One day, I watched a woman walk by in shorts emblazoned with a company’s logo—Did she pay for those? Where did she get them?
Soon, I saw this become a trend, especially among women, seemingly eager to advertise where they bought their clothes. Was it a status symbol? If so, just pin hundred-dollar bills to your backside and get the same effect!
What struck me most was the corporate strategy. Having worked in advertising, I understood the impact of company brands. These institutions were profiting from people buying their clothes, while simultaneously, getting free advertising—paid for by the consumer. Double the profit!
Storytime…
A long time ago, I had a wonderful neighbor from Germany who excelled in finance. He often shared his insights on how money should be used sensibly, and lived by those rules when managing his own household.
One day, he was buying a new car from a local dealership. Like most car dealers, they’d placed their logo on the trunk—free advertising for them.
But that didn’t fly with my neighbor.
He told them if they refused to remove it, he wanted a $250 monthly discount deducted from the total sales price, basing it on the average the life of the vehicle.
They were shocked. No one had ever questioned their practice before! But my neighbor stood his ground.
They removed the logo.
Americans today…
Americans have come to believe that by buying the most expensive clothes, trendiest car, flashiest jewelry, whatever status symbol they see advertised in social media proves to others that they have made it to real success. Hiding behind massive credit debt to achieve that look doesn’t seem to occur to them that they are stealing from their future, retired selves for the sake of something fleeting.
What factors drive this? Why do they not see the imbalance of power in their financial losses versus the businesses’ gains? Is their concern only with appearances and impressing those around them?
Dr John Lee of Enriched Mindset put it this way:
“…It’s not the money we seek, it’s what we perceive it gives us…In an era dominated by social media, where individuals meticulously curate an idealized persona, the allure of appearing affluent has seemingly surpassed the actual value of financial stability. And with record access to credit, faking rich has never been easier.
But how can anyone afford to keep up the appearances?
Access to easy credit access. Money that the person doesn’t have so they are willing to pay the extra interest rates on balances thinking that those minimum monthly payments were going to be easy to manage. Until that balance grows…
Credit, in the form of accessing a line of credit based on the “equity” in your house, access for anyone with a job to attain revolving credit cards first with retailers and then into the mainstream of Visa and Mastercard, big purchases using lenders to secure your purchases, etc. All without the understanding that borrowing money comes with a substantial price.
McDonalds was among one of the first fast food industries to realize that, without physical money, people tended to spend more on their food than if their wallet only carried a finite amount of cash. So they rolled out the ability for anyone to use electronic payments, and their profit margins grew exponentially. Soon other fast food restaurants followed with equal financial success.
So what’s the bottom line?
There seems to be no reason for our culture to be as broke as it is. Yet we are.
Unlike other countries, saving for retirement wasn’t encouraged back in the 80’s-90’s. Making a good wage was roaring back then, and, unlike their parents, no one at that time thought much about the future, except for a few outliers who enjoyed the challenge.
Guaranteed retirement benefits, called pensions, disappeared about that time, and 401K’s were just starting to roll out. Handling money wasn’t taught in schools or understood by their peers, so most people retires broke.
Without proper financial understanding, today’s youth have fallen into the same trap as their parents. They learned from their parents’ example and now struggle to make ends meet. With a failing economy, home ownership has become just a distant dream for many.
Where did this all come from?
Much of the free advertising for big corporations stemmed from Hollywood’s influence. They prominently displayed product labels in movies to promote other companies, subtly shaping audience familiarity and perception. And it helped fund the expenses of producing the films in the process.
Then, marketing began elevating rock stars and glamorous actresses above the average person, showcasing designer clothes and luxury handbags as symbols of wealth. Companies provided them with expensive goods to drive consumer desire. The rallying cry became, “What did the stars wear? Who were their designers? I need that, too, because my favorite actor or influencer has it.”
Coupled with easy credit, designer brands entered accessible retail outlets, allowing corporations to profit and gain free advertising effortlessly. It was a win for them. Meanwhile, many women flaunted designer logos on their clothing, overspending to project wealth.
They still do.
But in the end, who is the real loser?
The person who believes that the extravagant purchases are the way to signal wealth are the real losers. Countless callers to consumer debt agencies and radio programs all decry the same message.
“Too many people spend money that they haven’t earned, to buy things they don’t want, to impress people they don’t like.”
Will Rogers
Those who think extravagant purchases signal wealth are the real losers. Many callers to debt agencies and radio programs echo the same message: they bought expensive items, mostly on credit, because they lacked the self-discipline their grandparents had. They were encouraged to stretch beyond their means, failing to see they had walking became billboards for companies which overcharged them for those products.
Sadly, most people remain in the dark about this strategy. And designers and companies who sell those products continue to steal from the American people.
It is the Great American Theft. And as consumers, we need to become wiser to the wiles of those who profit off our our ignorance.
We may need to reevaluate our values—prioritizing managing our income for the future over spending beyond our means on things that ultimately don’t really matter.