Buy What You Need, Not to Impress

My first car was a baby blue 1980 Chevette. Starting the car involved using a manual choke and feathering the gas pedal. It was prone to stalling out at stoplights and couldn’t climb hills when the air conditioning was on. A blanket covered the rotted back seat that flopped forward with sudden stops. That car was the antithesis of cool.

Having to feather the gas pedal in the school parking lot is never hip. But my fourteen-year-old mind reasoned that having a car phone might be. That’s probably why I used the points I earned selling products for the Spanish Club to buy what looked like an authentic car phone. I don’t know what I expected, but I was disappointed when the phone arrived and looked like a child’s toy.

It’s laughably incongruent, and a little embarrassing, that I imagined a fake car phone was my ticket to coolness. Nevertheless, reflecting on this story makes me think about the problem of trying to present a certain image of ourselves, when the reality is altogether different. The stakes in real life are much higher, though.

There’s a name for this kind of behavior; it’s known as compensatory consumption. Compensatory consumption is defined as an attempt to offset deficiencies or a lack of self-esteem by spending money, often on so-called status symbols. Research suggests that people are most likely to engage in compensatory consumption when they experience a feeling of powerlessness. This feeling could be a result of getting passed up for a promotion at work or struggling to make friends, for example.

Whatever the reason for the behavior, compensatory consumption often ends up as an attempt to buoy your image among peers. Perhaps it’s taking a trip you can’t afford because you don’t want to disappoint the friends who have invited you. Or maybe you offer to pick up the lunch tab, even when it will bust your budget. Buying a pricy gift or throwing a lavish party—because you don’t want to appear cheap—fit into this category too.

Scrambling to pay your monthly bills may be a short-term consequence of compensatory consumption. In the long-term, you could end up getting stuck with payments that you can’t afford to make. Maybe most significantly, making decisions based on how others perceive you can chip away at your overall economic well-being. It can also keep you from reaching your personal financial goals.

The best way to avoid the trap of conspicuous consumption is to know what you want. Your goals, not marketing messages or pressure from those around you, should be the roadmap you follow.

CCCS/ACCE –American Center for Credit Education
Carey Denman