Spending is the primary method of solving problems in modern society. But many of the methods corporations use to get you to spend your money are the same ways in which society destroys your wealth.
We live in a world where solving problems without spending money has become more difficult.
Is it intentional? I’m not sure. But it’s a primary part of our lives, and it’s here to stay.
Finding ways to avoid spending money unnecessarily is more important than ever.
This is the fourth article in the Saving Series. In this series, I share my thoughts on the balance between spending and saving, and how to avoid the money traps we face in our everyday lives.
Below are some of the ways in which society destroys your wealth, as well as what you can do to avoid these traps.
Wealth Destroyers
A fool and his money are easily parted.
Put a fool in a world that seeks to extract his wealth, and he will find himself penniless before he understands where his money went.
There are many methods with which to easily extract money from people. Once you become aware of these methods, it’s very easy to spot when businesses use them.
Subscriptions
None of us are strangers to the subscription payment model at this point. You can get subscriptions for entertainment, software, and even… supermarkets?
It seems every business is offering you to pay for access to their service or additional benefits.
There is nothing wrong with subscriptions. To their credit, they’re a convenient payment model for a service you may only want to use for a short time.
But they’re easy to forget about once you’ve set up the payment plan for them.
Wealth Destruction Method #1 – Death by a Thousand Cuts
If you have multiple subscriptions active, it’s very easy for them to form a large portion of your expenditure. Lots of small transactions will add up if ignored.
Keep track of all of your subscription services so that you know how much you’re spending each month.
If money is getting tight, subscriptions are an easy thing to cut. Many subscriptions are month-by-month, and don’t have any additional sign-up fees. This makes them easy to sign up for in future.
If you aren’t using a service, cancel it. Don’t let it take a cut of your wealth every month, forever.
Credit Cards, Debt, & “Buy Now Pay Later”
Debt is the easiest way to make someone subservient.
The easiest way to make people subservient is therefore to design a society that encourages debt.
That way you can give people what they want now, and in return receive interest from the spender. This interest often ends up costing more than the buyer anticipates, or at worst, more than they can afford.
This has progressed to the point where companies like AfterPay and even the banks have made it easier to buy on credit.
Problems arise when debts aren’t closed before buying more new things. There are many cases where this has created a debt spiral with no escape.
Wealth Destruction Method #2 – Voluntary Slavery
If you buy on credit, you are getting free money.
You may think you are getting that money from the bank, or from AfterPay. This is incorrect.
You get that money from your future self.
All of the interest you pay on that debt comes out of the money you earn in the future.
If you struggle to manage money, avoid debt at all costs.
Limit your spending only to what you need, and save diligently for the things you want.
Designer or “Premium” Goods
Corporations have combined easy access to debt with the idea of “luxury” or “designer” brands.
These brands have price tags that are massively inflated beyond the value of the item itself.
This isn’t to speak badly of designer goods. Some of them are of genuinely high quality. Many, however, are not, and are bought solely for the prestige of buying and owning a product from that brand.
This is only made worse by social media, where it seems everyone who posts wears designer brands.
This makes consumers believe that the way they “look better”, or “find a partner”, is through buying expensive things. They believe that the only way to solve their problems is to buy the solution.
Wealth Destruction Method #3 – Spend for Vanity, not Utility
We all have needs that can only be solved by spending money. But buying goods that cost more than their relative utility stands at odds with the pursuit of wealth.
There may be a need to purchase some expensive items depending on your social or professional circles. But if you wish to increase your savings and build security into your life, this must be kept to a minimum.
Find those who share the ethos of avoiding purchasing goods that cost more than their relative utility. This quality is essential to find in a partner, as the lack of this trait will destroy your wealth.
Learn to discern the quality of the goods you buy. If you can do this, you will be able to save even more money in the long run.
The Psychology of “More”
I recently wrote about the Hedonic Treadmill and how easy it is to keep buying more and more. As I wrote about previously, this ties in with what I believe is a fundamental change in society: we pursue money above all else.
There are tons of websites that sell things of dubious quality at rock-bottom prices, making it easy to buy more. You can put your money to good use getting more and more – what’s not to love?
These businesses prey on you by getting you to buy more than you need.
Wealth Destruction Method #4 – Buy More than you Need
Take a look at what you’re actually buying and decide if you need it.
Avoid buying things just because they’re on sale. Avoid buying extras if you don’t need to.1
If saving money is an issue but you enjoy buying a specific something, you may need to cut back on it. At least until your finances improve.
If saving money is the goal, then consuming less is mandatory. The means to consume less are your own; chances are you can find something to cut.
