Tuesday, April 10, 2012

Spending WANTS More Than NEEDS


In today's world, the young consumers of Generation Y and Z are the top and main big spenders in brands, latest gadgets, fashion and style. These Generation Y and Z born from 1980's to the millennium digital years since both of these generations are exposed to the latest media technologies such as the World Wide Web, instant messaging, text messaging, MP3 player, smartphone, tablet computer, social networking etc. 

The young generations of Y and Z are also being pampered and spoiled with materialistic by their parents, family members and peers since they are still schooling. As such, they don't appreciate the value of hard earned money but they develop the habit to maintain their lifestyle by continuously spending and upgrading their latest gadgets and fashion in order to look good with their personalities, without thinking and saving for their rainy days. The issue of being materialistic is growing rapidly throughout the world. Apart from that, the advertising and marketing use a lot of gimmick tools to brainwash the consumers' psychology mindset from WANTS (unnecessary material things) to become NEEDS (basic survival in life). We must be able to distinguish between NEEDS and WANTS if we want to be smart money savers. 

I found this inspiring project video by Mr Thirasak Tanapatanakul and would like to give you an idea about the negative consequences of the young generations who are obsessed to the world of materialistic. He experienced with his four year old son, who was screaming crazily when he refused to fulfill his son's request for the latest smart phone. He immediately realizes that we live in a world of over-consumption by non-necessities in life. As such, he and his wife created this project to educate his children and other people to return to the basic and fundamental needs which we really need in life like food, energy, medicine and basic entertainment. 

Will you be willing to spend your quality time with your children by taking them to explore the natural environment instead of spoiling them with unhealthy lifestyle like gadgets, branded goods and television?





Top 10 Reasons People Spend More Than They Earn

Written by Clint · Filed Under Money 101, Spending  Tuesday, April 10, 2012 Source: Accumulating Money

Rule #1 of financial freedom is spending less than you earn. If you can’t do that, you’ll never be financially successful no matter how hard you work, how many hours you put in, how many promotions you receive, or how much money you make.
It’s a simple rule, and most would consider it common sense. But, the U.S. has a negative savings rate, meaning this common sense rule may not be so common place. I recently saw a statistic that claimed that about 43% of American families spend more than they earn each year.

It’s helpful to understand why people over spend, and be aware of any that might apply to you.

10.Keeping up with the Jones’ – Psychology plays a big role in our spending habits. We want to feel as successful or more successful than those around us. We spend a lot of money to keep up that image. The reality is, the neighbors probably can’t afford that new boat either.

9. Avoiding the truth – It’s easy to overspend when you don’t keep tabs on how much you have. People will go for years unaware of their true financial situation because they’re afraid to look at what kind of mess they are in. It’s easier (temporarily) to just avoid it. They’ll pay their minimums and add new credit cards as necessary ignoring the growing debt total.

8. Counting the chickens before they hatch – In National Lampoon’s Christmas Vacation, Clark Griswold made a large down-payment on his swimming pool expecting that his upcoming Christmas bonus would cover it. Instead, he was enrolled in a Jelly of the Month club. We are often similarly optimistic about incoming money. It’s spent before it’s received, and it’s often not as much as was expected nor received when expected.

7. Plastic doesn’t feel like real money – It’s common to spend more when using credit cards than cash. The experience of hading over a card that you get back is just not the same as handing over some cold hard cash and seeing it disappear.

6. Immediate gratification – It’s all around us. We’re bombarded with the immediate gratification mentality. “Instant pain relief”, “fast food”, “on demand video”, and the big financial one, “buy now, pay later”. We’re too used to getting what we want now even if we don’t know how we’ll pay later.

5. Lifestyle maintenance – Most people increase their expenses as quickly as they increase their income. The same cannot be said for decreases in income. Once we become accustomed to a certain lifestyle, it’s pretty difficult to cut back, even if our financial situation changes for the worse.

4. Poor as a child – Whether they’re trying to make up for their deprivation as a child, a fear of money being taken away that isn’t spent immediately, or a lack of financial understanding, being poor as a child is an often used excuse of overspending adults.

