Obviously im talking about people who buy unecessary thjngs not about poor people who literally cant save.
Many people live above their means, not only spending their income, but living in a world of debt payments.
Assuming someone can afford the basics and have leftover money, there are a few things that cause people to spend it all and more.
1) The live for today attitude. - Here today, gone tomorrow. Run up a bunch of debt, declare bankruptcy and start again, and meanwhile had a great time. Whether complaining about inflation, or just not having an attitude of planning, this is common. Those that lived through hard times, and those of certain cultures and ethnic backgrounds have a different attitude.
2) Keeping up with the Jones's - Neighbors and the world around you have a set of toys or fancy things or activities, and people do not want to be seen as "poor". They buy the things that everyone else is buying whether it is a good value or not. MacBook Pro for example as bought because friends have one. Designer clothing!
3) Conspicuous consumption - Related to above #2, but instead is an extension to be seen as BETTER than everyone else and a feeling that one will be respected more for living in a fancy home or having a fancy car. This is the opposite of an Epicurean [Reference Epicurus - look up quotes] attitude. "Look at my gorgeous diamonds" Designer clothing.
4) Addictions - money goes to alcohol, drugs, gambling, even paying for sex, or buying for a collection to the point that cannot do anything but buy. Different from above three in that this is an illness of sorts rather than just a social personality or attitude about life.
5) Susceptible to cult and marketing - "I WANT MY MTV" as marketing went years ago. Here is Apple products, Ginsu knives and TV shopping clubs, you NEED a new computer. Things go better with Coke. A diamond is forever. Aren't You Hungry for Burger King now? Cable. It's not just more choice, it's your choice. (Council for Cable Information - Got to get every channel), Did somebody say McDonald's? Do the Dew. Do what tastes right.-Wendy's, Eat Fresh. Subway, Eat Mor Chikin! Every kiss begins with Kay. Have it your way. I'm lovin' it. It's finger lickin' good. Just Do It. Nobody can do it like McDonald's can. Nobody does chicken like KFC. There's always room for Jell-O. Thousands of possibilities. Get yours. What would you do for a Klondike bar? Where a kid can be a kid. Chuck E. Cheese's Who could ask for anything more?
BUY WHAT YOU NEED. BUT, YOU NEED TO BUY WHAT WE ARE SELLING.
Priorities and values. I saved even as a small child getting 25 cents a week allowance. I loved the way it felt to know I had choices to spend or not spend. I wasn't saving for future spending but just as a sense of freedom. My older brother spent every cent he laid his hands on the moment he got it. We would ask mom if we could go rollerskating and she would say if you have the money, two of us always had money, one didn't so we either loaned him money or we couldn't go. I had to beat it out of him a few times or take his possessions. We are all retired now, two of us have nice homes and investments, older brother is still coasting. He is living with 4th wife now and we all inherited from mom, he vacations all the time just paid to have his daughter come vacation with him, he will blow through the inheritance soon if he hasn't already but he doesn't seem to want to save for any reason. When his oldest daughter was born he didn't have furniture or diapers or anything for her, mom was upset with him but he told her only one of us has to worry about it. He just knew everything would be fine even with no planning or saving. Twenty years in the the Air Force and ended with nothing except another wife and 8 kids, now 10 kids.
You hit the nail on the head...in a round about way. What everyone should do is place a purchase in 1 of 2 columns: is it (the purchase) a WANT or a NEED?
Needs are necessary, like food, water, rent, etc.
The reason society in general are so ignorant of financial management is because they are not taught "financial management" at a young age.
IMO, schools DO NOT teach life skills...home economics (for guys) and how to shop (economically) and cook for 1 person, 2 people, etc.; banking (opening and maintaining savings & checking accounts), CDs, IRAs, how loans work; how the the stock market works. By not knowing these things the masses are ignorant about how money works.
I used to work with lots of people who were "house poor" too. I used to ask them, do you really need a $300k, 4500SF house for 2 people? Then one of them was laid off. They asked me how I did it on one income. I said, I purchased a house 50 miiles away. The prices are too good to pass up (2300SF Victorian house (built 1885) for $23k) and I don't mind being on the road for 2 hours out of the day especially since the entire drive is interstate (NO crowded roads either). The drive was unwinding time. And the house sold for double in 5 years.
I retired at 55. I still save $20k a year form my pension. My ex-co-workers are still at it.
I have noticed this my whole life. My wife and I have never made as much money as many people we know, but never seem to be worried about money. Some of my richer friends are living pay check to pay check.
Keep up the good work. When you get closer to retirement you will be sweating less than your friends. Cat food or people food? Cat food or people food?....
I saved $1.50 just yesterday. I had a coupon.
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