If asked what you value spending your disposable income on most, what would you say? Would your bank account summary and credit card statements tell a different story?
Apart from the essentials (food, housing, transportation), we all keep a mental checklist of what we “can” and “can’t” afford. Essentially, this comes down to what we value. But what we don’t spend our money on can say just as much about us as the things we do spend it on.
Why we buy
In an article published in Psychology Today, Financial Psychologist Dr. Brad Klontz says that our financial values are largely shaped by our life experiences, most of which are formed in childhood. He calls these “flashpoint experiences” and believes they can either be helpful or non-helpful. For instance, if your parents valued education and intellectual pursuits, chances are you’ll also see this as a worthwhile investment. If they tended to be fearful of spending money and held back, you might adopt that financial behaviour too.
Birds of a feather
Our financial values aren’t necessarily locked into the patterns formed in our upbringing. Sometimes, they can shift depending on the social and environmental influences in our lives. Let’s say you join a social circle that regularly goes to art exhibits and galleries. This might inspire you to invest in building your own personal art collection, even if this isn’t something your family particularly valued.
Of course, the reverse can be true. You might find that, despite having certain interests or values, the influences in your life dissuade you from putting money towards those things. I have heard people say that fresh cut flowers are a waste of money because they die shortly after you buy them. But who doesn’t walk into a room and feel instantly uplifted by their sight and scent? Would you think twice about making such a purchase if, say, your partner finds it frivolous and makes comments to that effect when you buy them? This is a minor example, but could also apply to more significant spending decisions, like whether or not to pursue a passion project or take a dream vacation.
Different strokes for different folks
A report by the Office of Consumer Affairs (OCA) on the changing age structure of Canada’s consumers notes that as consumer needs change over their lifetime, so does their spending. For instance, young adults spend more on education-related expenses, whereas seniors spend more on travel.
A related OCA report on consumer spending shows that various social, economic and marketplace trends at the household level affect consumer behaviour. For example, the increasing number of senior couples who spend on recreation and entertainment indicates that they have better health and financial security than their predecessors did. The increase in average household spending on communications at all ages suggests that most Canadians value connectedness.
The report further notes that what we don’t spend money on can also reveal something about what we value. While harder to document, consumer boycotting is becoming a popular way for people to express their political views. “Boycotting has brought about a number of changes in companies’ social and business behaviour, such as the development of certain voluntary codes.* In fact, any consumer decision to stop buying a product can ultimately and substantially influence corporate strategies. New trends in the fast food industry’s offerings are one example of the marketplace’s responsiveness to consumers’ willingness to walk away.”
Our preferences can be complex and changing, and sometimes we even spend in ways that are out of character for us. But it’s important to check our spending habits now and then to make sure they really do align with our values. Dr. Klontz says that in doing so, “…we don’t just become materially richer – we become emotionally wealthier as well.”
Content Manager, T.E. Wealth
Editor-in-chief, Strategies Newsletter
*For example, development of the Canadian Standards Association’s Sustainable Forestry Management Certification System was prompted largely by the fear of European boycotts of Canadian wood products (Office of Consumer Affairs/Treasury Board 1998).
This article was published in T.E. Wealth’s Strategies newsletter, June 2019 edition. Read the full edition here.
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