3. Sense of power – Spending money actually makes some people feel powerful. The more they spend, the more powerful they feel, and the only way to get that rush is to spend more money.

2. Prove self worth – Buying that fancy new car proves you are somebody, right? For some people spending makes them feel like they are worth something to the world.

1. Can’t say no – Some people feel like a failure when they can’t meet the wants of others. Whether it’s new toys for the kids, new outfit for the spouse, or a night out with the friends, some people just can’t say no, even when they can’t afford to say yes.

(Source: http://www.accumulatingmoney.com/top-10-reasons-people-spend-more-than-they-earn/)



You are what you buy? How people who spend LESS on fashion are more cool

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If you had $100 left in your wallet, would you go to dinner with friends or buy a new dress from H&M?

How you answered could define your happiness, your likability, and your overall outlook on life.

Two recent studies have come up against the old adage 'money can't buy happiness', concluding that materialistic buyers were less happy, and even less liked, than experiential spenders. 

Money can't buy happiness: Two recent studies have concluded that your overall outlook on life can be attributed to your spending habits
Money can't buy happiness: Two recent studies have concluded that your overall outlook on life can be attributed to your spending habits (Source: Daily Mail)

People generally believe that being able to purchase material possessions will improve their lives.

However, psychological research suggests that people who spend money on travel, food and other cultural experiences were able to get along better with others, feel less anxiety in social situations and had a greater overall well-being than those who spent their money on a pair of this season's shoes. 

Nearly 10,000 people answered online questionnaires about their personality and purchasing habits in a study conducted by researchers at San Francisco State University.

The results were published this January in the Journal of Positive Psychology, where researchers calculated that an 'experience shopper' had greater overall life satisfaction than a material consumer. 

One of the reasons for increased happiness for experiential spenders, is that they are risk takers, said Ryan Howell, an assistant professor at San Francisco State and the study’s lead researcher. 

'You are taking a bigger risk on a night at a new restaurant or play,' he said. 'You can’t return a trip or a meal the way you can return something from a store.'

Another reason, the researchers found, was that people felt a greater sense of vitality or 'being alive' during the experience and then later, in reflection, Howell said. 

Key to happiness: Spending $1,000 on travel instead of a new pair of designer shoes leads to greater overall well-being a new study revealed
Key to happiness: Spending $1,000 on travel instead of a new pair of designer shoes leads to greater overall well-being a new study revealed (Source: Daily Mail)

'As nice as your new computer is, it's not going to make you feel alive,' he said.

The initial joy of acquiring a new object, such as a new outfit, fades over time after the person becomes accustomed to seeing it every day, experts said. 

Experiences, on the other hand, continue to provide happiness through memories long after the event occurred.

Researchers believe their findings will be helpful in making people who naturally find themselves drawn to material purchases more aware that life satisfaction and happiness can be influenced by their spending habits.

This study reflected similar findings by researchers at the University of Colorado who found that materialistic buyers were less well-liked by their peers than experiential buyers were. 

Published in 2010 in the Personality and Social Psychology Bulletin, participants expressed negative stereotypes of materialistic people, considering them to be more selfish and self-centered than experiential people.

While these impressions were mostly attributed to the inherent reputation of materialistic people, rather than an admiration for experiential people, participants said they found the experiential shoppers more charismatic and wanted to spend time with them. 

By comparison, they found the materialistic shoppers shallow.

The stigma of materialism also led participants to dislike discussions based on materialistic, rather than experiential, purchases.

Experts also point out that people are less self-conscious when comparing experiences than they are when sharing stories of material possessions.
It will probably bother you more that your friend bought the latest


(Source: http://www.dailymail.co.uk/femail/article-2125669/You-buy-How-people-spend-LESS-fashion-cool.html#ixzz1rfw6aS59)



Chinese Teenager Sells Kidney To Buy Apple iPhone, iPad; Conspirators Charged With Intentional Injury

By Dave Smith   April 6, 2012 12:28 PM EDT   Source: International Business Times
(Photo: Reuters / Jo Yong Hak  Source: International Business Times)

On April 28, 2011, a 17-year-old boy traveled to Chenzhou City in the Hunan Province of China to sell his kidney for a new iPad 2. One year later, the boy's health is quickly deteriorating due to renal deficiency, and five conspirators have been charged with intentional injury.



