I was chatting with two girlfriends the other day when one of them stated: “I am a paycheck away from living in poverty because I spend everything I earn and anxiously expect my next paycheck. I will be screwed the day my employer doesn’t pay me”. Then she proceeded to order hair extensions from one of our mutual friends. She bought different types, and colors so she could try them out in the next few months. She also told us that one of the trendiest shops in town was having a sale and from the way she spoke it was obvious she wanted to make some more purchases.
I was surprised because several packs of hair extension and additional clothes seemed far from being a priority when one feared poverty. But then I remembered that we are a generation that lives beyond its means. We are increasingly exposed to new lifestyles that lead to chronic consumerism and to “keeping up with”.
Here are a few tips to avoid the syndrome:
1. Live slightly beneath your means: one of the best pieces of advice a successful business woman gave was to live beneath one’s means. This implies that you have to act and live as if you earned less than what you actually earn. Say your revenues amount to 1,000 cedis, establish a budget as if you earned 900 cedis. That way, you always have extra money that can be used accordingly.
2. Distinguish between your NEEDS and your DESIRES: Maslow’s hierarchy of needs starts with physiological and safety needs (food, water, health, property, employment, etc.). Basically, make sure that you have your basic needs covered before you start thinking about your wants. We all have desires but it’s important to strike the balance. Spend on your desires by focusing on: (i) price: if it’s affordable and within your budget, then go for it; (ii) asset: whatever will be used for a long time, can be used on several occasions/recycled or will open up opportunities to you; and (iii) coup de coeur: once in a while, you can buy yourself something you longed for, just make sure you save for it.
3. Shop smart: Getting the latest of anything is always nice. However, don’t fall into the trap of wanting the latest in fashion, electronics or other. Instead, focus on what’s important and most useful for you (and mainly your career or business venture). You can be dressed professionally and stylishly by buying a limited number of quality classic color suits and shoes and buy a few statement pieces. Also, you don’t need a new outfit for every outing. You don’t need to buy a new Blackberry or iPhone every time there is an upgrade. Instead, choose the features you need the most and buy a new phone every few upgrades (similarly, you don’t need more than 2 phones). You don’t need the latest furniture and sono equipment in a low cost rented house or flat. You will be able to have a luxurious living room that matches the decor of a nice house or flat.
Remember that your life is built up progressively; it’s not about accumulating as much as possible as fast as possible. Don’t rush to have the best of everything just yet (unless you can afford it). Set priorities and work through your milestones while crossing off important things you have achieved. Make sure that your life keeps on getting better, your style keeps on improving and you get to see new places or have access to new opportunities.
4. You’re not in competition with anyone but yourself: I once met a Nigerian lady who left Lagos because her lifestyle was damaging her financial stability. She told me that she tried to attend every notable event, she went out frequently, she shopped ’til she dropped. She was always on the lookout for the latest lace, name brand clothes and accessories, in short everything that would make her noticeable and look “rich”. Meanwhile, she could barely afford to take care of herself and had no savings. She had to run away.
Things don’t have to be this drastic if you tell yourself that you have nothing to prove to anyone regardless of your name or your economic status. Society will make you believe that “if you’re X then you should be able to wear/do/afford y or z”. Don’t fall for it. Don’t forego your financial independence just to prove a point to others (who generally don’t care about you). You will be left behind. Keep your wealth vision in mind and try your best not to be distracted.
5. Beware of frennemies: Usually, our friends are the first ones to know about our various purchases. A frennemy is that friend who is always cheering you even when you’re sinking. She has the best arguments and compliments to boost your ego and get you to keep on spending. She is so consistent that you don’t second guess your financial decisions and even feel comfortable in them. Avoid such friends when it comes to money matters. Instead, surround yourself with other women who will encourage you to stay focused on your dreams and goals and who can speak the truth to you.