Today most people bought a lot things – clothes, TVs, sandwiches. Rich people, the middle class, and people in debt buy things differently than the wealthy. They buy junk. By “junk” I mean the latest iPhone, a bigger house, a flat screen TV, or a useless SUV.
Wealthy people buy investments in their future. Robert Kiyosaki explains this concept as “assets versus liabilities” in his book “Rich Dad Poor Dad.”
The reasons normal people buy lots of things instead of investments are plentiful. Here’s what comes to mind.
- Peers buy lots of things, so it’s normal.
- People believe they’ll be happier with more things.
Unfortunately all of these reasons are pure crap! Don’t buy it. Here’s why.
Peers buy lots of things, so it’s normal
My mom used to say to me, “If your friend jumped off a bridge, would you do it too?” Well, yes, I think most people would. If you have an adventure seeking friend then you may be invited one day to go bungee jumping with that friend. This aforementioned bungee jump may take place on a bridge (that you jump from).
Seriously though, our society is based on social norms and this is a good thing. People don’t just run around doing whatever they want and acting however they want. Not only because of laws, but also because of acceptance. Humans are social creatures and naturally seek acceptance, externally and internally. Most of us have internalized acceptance of ourselves and our actions so much so that we don’t realize how much we base our own self worth on completely external and situational circumstances.
For example, if you imagine a woman sunbathing on the beach in a bikini, does it seem like a normal situation to you? If your social environment is the US or Western Europe then it’s probably normal, but in Saudi Arabia this would be out of the question. We internalize, make assumptions, and then follow the social norm on auto-pilot. This is good and normal in most cases and disastrous in the case of money management. Most people don’t know how to manage their money.
So the “why” to why most people think it’s normal to buy lots of stuff is because of what they’ve been exposed to from their parents, friends, acquaintances, or the TV shows they watch. In other words, it is normal, since “normal” is what most people do.
If you decide to be wealthy, you also decide to not be normal in a very specific way. You’re deciding to be extraordinary.
People believe they’ll be happier with more things
For those of you who read this line and think “That’s silly. I know more things won’t make me happy.” Feel free to skip to the next paragraph :) Cell phones, TVs, SUVs, new furniture, a bigger house, and eating out at restaurants are typically what people imagine when they want to be rich, so that ultimately they can be happy. It’s counter-intuitive, but these things do not provide lasting happiness. They provide a fleeting happiness that wears out. In fact we adjust to our environment in a process known as hedonistic adaptation. So yes, even if you manage to buy or inherit a 4 million dollar Lamborghini or Koenigsegg, you will get used to it and it will stop making your happy. At first you’ll be happy of course, but it won’t last. To see this in your life think about the last time you upgraded your apartment, car, cell phone, or TV. Do you still get a feeling of joy today when you think about having those things that you already have, or is it more like the same feeling you get from having a coffee table in the living room?
So why do we keep buying more things if it doesn’t make us happy? Typical reasons are we don’t know how else to feel happy, we buy things on auto-pilot without thinking about it, we have poor impulse control, or we haven’t really internalized the belief that things don’t make us happy (even though we can say it out loud).
When I say “internalizing the belief that things don’t make us happy,” I mean getting to the point that your actions reflect this belief. For example, by either having no cell phone at all (yes, that exists) or by buying the cheapest possible cell phone you can find, and similar such things. Investing or spending on things that produce lasting happiness is a good alternative. Wealthy people make good investments by investing in their own happiness.
What will you do to create lasting happiness?