"I wanted to buy an iPad 2 but could not afford it," said the boy, who is only listed by his surname, Zheng. "A broker contacted me on the Internet and said he could help me sell one kidney for 20,000 yuan."

The conspirators gave Zheng a total of 22,000 yuan (about $3,400) -- including an extra 2,200 for his troubles -- to have his right kidney removed at Chenzhou's No. 198 Hospital. China's Xinhua News Agency says one of the defendants was paid about 220,000 yuan (roughly $35,000) to arrange the transplant, of which he gave 22,000 to the boy and split the rest of the 198,800 yuan between the surgeon, the three other defendants in the case, and other medical personnel.

The boy used his surgery money to buy a new iPhone and iPad, but when Zheng's mother discovered her son with a new iPad and a disturbing scar, she called the police. Zheng tried to call back the broker, but his cell phone was reportedly powered off, and he and his mother were unable to reach him.

The trading of human organs has been banned in China since 2007. Several different factors led to the eventual ban, including accusations that the government harvested organs from executed prisoners and road accident victims. The No. 198 Hospital said they had no idea about Zheng's surgery because the department that performed the surgery had been contracted by an unnamed Fujian businessman.

Zheng currently lives in Anhui, one of China's poorest provinces that neighbors the Hunan Province. Reuters says that residents of the Anhui province typically leave to find work and a better life outside the region, but now, Zheng suffers from renal deficiency, and his health is in jeopardy.

While five individuals are charged so far, the Xinhua News Agency said "several other suspects involved in the case are still being investigated."

China is the second-largest-market for Apple, Inc., and its iPhone and iPad products have been the best-selling products in the country. iPhones start selling at 3,988 yuan (about $633) and iPads begin at 2,988 yuan ($474). China revenue, according to Apple CEO Tim Cook, accounts for more than 16 percent of the company's annual earnings.

"It's our fastest growing major region by far," Cook said


(Source: http://www.ibtimes.com/articles/324980/20120406/chinese-teenager-sells-kidney-apple-iphone-ipad.htm)



Young Consumers Pinch Their Pennies

 
Millennials were supposed to be the next golden ticket for retailers. A cohort of 70 million consumers roughly between the ages of 18 and 34, this was the first generation of Americans to grow up with cell phones and the Web. Marketers could reach them in myriad ways—tweets, Facebook pages—that were unavailable when their boomer parents started out. “Marketers thought, ‘Here come the Millennials, we’re going to have an awesome time selling to them,’” says Max Lenderman, a director at ad agency Crispin Porter & Bogusky. “They were waiting for a boom. Then comes the financial crisis, and all of a sudden the door has almost slammed in their face.”


No group was hit harder by the Great Recession than the Millennials. Their careers are stalled. They hold record levels of education debt. And an estimated 24 percent have had to move back home with parents at least once, according to a recent Pew Research Center survey. Almost a quarter of them describe lives of financial desperation, reports researcher WSL Strategic Retail. “It’s a culture shock because this generation has grown up entitled,” says Wendy Liebmann, WSL’s chief executive officer.


That’s bad news for the movie studios, clothing retailers, and home improvement chains that had hoped for better. Walt Disney (DIS) and Sony Pictures Entertainment (SNE) need Gen Y-ers to fill seats at summer blockbusters. Gap (GPS) and Abercrombie & Fitch (ANF) are counting on 18- to 34-year-olds because they typically spend big on clothes. Williams-Sonoma (WSM) and Home Depot (HD) thrive on household formation—economist-speak for marrying, having kids, and buying a home—but many cash-strapped Gen Y-ers have put those modern rites of passage on hold. Twenty percent of 18- to 34-year-old respondents in a recent Pew survey said they had postponed marriage for financial reasons, while 22 percent put off having a baby for similar reasons.


