we often look at the positive sides of a product while ignoring its drawbacks. For instance, look at how this works for the benefit of the most expensive companies such as Apple. Most users will stay awake for the entire night waiting for the latest iPhone or MacBook release, irrespective of its price.
There is another class of people with low esteem issues who purchase luxurious products to improve it. Researchers Liselot Hudders (Researchgate account) and Mario Pandelaere (Researchgate account) from Gent University tell more about this in their research on how having a taste of luxury affects satisfaction with life.
It was found out that some women who bought expensive shoes and handbags to boost self-esteem, and express their style. The study also revealed that other women purchase those products as a way of preventing women who might steal their men.
The current market is filled with many products, which are hard to identify whether they are fake or genuine. For this reason, most people consider the higher priced goods as the genuine ones.
This also flies to the same idea yet again. The products are identical, and they perform the same roles. So, who else would notice that it’s cheap unless you tell them?
There are many reasons why you should stop buying the expensive things which you don’t need. They will drag you to debts, and in no time you may be in a severe debt chain hard to escape.
Use these tips to maintain good financial discipline.
People purchase luxurious products for different reasons. However, all of them are linked to the emotions related to expensive goods. Irrespective of whether we are financially stable or not, we often purchase the goods to gain acceptance from other people and also show how financially successful we are.
Now that you understand that expensive purchases are connected to psychology, the way forward is to defeat down those emotions and focus on buying what you can afford!
Mario Pandelaere (Researchgate account) from Gent University is a skilled researcher who focuses on Social Pshychology, Consumer Behaviour and Social Marketing in his studies.
Liselot Hudders Researchgate account) is an assistant professor in marketing communication and consumer behavior at Ghent University Gent University and director of the Center for Persuasive Communication.
LaToya Irby (@latoyairby) is a credit card expert with more than 12 years experience in financial reporting. She is also a writer for the top financial outlets such as the Chicago Tribune and The Balance
Amy Fontinelle (@AmyFontinelle) is a personal finance expert and writer Investopedia. She has more than ten years experience in the industry, and she currently writes about insurance, blockchain, and economics.
Raven’s genuine interest in behavioural economics and her expertise in psychology, acquired during her Master of Professional Studies (MPS) in Applied Behavioral Economics at Dyson Cornell College of Business make her the perfect candidate to approach all the personal finance topics through the perspective of an individual’s psychology.