Iâm going to go out on a limb here and assume spending is easier than saving for most.
Itâs not your fault.
The world we are living in is far more appealing and fascinating to bite into than to skip out on and stash our money away and be patient instead.
Even investing is hard for most since we attempt to predict the markets not explain it.
Yet who returns more satisfaction and profit in the end?
Short-term attention seeking day traders or long-term passive investors?
Since 80%+ of day traders loose at least 35% of their capital, it is fair to say they are enticed by this consumer driven âbuy now, pay laterâ attention seeking algo driven personalized world of get rich quick schemes.
Itâs hard to stay away from ads that sell you what you believe you need or shy away from the next greatest anti-wrinkle cream that promises to be the one and only.
There are endless traps online and I think itâs fair to say itâs harder to save and way easier to waste our money than ever before.
Guilty As Charged
Everything looks so much better than what we have right?
Why is that so?
The internet and media ad market are mainly to blame.
Since we spend a great deal of our lives online, most evidently on social media and the rest for personal matters, and work, we are almost always on an addicting platform that attempts to lure us into buying something we donât need. We are more prone to distraction, have short-term attention spans, more tired and hungrier than ever, horrific listeners, and lost our patience these days.
This is a recipe for overspending!
If you want to revenge spend from the pandemic, itâs already too late. Inflation has taken full control over all markets yet as they say, it will only go up so now or never! If you want that house, the best time to buy is in the winter months as there is less competition, more inventory on the markets, and cold weather blocking perspective buyers away from the bidding wars! Plus if youâve been aggressively saving, paying off your toxic debt, and staying safe not traveling or going out for the past 2 years, youâve earned it!
For the rest of us, we have a lot of explaining to do. Pelotons to tie-die, sour dough mix to fidget spinners, donât get me started on lock-down regrets.
Just by scrolling on Facebook, they are making $50 each quarter from you selling your personal data to targeted advertisers.
Remember folks, when the platform/product is free, you are the product!
Scared yet?
You keep them in business by lasting longer on the platform! You are very precious to them.Â
And what do you get in reward?Â
Well, thereâs a laundry list but Iâll keep it short.
-Wasted time = Flushed Money
-Regret
-Comparison
-Self hatred
-Embarrassment
-Mental drainage or build up
Facebook cherishes your eyeballs and begs you to buy anything, something to prove their worth! Thatâs how they stay alive. No advertisers, no users.
Their valuation and inherent price is driven by network effects. Facebook isnât innovative, they are clever so clever they have 3 billion hooked with 57% of the world addicted. More users on Facebook leads them to become less replaceable as a platform. Facebook is well aware they are doing more harm than good, leading to higher suicide rates amongst teenage girls and selling you lies that are fun to read as a nuclear weapon in your pocket. They entice controversy for more engagement. They choose to feed you content that confirms your false beliefs about the vaccine. It keeps them alive and your adrenaline pumping.
The way social media companies and digital companies attain value is through these networking effects. The more users they attract, the more valuable they are. As a result, these platforms need to advertise all they can to keep you on there. If Facebook isnât advertising, they go out of business and all the businesses and creatorsâ that rely on the platform do so as well.
Tip in Life: Never rely on 1 thing, including a person. Our time is finite and I believe Facebookâs is as well. Thereâs no metaverse in sight.
Otherwise, with no filtered photos or any addicting algo that is personalized to your every day wants not needs, thereâs no point in scrolling.
We are seduced to a drug we never knew was toxic to us.
Yes, Weâve Gotten To That Point
As someone who quit social media, except for LinkedIn, roughly 5 years ago to take charge of my mental sanity and time, Iâve become increasingly wary of Facebookâs practices and how they are harming people my age.
Social media is one of the best ways to waste money on absurd things. I cannot tell you how much Iâve disappointed myself and my wallet on there. Amazon or Roku doesnât help either. An abundance of options is made to make us worse decision makers and crazy good spenders. Although the use of analog systems from broadband TV to radio are on the brink of extinction, although I definitely prefer these platforms to stay sane, streaming services and social media have only filtered us to buy more.
Just look at the fancy shmancy FinTech, Big Tech players in our world today. From merchant banking to online lending, payment processors to crypto and retail trading, who needs to be on WeBull, use Coinbase, pay via Stripe and PayPal use Robinhood all at the same time to grow their wealth?
Too many accounts = too much money dispersed and not enough concentration. Not to mention privacy concerns!
In finance, simpler and boring is usually better and for GenZers and Millennials, they would benefit the most from following this classic motto coined by Buffett. By simply stashing your wealth in a passive fund, overtime it will beat out the performance by an active mutual fund by a few basis points. Stick with the reputable firms for now for ultimate capital preservation and when it comes to content consumption, follow minimal amount of companies and or creators to make sure your feed is helping not hurting you or your wallet.
