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On looking poor

Smart Spending recently discussed a Saving Advice post on how looking poor can benefit you. The comments are great reading; a lot of the readers have anecdotes on how some snobby salesperson missed out on a great commission by passing over a person who didn’t look like he had much money to spend. There are definitely advantages to looking poor–or at least not looking rich. The original poster, Shannon Christman, lists some: it can help you negotiate, it can net you freebies and like-minded acquaintances, it can make you feel good to laugh up your sleeve at an unsuspecting salesperson.

So why don’t more people do it? Because we don’t; we go to the bar with friends when we really can’t afford it, we buy a new dress for our friends’ weddings because people we know will be there, we send our kids to school with lunch money when we should be getting financial aid.

Generally speaking, people don’t like to look poor. We like to keep up with the Jones, to look like we’re winning at life–to socially conform. “Normative influence” is the pressure we feel to be like others so that we’ll be accepted. If we look poor, we won’t look like everyone else, and then they might not accept us.

Blunt Money posted on this a while ago, saying, “For me, it’s easier to do what I really want to do when I have the money to do otherwise. I’m less concerned about what others think…But when I really had very little money coming in (there were a few years not that long ago when I made $4,000 or less per year) I was more concerned about what people thought.”

Similarly, a recent post on FAIL blog: (via Get Rich Slowly) is about someone who’s looking for a new service: “video rental store but for books.” This would be a great idea, maybe even something for a young entrepreneur to jump on…if not for the fact that we already have something called a library. (Or a used bookstore, perhaps.)

But look past the apparent tragic unawareness on the poster’s part of public services. Why, in fact, do people use Netflix instead of the library? Would people actually use a book-Netflix? I suspect they would, even if they were getting the same service for a little money rather than for free, because “only poor people can’t afford to pay for books.”

How much does your fear of looking poor influence what you do? Do you truly want that new car or shiny watch, or do you just want to look like a well-to-do member of society? If you didn’t care what other people thought, would your spending habits change?

Separating necessities and luxuries

Memorial Day Weekend is almost over. Are you satisfied with however much money you spent for it?

$4 gas prices have significantly affected people’s spending habits in a way that hitting the $3 mark didn’t, Marketwatch says. There are articles all over describing how people have been trying to save money on Memorial Day weekend–though not always by canceling plans. “You can’t make financial decisions based on happiness,” said a man whose family used their economic stimulus refund to fund their family gathering (but decided not to buy steak for it).

Money may not buy happiness per se, but it can buy some things that will make you happy–a plane ticket to see your family, or food for a birthday party, or that painting you’ve been wanting for your bedroom. And, of course, money also supplies the necessities of life–food, clothes, medication–without which we find it harder to be happy.

The problem comes in defining and obeying the line between discretionary spending (luxuries) and autonomous spending (necessities)–particularly if you are used to a certain level of discretionary spending and are finding yourself required to reduce it. (more…)

Addictions – Fatty Foods

We’ve looked at the addiction to caffeine, but are there other addictions that impact our financial and physical health?

When people are stressed, often we turn to our comfort foods. Foods that might help bring up happy memories, or just ones that we associate with relaxation.

A lot of food companies try to tap into this as well. They use different marketing tools to try and get us to associate relaxation with their chocolate brownie sundae, with their cake, or with any other “sinful” dessert treat that we “deserve”. Each of these treats comes at a cost, both to our health and to our pocketbook. Treats such as these are in excess of our ordinary food budget. A single chocolate bar a week adds up to about $50 per year. Make that a $5 dessert instead, and you’ve spent $250 on food you don’t need.

It’s easy to argue that it is needed. It’s a luxury. It’s something that makes us feel better. Well, some studies have shown that fatty food does in fact create a physiological response in the body that can help to reduce stress. So, you have something that you can eat which makes you feel better. That is definitely the definition of a comfort food, but also something to which you can become psychologically addicted. Why change your lifestyle when you can just eat something to feel better?

Now, the kicker to this is that this same positive feeling can be achieved WITHOUT the comfort foods. Comfort foods are an easy path to the result, but they are one of the many factors leading towards higher rates of obesity. This in turn starts a downward cycle of lifestyle. We then spend money to counter that downward cycle by joining gyms, buying exercise equipment and so on.

So, get out of the cycle. Rather than getting yourself a sundae for your stress, take a walk. Rather than having a chocolate cappuccino, get an extra half hour of sleep! You save yourself money in the short-term AND save your health in the long-term.