Question: Hi, Randell. I know this sounds very simple but every time I try to save up money, a new gadget comes out and makes me want to use my money in order to keep up with the trends. I think that I should be upgrading my smartphone all the time because it is related to IT. I also get pressured by my colleagues.
How do I stop the urge to buy a new smartphone all the time and have more self-control when buying gadgets in general? Hope you can help me with this. Changing this habit will definitely help me save more money in the long run.
Thanks!
Louise, 30 years old, via e-mail
Answer:
Hi, Louise. There are many factors that affect why you want to buy more expensive gadgets. It could be because you feel the need to keep up with your peers. It could also be the temporary feeling of satisfaction you get when buying a new gadget.
I also hear other people tell me that they are investing on expensive gadgets because they need them for their jobs. I don’t see buying a gadget as an investment because a gadget depreciates in value quickly and if you really need it, your employer would have easily provided it for you.
In certain instances, when you do need a gadget to perform your job, you can get better results using a cheaper alternative compared to the expensive one that you just bought. You can also choose to borrow or rent gadgets like DSLRs if you will only use them a few times.
Investment simply means that the value of what you have saved will grow over time.
Gadgets do not increase in re-sale value and depreciate fast because that is the nature of technology. For instance, buying a P35,000 smartphone because it has a sharp camera—and maybe prestige—may not be the wisest thing to do. You can buy a smartphone with the same specifications but of a different brand for P17,500.
You can then use the P17,500 difference for investing in the stock market, mutual funds, UITFs or for opening an online business that can earn you more money in the long run.
There is nothing wrong with buying top-of-the-line gadgets when your savings and cash can afford them. You can get the latest gadgets when your multiple streams of income are already earning money. This can justify your getting the latest model since the amount will just be a fraction of the total earnings that you get per month.
Personally, I like smartphones and I also like the latest ones. However, I have learned to skip models because gadgets are really wants and not needs.
People always say that finance advocates like me are cheapskates or ’kill joy’ and that we do not find pleasure on spending on wants. That’s not true.
Personally, I still buy wants because I like to reward myself or other members of the family from time to time and it can be a source of motivation.
However, buying wants—and gadgets are definitely one of them—is an issue of propriety and not an issue of buying or not buying. Buying wants should be dictated by your objectives and your cash flow. Always remember that balance is key.
And remember, you should be known for your work ethic and not for your gadgets. Make yourself valuable because of your skills and your behavior and not because of your material possessions.
Here’s a brotherly advice: Spend on wants occasionally, but save consistently. You will thank yourself in the future.