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Saturday, 19 April 2014 00:00

Personal-Finance Fancy cars and labels – do they make us happier?

We hear this often – your appearance makes you confident and happier, right? As such, many strive to make a statement with the cars they drive and the clothes they wear. We live in a materialistic world, where our identity and egos are defined by what we own, which car we drive and what clothing labels we wear.

There is an assumption that the fancier the car and the more expensive the label, the more sophisticated we look, and the more impressive the statement is that we make, the more confident we are. It is also assumed that the more sophisticated we look, the happier we become.

However, research has shown that if you were unhappy before you got your fancy car or your designer threads, your happiness will be short-lived after you get them because you’ll adapt to being flush after a couple of weeks and it will no longer be exciting or fulfilling.

What this means is that you need something else to make you happy. Think about it, you buy your designer dress today for an event, and the next time there is an event, you look through your closet and you feel like you have nothing to wear, so off you go to buy another one. If you were happier before you bought your fancy car or designer clothes, you will continue to be happy because you have an internal locus of control.

What you own does not define you, but your self-awareness, self-management and the prioritisation of happiness in your life does. It is meeting the unquenchable need to become more, be more and do more that is innate in all of us.

When you do not prioritise happiness and you measure your self-worth by how much money you have or what car you drive, you will constantly be met with changes that you cannot control and you will become unhappy.

Another interesting issue is that of affordability. Many people have overextended themselves by buying fancy cars and designer clothes on credit so they can feel happier, or so they can numb their negative emotions of insecurity, low self-esteem and negative self-image.

So, for example, let’s say you bought a fancy luxury car that you were unable to purchase cash. If your total monthly vehicle expenses, including the principal debt, interest and insurance, exceeds 10% of your gross income, you cannot afford the car and you are overstretching your finances. A car, being a depreciating asset, should not cost more than 10% of your gross earnings.

Many people are stuck in jobs that make them unhappy because they have a car that is costly to repay, which means they are stuck. Happiness is about overall well-being – it’s not about one fancy item or one area of our lives.

Another factor to consider is the process where someone exercises financial discipline, and works on building up their wealth first. Once they have enough interest-generating assets, they can afford to buy the luxury car and designer labels.

Most people, unfortunately, seek instant gratification – they want to enjoy now and pay later. Instant gratification is instant gain with long-term pain.

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Ben Charlton

A financial planner can be someone who sees you as a number; they sell you the product that works best for them, they do exactly what you ask for, no more and no less. We are not like that, to us, our job is not to sell you a product, it’s to help you realise your dreams.

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