Younger generations are loosing more money on new banking systems as FinTechs are betting and taking advantage of their limited fin-lit knowledge. Half of these companies are exploiting the same practices that got the Robber Barrons on Wall Street rich quick in the industrial age. FinTech just like ESG are unfortunately pretty low-value add fields and need to be fixed ASAP.
Since Silicon Valley thrives off of the saying, âmove fast and break thingsâ, we need to move slower and fix things which starts with our attention and allocation of time.
Although FinTechs seem harmless and strive to promote the democratization of personal finance to get the unbanked, banked, we need to look at them from a glass half empty. Robinhoodâs revenue from last quarter was primarily boosted from crypto and meme stock transactions. This means their customers took on excess leverage, no calculated bets, and most likely went into debt buying on margin. This is not the way to build wealth let alone save money!
Investing shouldnât be this fun and easy nor should spending.
Itâs a decision not a bet.
Sadly, whenever money is on the line, someone will try to take advantage of it and my generation are hooked on the wrong platforms. In particular, Millennials whoâve lived through 2 1/2 recessions, if you want to count the Dotcom bubble, are behind the most and the first generation severely lagging behind their parents. With the abundance of digital options and devices, inflation eroding our purchasing power, infatuation with Avocado toast and Starbucks, no personal finance education, social media influence, Netflix and Chill, and obsession with Keeping up with the Joneses online and across the block, thereâs no moving forward without properly assessing where oneâs time is headed and where their data is being sent.
Data is our most precious commodity and it is money.
Just because something is invisible such as cash and data doesnât make it indestructible.
Besides social media a.k.a Big Tech and its little cousin, FinTech, letâs observe the little annoying purchases people fall into the trap of making that do in fact severely threaten wealth accumulation overtime:
And yes, the latte effect is real. Stop the Starbucks.
-Buying a meal daily
-Not buying enough groceries and having to order UberEats for the next 7 days due to laziness and no time
-Purchasing exercise classes or fancy equipment you just needed to use during lockdown
-Not turning off the lights or keeping the heat/AC on all day when not home
-Only buying fresh new clothing straight from the manufacturer
-Overdoing it on transportation instead of walking when you can
-Paying extra for shipping when you couldâve gone to the store and bought the item(s)
-Purchasing entertainment instead of education
-Buying flight tickets when you can reasonably drive
-Renting an Airbnb or pay for a hotel instead of buying a vacation home that costs more and barely used-real estate isnât an immediate investment folks!
-Deciding to sleep in the fanciest hotel
-Jewelry for âspecial occasionsâ
-Throw out leftovers
-Buying designers and overpriced labels that arenât better quality
-Upgrading to a new gadget every time something drops at Apple
-Buy your pets cute halloween gear
-Drinks and more drinks and cheese
-Buying individual songs or Spotify Premium when ads are manageable
-Wearable gadgets
-Owning 30 sunglasses
-Getting nails done when you feel like it or hair styling too often
-Buying water bottles
-Having endless subscriptions for every possible thing in life
-Accessories and random kitchen gadgets that youâve only used once
Iâm sure you can think of purchases that really didnât need to be made. In the moment you convinced yourself but down the line, you know they are money down the drain.
Of course we all have different budgets and some choose to live the stealth wealth frugal minimalist lifestyle like myself and appreciate every little thing like Mari Kondo and others buy and toss things as they go living on the wire.
Regardless of your wealth, having less stuff ends up meaning more. Plus when you canât find something, itâs the most frustrating thing in the world!! Appreciate the things that cannot be replaced and even if you can afford anything, anytime and not worry about not being able to afford something, you still should since a clear mind = a clear life and environment.
More money shouldnât mean more stuff. Instead, it should entail having the time and privilege to focus on prioritizing what you want to do with your finite time left here on Earth.
Itâs more important than we think to have what we need not want especially with 90% of our lives lived indoors.
You can really save a lot with just a little effort and creativity too. Of course ditching the morning coffee run and walking to school versus using a 3rd of gas wonât make you a millionaire or help you rise up the income ladder overnight, but it doesnât mean it wonât provide more stability, comfort, independence, and a nice nest egg for you and your loved ones once you take that extra cash and invest it into a low-cost ETF that mirrors your favorite benchmark.
Everything adds up. Patience is a virtue.
Iâm not saying to knit your own coat or buy a bike to commute from NJ to NYC every day, Iâm saying the things that can be avoided arenât as important as they once seemed and gradually phasing them out of your life most likely wonât make difference at the end of the day.
Guard your data, focus on your time, invest wisely, and believe less = more.
Donât be the victim of your own decisions.