Succumbing to Peer Pressure
Friends, family, and co-workers may want to spend their money in certain ways. Sometimes, their spending habits can lead us to spend money in the same way.
It can be easy to get tied up in the spending habits of others, especially at work functions or friendship groups.
You may find yourself spending more than you mean to in order to maintain appearances. In these circles, spending can become a flex to see who can outspend the others.
You can choose to play that game if you want. Prepare to walk away penniless if you do.
Wealth Destruction Method #5 – Let Others Dictate your Spending Habits
If you want to succeed financially, you have to be willing to save your money. You have to avoid feeling pressured to spend your money to fit in, or do what your friends and family do.
Be open and honest with the people you spend your time with. If you want to save, see if you can spend time together in ways that don’t involve spending money.
If you spend time with someone who’s trying to save, find ways to spend time with them to support that goal. A movie night or dinner at home may be more palatable than a night out.
Determine how you want to live your life, and what the consequences of living that life are. If you are prepared to walk a different path, you have to be prepared for others to not follow you.
Good Old-Fashioned Scams
Businesses will try to get your money through subscriptions, buying on credit, and various methods of encouraging you to spend more than you plan to.
Another method is to stop waiting for you to spend the money, and instead just take it.
Scammers looking to steal your money will try every trick in the book to get you to part with your money. From hacking your accounts to pretending to be family members, nothing is off limits.
Usually these schemes involve trusting someone to look after your money, or paying someone for a service that doesn’t exist.
Once they have the money, they disappear and you’re left with nothing.
Things that seem “too good to be true” often are.
Wealth Destruction Method #6 – Trusting the Wrong People with your Money
Learn to discern who has your best interests at heart.
Lots of people care about your money. But you care about your financial wellbeing the most. Most people don’t care at all about your financial wellbeing.
Make protecting and preserving your money the number one priority. Ensure that it does not fall into the wrong hands.
How to Avoid Wealth Destruction
Pay Yourself First
This is a common tip amongst the personal finance community, and for good reason. Make it your goal to ensure that you put money aside as soon as you get paid.
If you can put some money aside into a savings account, you’re much less likely to try to spend that money. You should only save what you can afford to save, so that you’re not tempted to withdraw from your savings.
The purpose is to develop a habit of putting your current and future financial needs above those of others.
Be Intentional
If you want to preserve your wealth, you have to be intentional.
Avoid being nickel-and-dimed by small transactions. Take action to control how you spend your money.
Determine what matters most to you, then cut the rest out.
Reduce Consumption
Saving money doesn’t just happen. We don’t decide we need to save money, then watch as our bank accounts magically fill up.
We need to take action by avoiding spending. Reducing consumption is a non-negotiable skill to build, that will serve you in more ways than increasing your bank account.
Avoid Phantom Costs
Phantom costs are additional costs you have to pay on top of the purchase price of an item. These costs are unavoidable, and if not paid, will lead to the item being worse – ranging from suboptimal to worthless.
Say you purchase a second-hand car. You have to pay for the cost of the car, stamp duty, registration, and insurances, just to be able to drive it. In addition, you have ongoing costs such as fuel, repairs, and maintenance, as well as ongoing registration and insurance, tolls, cleaning… The list goes on.
Many products that we purchase often come with these phantom costs that aren’t considered when purchasing the initial item. As a result, you end up needing more than you anticipated to keep that product running.
Some phantom costs are unavoidable. Some are instead deliberately built into mediocre products. Learn to discern the true cost of owning things; this may not be money alone.
Prepare to be Different
Your friends, family, or co-workers spend money in a way that doesn’t align with your goals. If you want to move forward, you have to be prepared to be different.
This can have impacts on your relationships with others. But if you want to achieve your personal goals, this is a sacrifice that must be made.
Closing
There are many things in our society that can destroy your wealth. But you don’t have to buy into them.
Identify where this is happening in your own life, determine if it impacts you negatively, and act accordingly.
If you want to save more money but aren’t sure how, chances are you have fallen victim to something on this list. Review your expenses and your spending habits to see if any fall into the list above.
Saving money – especially at first – will come with sacrifice. But as you continue to roll the ball along, you’ll reach a point where you don’t even need to push at all.
Thank you for reading.
If you liked this article, please consider sharing it with someone you think will enjoy it. If you’d like to read more of my articles, check out previous posts on the blog, and follow me on X @ScottOnFire and Facebook page Scott On Fire.
- Nothing wrong with buying extra if you truly plan to use them. I recently purchased two identical pairs of running shoes. They were a good fit, and I got 50% off the second pair. Spending money isn’t the issue. ↩︎