At some point, you may have come across the term consumer mentality. It’s the mindset many of us have, whether we realize it or not.
And it’s no surprise that consumption of material items become so important to us, when advertisements are ingrained in our DNA from the moment we are born.
According to Forbes, digital marketing experts estimate that most Americans are exposed to around 4,000 to 10,000 ads each day.
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And as someone who works in marketing full-time, I see the value of advertising, but also think it’s a bit out of hand too.
However, I think that is only a piece to our mostly-developed consumer mentalities.
What is the consumer mentality?
The consumer mentality is simple and most can agree it typically has a negative connotation to it. But what does it really mean to have this mindset?
I think there are two parts to the consumer mentality.
To me, part one is about owning and having material items or constantly consuming the latest and greatest.
We want the latest, the newest, and the largest, otherwise we lose interest fast. But this triggers the vicious cycle of constantly spending money to fulfill those consumption desires.
You may have even come across this quote or other variations (it was in the movie Fight Club in a variation of the below), which holds even more truth today than ever before.
“Too many people spend money they haven’t earned to buy things they don’t want, to impress people they don’t like.” — Will Rogers
Besides just wanting to fill the void of becoming bored with these possessions, it’s usually also to do a few other things:
- Keep up with the joneses (aka not get left behind what others have)
- Fulfill some instant gratification (I need it now!)
- Need to impress others of all my things (showing off)
- Addicted to spending and shopping (Oniomania)
And for part two of the consumer mentality, it’s that your only interest is to just consume, forgetting the notion that you should be producing too.
Meaning there is a lack of restricting your spending and zero thought about where money should go outside of living expenses, bills, and buying depreciating assets for temporary satisfaction.
Should you stop consuming?
This isn’t to say you should stop consuming completely as it does keep the economy running when people are buying.
Consuming and spending keeps businesses open and the money machine turning. But I’m also not an economist or well-versed in this area, so I won’t pretend I know everything about how the economy works.
Plus, why shouldn’t you treat yourself occasionally? Buying something you like or upgrading possessions with your hard-earned money is your prerogative to do so.
And not everyone needs to adopt a minimalist lifestyle to be financially savvy. Instead, learning to prioritize when to spend will be key.
What I do know is, the personal finances in America are generally pretty bad. I think a big portion of this (outside of our student debt crisis and fast rising inflation) is having too much of a consumer mentality.
I mean, just look at some of these personal finance statistics to get a taste of what is going on.
- 20% of Americans don’t save any of their annual income at all and even those who do save aren’t putting away a lot. (CNBC)
- 43% of Americans spend more than they receive each month borrow and use credit cards to finance the shortfall. (Federal Reserve)
Transition to the investor mentality
Having an extreme consumer mentality can put your finances into some serious trouble.Whether that is excess consumer debt, spending more than you make, not having an emergency fund for unexpected situations, or just not prepping for your future (retirement savings, for example).
And breaking the consumer mentality is also not easy, especially if you’ve been in this trap for years.
It’s going to take work to break the consumer habit, but transitioning to the investor mentality will be key for building your financial stability and potential wealth.
Putting bad financial habits to rest can take you a short time or may take a lot longer with some minor consumer relapses. It’s okay, because making any effort at all and realizing your consumer mentality is a problem, puts you light years ahead of the vast majority.
So why is the investor mentality the way to go?
- Helps you build and save money (Fattening your wallet and bank account)
- Eliminates high interest consumer debt (and keeps the debt off)
- Creates more financial stability
- Builds long-term wealth for your future
- Helps you get unstuck financially
The steps to develop the investor mentality
As I’ve stated above, spending money in moderation is okay. Additionally, not everyone needs to be an extreme investor where you become some expert or guru.
Instead, you should be adopting an investor mindset from the broad sense: to minimize your consumption and increase production of assets that will help you build wealth.
When I was working on fixing my mindset, I was actually stuck between a consumer and investor mentality.
I was never a huge consumer (I like nice things and still do, but rarely buy things for myself), but also was not approaching things with an investor mindset (other than contributing to a basic 401k).
Nothing below is rocket science or any special secrets. Like most of my content, it’s straightforward advice. But, these were the steps that helped me develop an investor mentality.
Actually make it a priority to make changes – If you don’t dedicate time or prioritize breaking the consumer mentality, it’s not going to happen. You are shifting your entire mindset when you want to think like an investor and it’s not something you can passively do and expect results. Like most things in life, you need to want it and willing to work towards your goal.
See where all your money is going – As you get started, you must figure out where all your money is currently going. This means making a budget, make use of other personal finance tools, and keep track of money coming in and going out. Without this picture, you’re trying to make changes in the dark. For you to begin the investor mindset, you have to be managing your finances with precision.
Evaluate why you feel the need to consume – You also need to get a good look in the mirror as well and figure out why you feel the need to consume. What feelings does making purchases do for you? How do you feel after? What is the driving force behind any excess consumption? Find the reasoning for your consumer mindset. It may not fix everything, but it can help you understand the “why’s” when you start to evaluate.
Focus on what financial goals you may have – If you start making financial goals and focus on making your goals a reality, it can help you shape your investor mindset. Of course, there is no guarantee because your mentality and commitment to your goals has to exist too. But by creating goals, writing them down, and setting a plan in motion, it can help stay the course and focused on them.
Start reading investing books – A great way to break the consumer mentality is to start reading some investing and money books. These open your mind and makes it easy to learn about great financial habits. And not all investing books are overly complicated or difficult to read. I think one of the best books to start with is Rich Dad, Poor Dad. A simple, yet informative book that set the groundwork for my shift to an investor mentality.
Practice asking yourself questions – Besides the above, you’ll need to begin thinking like an investor and ask yourself some questions when it comes to purchases. This habit won’t happen overnight, but make it a note to practice. What do I mean? Well here are some examples:
- Instead asking, “How much does it cost?” ask “What’s my rate of return?”
- Instead of saying, “I can’t afford to invest” state, “I can’t afford to not invest”
- Instead of saying, “I’ll worry about it later”, state, “I’ll set myself up now, so I don’t have to worry later”
- Instead of saying, “Look at what I can buy now,” you should be saying, “Look what my money can do for me”
Those are just some examples, but you should approach purchases and your money with strategy and how it benefits you in the long run.
My aggressive title, “Death to the Consumer Mentality” was meant to catch your eye. Again, I may be playing too much with a clickbait-type of title considering I don’t think ALL consumption should die out.
However, I find our society as a whole has a consumer mentality problem that needs to transition into an investor mentality. The financial troubles and some of data of our society is enough to backup that observation.
And I totally understand not everyone has the means currently to become an investor, even in the broader sense of the term.
But, we all have the opportunity to break the consumer mentality and get on a financial path of more financial stability and growth.
You also shouldn’t feel expected to be the next investing titan like Warren Buffett or that you should never buy anything for yourself ever again. But you should make it a priority to learn what brings you joy and how to set yourself up for a better financial life.
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