Do we all see the same color of blue?
Each passing day bring with it small new understandings into human nature and even bigger new puzzles. Ever since I remember myself I’ve had the good fortune of ranking in the top 10th percentile. Whether in SAT’s or GMAT or in terms of household income I’ve always found we averaged somewhere on the border between the 9th and 10th percentiles.
Still, ever since I remember myself we never had a brand new car or never ate in fancy restaurants aside for birthdays. Even now, when I’m relatively well off after having bought an apartment and finished renovating it, I couldn’t manage a new car on our household paychecks alone (it’d take us about 3 years of savings to get to a new car right now).
I often find myself amazed at the number of SUV’s, 4x4’s, BMW’s, Mercedes, Porsche and what not driving casually around almost taunting me with their sparkling new look. A new car is not in my list of top 10 desires but serves as a good metaphor.
It doesn’t end with cars. All around people are living in new homes, wearing top brand clothing, dine in fancy restaurant, and take expensive vacations and many other luxuries I simply can’t afford.
I realized two things this passing week which I have yet to understand in a conscious matter up until now.
The perception of money (or lack of) varies greatly
As a kid I used to wonder if everybody sees the same color of blue I do. I still don’t have the answer of course but the principle remains unchanged through life. Perception varies from person to person.
The feeling of insufficiency I feel when I save $500 a month may be a completely other feeling in other people. I’ve known people who simply couldn’t handle a positive balance on their account and had to go buy something. For them words like emergency funds and long term savings are completely strange. Aside from what savings they have embedded in they pay they simple ignore the concept of saving all together. Everything will turn out for the best is their lead motto.
My wife and I have managed to save $7,500 in an emergency fund in the past year. With the upcoming Jewish holidays in October nearly all my colleagues at work have arranged vacations and will literally leave the office empty through October. I had deliberated in length whether to go on a three week vacation with my wife or not. Such a vacation would most certainly eat away our entire emergency fund.
I’ve discussed the matter with friends at work. Nearly all of them didn’t even think about leaving the money just hanging there. I’ve often mentioned my dislike for extreme frugality and I constantly wonder whether I’m missing out on life just because I love money so much.
There’s a deterministic factor at play here. My parents have never been frugal about anything and belong to the first type of people I’ve mentioned above which simply enjoy their money. I’ve developed a taste for growing positive balances in my different accounts and act accordingly.
I could have been driving a new car right now paying 20% more through monthly installments but the overall utility I’d gain would be negative. The pleasure I’d get from driving a new BMW would be dwarfed by the feeling I’d have repaying the loan. It’s just how I am.
There aren’t as many people living the good life as we are led to believe
Perception isn’t only heterogeneous. It’s also biased. There really aren’t as many people living the good life as we are led to believe by both our brain and advertisements.
Human nature, in what seems to be a remarkably ingenious ploy of nature, leads us to always aspire to more than we already have. Naturally we look up to things rather than down. We will always notice a new shiny object we don’t have. We will forever look up to a passing by Porsche until we own one.
The other side of it is never realizing what we already have. We accumulate and gain much but we never bother to look at the more shabby cars driving by admiring our own. Again determinism comes to play: It’s just the way we’re built.
Advertisers do their best to make us think we’re missing out on something and we’d better tag along. Everyday couples (especially young couple in their 20’s and 30’s) are portrayed in situations some of us can only dream of. How can they possible afford it, you ask? They can’t. It’s staged. They’re just selling one more can of cola.
The dilemma of whether to save or consume is genuine. Group pressure doesn’t make it any easier. Still, the rough times ahead make the decision a bit easier. I feel more a bit more secured and reassured knowing we’ve got three full months of unemployment budgeted for.
I’d like to dedicate this post to one of my favorite personal finance blogs and to a mentor I’ve one-sidedly adopted: The Digerati Life. I’ve learned much on proper writing from reading the practical, extensive and exhaustive posts of The Digerati Life. Not many people truly appreciate the professional effort required to produce such quality posts.brand new car, car, emergency, eye of the beholder, fancy restaurant, fancy restaurants, household, household income, Money, perception