It’s easy to understand why: In 2009 households led by those younger than 35 had 68 percent less inflation-adjusted wealth than such households in 1984, according to Pew in November. That compares with a 10 percent increase in net worth for all Americans over the same period. One contributing factor: Average student loan debt for 2008 grads receiving bachelor’s degrees hit $23,000, up 35 percent from $17,000 in 1996.


 
Getty Images(7); Corbis(1); Bloomberg(1)The job climate also hurts. The share of employed 18- to 24-year-olds in 2009 was 54 percent, the lowest since the U.S. began collecting data in 1948. “This customer doesn’t pay up for product, and they might not turn into a 45- to 50-year-old who will,” says Eric Beder, an analyst at Brean Murray Carret. “Retailers need to worry about how to build a relationship with this consumer.”


Hooking this generation was always going to be a challenge. Plugged into the Web’s endless information and choices, Millennials are pickier and less brand loyal than their parents. They also came of age amid eroding respect for institutions, including corporations and brands. Even before the recession they craved authentic products—for example, buying footwear from Toms Shoes, which donates a pair to poor children for every one it sells. The Millennial credo is “buy less and do more,” says David Maddocks, who runs an eponymous consulting firm that’s advised such brands as Nike’s (NKE) Cole Haan and Keds. “Boomers were about abundance, whereas this generation is about having enough.” The disproportionate impact of the recession could make Gen Y even less acquisitive.


Carmakers have struggled to woo the group. While Toyota Motor’s (TM) Scion has the youngest buyers of any car brand, sales have been paltry. And Honda Motor’s (HMC) youth-oriented Element sold so poorly that it’s no longer offered in the U.S. Clothing chains, however, have little choice but to chase Gen Y. Americans 25 to 34 spend the most on apparel and services annually of any age group.


Gap’s namesake brand chose Millennials as its target customer in 2010 and has since run ads featuring residents in young, hip enclaves such as Austin, Tex., and done design collaborations with fashion blogs popular with younger consumers. “Based on our research, we know style is important to them and they’re willing to spend money on pieces that are ‘trend right’ yet timeless in terms of quality and style,” says Art Peck, president of Gap North America. Macy’s (M) on March 21 unveiled its own Gen Y program, saying it will use social media, mobile shopping, and merchandise designed around locales and lifestyles popular with Millennials (say, college town or first adopter) to boost sales to them.


Unfortunately, getting 18- to 34-year-olds in the door increasingly means discounting, says Beder. This age group “is only drawn in by sales and promotions,” he says. “Maybe they want to be wired and fashion-driven, but they’re not willing to pay for it.” So companies that want to attract Millennials often cut prices. MGM Resorts International (MGM) is offering spring break vacations at its Las Vegas properties starting at $29 a night with such perks as $25 buckets of beer and $1 Jell-O shots. After starting with its budget inns, MGM has expanded the deals—a room for $69 a night—to its higher-end Mandalay Bay and MGM Grand hotels.


Gen Y frugality could eventually hurt the luxury market, too, says Pam Danziger, president of research firm Unity Marketing. She says a 25-year-old who shops at Gap typically trades up to Nordstrom (JWN), Saks (SKS), and perhaps Tiffany (TIF) decades later. But today, Danziger says, “We have a group of people who are seeking only to live within their means.”


Aware that Millennials can’t afford its wares, Be & D, a New York-based purveyor of luxury bags and shoes, is layering in lower-priced goods, such as an entry-level tote for $300. The company doesn’t expect to generate many sales from Gen Y that way; instead it hopes to build brand awareness for the future. “Without that generation, we’re missing a huge percentage of sales,” says co-founder Steve Dumain. “We need to stay relevant to them and be patient as they eventually will come back.”


The bottom line: Retailers have long sought 18- to 34-year-olds. But with their wealth down 68 percent since 1984, spending is at risk.


(Source: http://finance.yahoo.com/news/young-consumers-pinch-their-pennies.html)


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