This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Friday, August 31, 2007

Conspicuous consumption gone wrong.

Posted by Paul
Conspicuous consumption essentially means lavish spending for the sole purpose of displaying wealth for the purpose of social status.

One thing I've always thought was kind of backwards in is the fact that if someone attains some new possession, etiquette allows (in some cases even requires) the person to show it off to their friends and family.

However, those same rules of etiquette generally agree that I'm rude if I show off the details of my financial situation (that's considered bragging, or at the very least it's considered gauche).

For example:
If I get a cool new car, then I can (and should) show it off to my friends, take them for rides, etc.

If I instead want to show off the balance in my savings account I'm a jerk.

Another example:

If I buy a house, I'm expected to hold a party so people can come and see the place.

If I invest wisely and my investments turn out well, I would be considered the worst type of rude if I were to have a "look how much money I made" party.

It's like the rules of etiquette favor conspicuous spending, but they don't really give any way to good naturedly "show off" things like saving or investing.

Take the example of getting the new car. Let's say that not only did I get a cool new car, but I financed the car at a terrible interest rate and I'm not putting any savings away because I'm making the huge payment. It's actually considered rude for someone to point that out to me or even ask those types of questions.

I don't know if other cultures view things differently, but I find it interesting that our rules of etiquette allow for the flaunting of possessions (even if those possessions were purchased irresponsibly), but don't allow us to publicize rewards reaped from smart and responsible financial decisions.

Is it just me thinking this?

1 comment:

Anonymous said...

I think that your idea that "conspicuous consumption gone wrong" is exactly right. My opinion is that consumption occurs and is celebrated because of how Americans have been brought to think of themselves (Americans are, in fact, often called "consumers"). It's easy to see how this happens. Think of the average person going through their day: They are bombarded with advertising from every angle -billboards, inside and outside of public buses and trains, sides of trucks, radio ads, television (about 1/3 of every hour, I think), and even turned into walking ads by the very labels on the outsides of their clothing. Is there any counter out there to all this? If so, I haven't heard of it.

When you contrast that to the abysmal interest an average person can earn on a savings account in any institution (which used to commonly be 5 1/4% compounded daily on savings accounts and you could withdraw it whenever you wanted without penalty) before the savings and loan mess in Reagan's years (and before banks found that getting lots of credit cards in the hands of ordinary folks and then getting them to pay back only 2% on it monthly so the bank could string out the debt for about 30 years), we are not encouraged to save unless we have at least a small bundle of money to put into a CD, where it must remain for the specified term, or there is a withdrawal penalty.

Let's face it: for those who want to consume a bank's services by placing small amounts in a savings account and building it over time, there is really no consumer friendliness.

On the other hand, we hear about "consumer confidence" and on the business pages of the newspaper we can read how consumer spending goes from month to month, somehow making the consumer responsible to spend, spend, spend, in order to prop up this economy so that investors will invest, and yada yada.

Frankly, I'm with you, and if you want to have a party to celebrate the rewards of your frugality, count me in. Maybe you can start a trend.