Many young people today struggle with something I’ve blogged about before—the need for instant gratification. After all, this is America—we want it when we want it, and we want it now, even if we can't afford it.
People fail to realize what a purchase will actually cost them in the long run. Here are a few hot items most young people can’t afford but purchase anyway:
(1) The toys we deem necessities for survival: iPod, PS3, cell phone, high speed internet, cable TV, etc…
(2) Eating out: appetizer, main course, drinks, dessert, etc
(3) Driving a fancy new car
I see some different issues here, that all lead back to the same problem—most people don’t know the difference between a want and a need, nor do they have the ability to spend money on the right things—or those that add value.
Starting with the items on the list, here is my breakdown:
iPod: I purchased one. Expensive, yes; however, I use it every time I work out, so it adds value to my life. Well worth the $199-$299 price tag.
PS3: I don’t own one, and I never will. I still have a Super Nintendo, which on rare occasion, I play just for old time’s sake. But to sit in front of the new gaming systems for hours on end is beyond my comprehension. I can’t think of a bigger waste of time and money. $499 for the system; $50+ for each game; and the increase in fat cells from loafing on a sofa all day. Sorry gamers, no value added.
Cell phone: I own a cell phone with a basic plan that includes text messaging. Being away from my fiancée sucks (simply put), so the ability to communicate with her, my family, and other friends across the country remains essential. I added the text plan because throughout the day it’s nice to send and receive small messages when you can’t always be with someone. Do I own an iPhone or a Blackberry? No, because at this point in my life it will only distract me from other learning. Not to mention the huge increase in monthly expense.
High-speed internet/cable TV: Yes, I have them both. For me, high-speed internet is a must because it saves time while learning. I don’t wait for web pages to load, and I value my free time—value added. I don’t watch much television because I think it’s a waste of time, but I do watch some select channels. I enjoy watching hockey games and The History Channel, so I’ll pay the money for cable TV, although I wish there was a five channel package!
From the list above, I challenge you to do the same. Find out the things you need versus the things you want. There is no problem spending money as long as you pass the quick litmus test: (1) know what each item will cost you in the long run (opportunity cost, continuing service, etc), and (2) ask yourself if the item you are purchasing will somehow add value to your life.
Why do people feel the need to go out all the time? Personally, now that I live on my own, I would much rather cook something at home. Furthermore, it costs a lot of money to go out once a week. A decent dinner for two with all the additions we love in a dining out experience amounts to roughly $50. You can cook a nice meal at home for around $10, not to mention the leftovers that usually give you another meal or two. I know people that eat out 2-3 times per week—scary when you do the math for one month.
Don’t get me wrong here; I enjoy going out on occasion. However, if you’re someone that can’t figure out where your money goes, keep a simple budget, and you’ll probably be shocked to find how much you spend on food and drinks.
I will freely admit to you that I’ve made some mistakes when purchasing vehicles. However, I’ll never do it again! There are advantages to leasing a new vehicle; however, for most young people buying a reliable used car is the most economical choice, especially as oil nears $100 a barrel.
For all you fancy car owners, I’m sorry, but I just don’t get it. I drive a 2001 Olds Alero, nicknamed the “old man” car. I have never gone crazy over vehicles, and I never will. However, there seems to be a disconnect in society—own a fancy vehicle and you become more important. What? This may be true if you’re a professional athlete attending a world class dinner party in a tuxedo where they valet your car. I argue that a $400-$500 a month car payment is nothing but a waste of hard earned money. Now add fuel costs and insurance and your probably living beyond your means. A simple rule: If you can’t afford to drive the fancy car, odds are it won’t help your social status either.