Hi there, how have you been? I hope you’re fine whenever you are. In this post I’m trying to talk about personal finance. No, we’re not gonna be talking about the most savvy finance things. Instead, I’m going to share some tips on the most boring thing yet I see a lot of people are oblivious to it. Let’s talk about wealth killers.
Do you sometimes find it difficult to save money? Even though you are trying to be mindful of your spending, you still find it really difficult to be consistent with the saving part. Maybe, you fall for wealth killers. It is the stuff that you don’t actually need, but you buy it anyway.
Okay, a lot of you right now might be thinking that your income is just not enough these days with inflation and stuff. While we are waiting for our government to set things straight, there is no harm in reflecting on our spending habits as well.
I have listed the four wealth killers that we sometimes fall for. It is not a definite list. Feel free to add some other things to your list. The key is to point out replaceable things that drain your money, from the most obvious to the least obvious ones.
#1 : The Latest Tech
Yes, the most obvious one. In this digital age, major tech companies have been running at full speed in releasing their latest tech. I personally feel that every month, there is a new gadget out there with new features and stuff. However if you look closely at those new gadgets, you would find little upgrades from the old version of that particular gadget.
Sometimes it feels obvious to not buy the latest tech. However I found some people that, despite their (relatively) new gadget, still switch their perfectly fine gadget to the newest version. Even though their old gadget is still working just fine.
There are some exceptions though. If using the latest tech can boost your productivity, then you can consider buying it. For example, if you’re a content creator who mostly shoots your video with a smartphone. Buying the latest tech might boost the quality of your content. If that’s the case, then buying the new smartphone could serve as an investment.
#2 : Cars
Wealth killer number two in my opinion is cars. I’m going to limit this category to luxury cars and new cars. Yes you read it right, new cars are wealth killers and we’re going to talk about it later.
In today’s society, owning a nice ride is often associated with success. You can be perceived as a successful person if you have a nice car. However this kind of concept often leads us to bad spending habits on cars. I know some people who are burdened by their car loan payment. They took a hefty loan for their car mortgage when it was clear that they could barely afford it. All for the sake of being perceived as successful in front of their peers.
Going back to new cars. A short disclaimer before we continue, if the new car you want to buy is still within your budget, go for it. Now, budget is the key when dealing with new cars. For you (and most people) who don’t have the budget for a new car, buying a secondhand car is a good alternative. Most second hand cars are still in good condition. However, their price usually has depreciated a lot. All the more reason to choose second hand cars over new cars. New cars depreciate a lot in terms of price. That’s why I say new cars are wealth killers.
#3 : The Latest Trends
Another obvious yet oblivious wealth killer. Same with the case with the latest tech, the pursuit of trendy items often leads to overspending problems. In today’s consumer-driven culture, a lot of people jump into buying the latest trends even when they don’t need them. Not to mention, the emergence of social media marketing has driven a lot of people to overspend on things that are “viral”.
The “Buy Now, Pay Later” (BNPL) phenomenon exacerbates this issue by making impulse purchases feel more affordable upfront. However, the (not so) hidden danger lies in accumulating small debts over time on multiple platforms. Not to mention the hefty interests BNPL platforms charge you over time making financial stress when repayments pile up. The short-lived satisfaction of trendy items is rarely worth the long-term burden of paying them off.
Before jumping into the trend quickly, you can ask yourself whether you really need those items or not. Some trendy items only last for a short period of time. I am going to take an example from shoes. When buying a new pair of shoes, rather than buying the latest model, it’d be better to choose shoes that have a timeless design. This small adjustment may save your wallet for the long term. Trends, especially fashion items, rarely last for a long time.
#4 : Luxury Goods
The last one on the list is luxury goods. Same with cars, our society sometimes perceives successful individuals based on their belongings. High-end items like designer bags and watches are often marketed as exclusive items. While many luxury items have superior craftsmanship and quality, some brands often overestimate the value of their items.
Same with the case with the latest trends, many people jump into BNPL services to afford their lavish splurge. This can lead to mounting debt and financial instability in the long term. Particularly, if buying luxury goods becomes more about signaling wealth than actual utility. Rather than splurging your money into luxury goods, it’d be wiser to invest the money instead.
The Bottom Line
Nowadays, it has never been easier to make a purchase. With just several clicks, you can buy literally almost anything online. On the flipside, it has never been easier for companies to market and sell their product to us as well. Not to mention the allure of Buy Now Pay Later has made it easier for consumers to purchase things they couldn’t afford to begin with.
I am not saying that buying things for personal indulgence is wrong, especially if done occasionally. However, some people tend to do it excessively and harm their financial security in the long term. Avoid making purchases on things just because you want to gain the status of owning the item.
So, here we are at the end of the post. I really hope you enjoy my take on wealth killers and I hope my post can help you in some way. Remember, true financial success lies in maintaining balance and prioritizing long-term security over fleeting displays of status. Cheers!