Every day we have the ability to use our dollars to vote for the kind of world we want to live in.
But managing to coolly allocate them sometimes requires a firm shift in thinking. The "system", as it is, is designed to spark instant spending, rather than thoughtful spending.
I’m not going to smack you in the face with Tyler Durden, who uncomfortably points out that we buy things we don’t need, with money we don’t have, to impress people we don’t like.
Even though it’s true (and I did).
Instead, I’m going to show you a neat way of employing a Mental Model to modify your spending behaviour and make the most of the money you’ve got!
It’s called becoming an Owner, rather than a Consumer.
This is not a competition between minimalists versus hoarders, nor is it a way of shaming folks who like to go out and get their nails done or spot themselves a $4 coffee every day.
We all earn our money to be able to do what we like with it.
Instead, this is a way of thinking about the world around you and how you can direct your money in ways that make it work for you. And how to detach your thinking from being a consumer, to one of an owner.
Investing is one way to do that; putting your money behind businesses or the ideas that power them is a powerful tool, for building wealth as well as for combating the surge of “affluenza” that makes it difficult to stem the flow of money from our bank accounts.
Let’s go through the logical steps of changing this mindframe.
Acknowledge the existing programming
We live in a world designed for you to buy stuff. It’s how economic growth happens.
It’s generally called “consumerism” and economic growth happens when businesses are thriving, and people are buying their goods and services.
That’s a good thing!
But the extent to which we are hungry for economic growth, means businesses work incredibly hard (and play on our psychology) to encourage us to keep buying things.
Which is fine if we need the things, but a lot of the time we don’t.
And when we feel compelled to buy things, we can tip over into a state of “affluenza”, which Clive Hamilton, a Professor of Public Ethics at Charles Sturt University, describes as; “a painful, contagious, socially transmitted condition of overload, debt, anxiety, and waste resulting from the dogged pursuit of more.”
That’s quite a dramatic idea, but at its heart it’s a mix of trying to keep up with the Joneses, failing to properly understand when we need something and failing to see we’re actually doing alright!
It’s about understanding that buying new shiny things won’t make us happier, rather, it might actually end up upsetting us.
Professor Hamilton explains, as individual Australians, we’re often heading to the shops for the thrill of the purchase, rather than for the pleasure gained from owning or using something.
As one marketing strategist says, “We are beyond satisfying basic demands and have moved to a tertiary level where consumption becomes leisure.”
Retailers routinely use environmental cues and psychological tricks to nudge you into spending.
For example, they’ll use music, lighting, colour or scent to prime your mood or will alter displays so you’re more likely to reach for a particular product.
Empowered: you are not inadequate
Some psychologists describe our consumptive habits as a way to achieve ‘self-completion.’
We try and complete ourselves symbolically by acquiring things that compensate for our perceived shortcomings. In other words, we’re trying to buy an identity.
We are peppered with marketing messages all day urging us to be slimmer, richer, smarter or more sophisticated, and by swapping dollars for a thing, we can take a step closer to becoming ‘better.’
Despite the barrage of advertising that tries to tell us otherwise, the more materialistic we are, the less free we are.
There’s nothing comfortable or calm about committing more of your time to work to pay for more things. Materialism robs us of autonomy and nudges us to redirect our dollars into the pockets of other people, rather than towards places that actually help us out.
Empowered: you are actually the boss
You are not too old nor too cool enough to pretend.
So, start pretending as if you were the boss. If you walk into David Jones, pretend as if you were the owner of the entire store and when you flick on Netflix, think about how much you watch and the habits of your friends and family.
As you travel about the place, pretend how you would feel as an enormous shareholder or CEO of any product or service you use.
When you are the owner of a business or project, you will be self-motivated to see problems (and ways to solve them.)
You will start to want to know what’s going on, where will this product be sold next? Will I ever pay for it again?
And you will become a quick learner. You will be able to conquer challenges and difficulties.
This kind of thinking does two really powerful things:
- It cultivates a sense of investing ownership
- And it will force you to pause before you buy things. It will instil a sense of clarity on what comes in and out of your life.
Allocating to areas that help you out
Simply put, investing is the practice of giving your money to other people, who might be able to be more productive with it than you are.
They use your money to go about their business, and if they make profits, they will return your money back to you and hopefully a bit more over time.
That said, there are risks. Not all companies are profitable, and some that start out profitable become less so.
Companies are run by people and sometimes the people are hopeless, liars or unlucky (or a mix of all three).
Sometimes things change in the market really quickly and the company doesn’t do enough to adapt.
Investing is more than just numbers on a screen, they are businesses operating in the real world and they are all hoping to make profits, generate revenue and grow.
When you’re investing in the share market, you’re a part owner of a business. When you begin applying that model to your life, you’ll begin to see opportunities everywhere!