How to Replace Consumerism with Proven Wealth Building Strategies

Devoid of wealth building strategies, almost one-half of all Americans do not have $400 to their name.  This statistic includes people from all income brackets.  No matter how much money people make, it seems they just can’t manage to hold on to it.  Here’s the test – if you had an unexpected expense of $400 pop up right now, how would it impact you?  Could you pay it with cash or check?  Would it impact your ability to pay other current obligations? Or would you have to borrow the money, use a credit card or sell something?

American’s have been consumed with consumerism for the past few decades.  As credit became easier and easier to obtain, Americans began to rely on credit as a safety net rather than build up their savings as a safety net.  They also use credit to obtain more material possessions.  So credit has replaced savings as a means to purchase and protect possessions.

After the attacks of September 11, 2001, the government encouraged Americans to continue spending as before to prove that our economy would not be affected by the attacks.  That encouragement would have been good advice if the status quo before the attacks was to earn and save money before spending it.  Since using credit to purchase everything was becoming the status quo, this advice was feeding the vice of consumerism.

The impact of continuing the rise of consumerism will result in an unhealthy financial state.  It is time to reverse the trend.  Americans need to learn to replace Consumerism with wealth building practices.  That begins with becoming financially literate.

Financial Literacy

A majority of Americans have become financially illiterate.  Despite the fact that we now have access to more information about how money works, we do not partake of that knowledge.  This financial ignorance has led to financial distress in many households.  There is a tendency to spend a little more than we make, no matter how much we make.  Earning more enables you to borrow more and so many people do just that.  Rather than learn and leverage financial principles, people have begun to live for today and wind up dealing with the consequences when it catches up with them.  Some do things like use credit cards for daily purchases, losing track of their spending and then when the bill comes, they don’t pay the balance in full.  An understanding of the principles of compounding interest and avoiding that expense would save many people thousands of dollars every year.

Our Choices Define Us – Make Good Financial Choices

Writing for the Atlantic Magazine, Neal Gabler says “But, without getting too metaphysical about it, these are the choices that define who we are.  We don’t make them with our financial well-being in mind, though maybe we should.  We make them with our lives in mind.  The alternative is to be another person.”  This is, in fact, what I suggest we do, become that better person by learning to replace old habits of Consumerism with Wealth Building practices.

You can start building the future you want today.  Financial planners will tell you that it begins with assessing where your money has been going.  This can cause an uncomfortable feeling in your gut, but in the end it will give you so much of a better feeling of peace to know your financial health and financial intelligence is on the mend.  Start now by writing down everything you have spent money on today.  You might be amazed at the frivolous things you spent money on.  Maybe not; hopefully not.

Financial Responsibility

So many people project their problem with money onto others or outside forces.  They blame the economy, or low or stagnant wages, or the government, or wealthy people.  Are you one of the people who thinks that outside forces are responsible for your financial state?  The problem with these excuses is that we all exist in the same economy and under the same government influenced by the same wealthy people.  Maybe you have had some crisis in your life that seemed insurmountable; extended illness or loss of a loved one that brought about financial instability.  Perhaps you feel like you will never be able to catch up.  If you were to find a way to start getting ahead of the rat race, would you take it?  Don’t get me wrong; I am not saying that you have brought on your financial struggles, the problems are real.

“Real hourly wages—that is, wage rates adjusted for inflation—peaked in 1972; since then, the average hourly wage has essentially been flat.” – Neal Gabler

What I am saying is that that your future decisions will play a huge part in determining where you go from here.  Think about this poem by Ella Wheeler Wilcox.

‘Tis the set of the sails

One ship sails East

Set a Course for a Better Future

“But to every mind there openeth,

A way, and way, and away,

A high soul climbs the highway,

And the low soul gropes the low,

And in between on the misty flats,

The rest drift to and fro.

 

But to every man there openeth,

A high way and a low,

And every mind decideth,

The way his soul shall go.

 

One ship sails East,

And another West,

By the self-same winds that blow,

‘Tis the set of the sails

And not the gales,

That tells the way we go.

 

Like the winds of the sea

Are the waves of time,

As we journey along through life,

‘Tis the set of the soul,

That determines the goal,

And not the calm or the strife.”

  • Ella Wheeler Wilcox

Developing financial literacy and leveraging sound financial principles will allow you to navigate your way through life toward the destination you intend to arrive at.  You will not get there by accident or by following whims.  You can get there by setting and achieving a series of goals.  To learn more about setting and obtaining measurable goals read  my post The Startling Truth About Goals Objectives and Campaigns

Let’s start off with the most basic fundamental…

Simple Wealth Building Principle Number 1

Don't buy stuff you can't afford Click To Tweet

In this classic Saturday Night Live parody (posted on Vimeo by the American Bankruptcy Institute), Chris Parnell offers Amy Poehler and Steve Martin a more rational alternative: Don’t Buy Stuff You Cannot Afford.

 

Maybe this should be required viewing for everyone before applying for a credit card …

As long as you follow the advice in the skit, credit cards are incredibly convenient and have some great benefits. If you pay your balance at the end of each and every month, you can pay zero dollars in interest.  Some cards offer cash back or points on purchases that can be exchanged for goods or services.  That means that the bank pays you to use the card.  Of course, they are expecting you to ignore this advice.

A Better Future through Wealth Building

Your future does not have to be the same as your past.  Here are 6 basic principles that form a good starting foundation to begin replacing consumerism with Wealth Building Strategies for a better future.

  1. Don’t buy stuff you can’t afford
  2. Pay as little on finance charges as possible
  3. Plan your future spending and spend according to your plan
    1. Notice how I avoided the word budget here?  That’s because people hate that word.  Let’s just call that a plan.
  4. Prepare yourself to respond to unexpected expenses
  5. Adjust your plan (in number 3) to avoid future unexpected expenses (in number 4)
  6. A portion of all you earn is yours to keep
Wealth Building Strategy #3: Plan your future spending and spend according to your plan Click To Tweet

Building wealth happens over time through good habits.  To learn more about how to establish habits, read my post How to Develop Habits to Improve Your Professional Growth

In future posts, I will cover and expound on these and other Wealth Building Strategies.

Drop a note in the comments section below and let me know what area of finances has been your biggest challenge so far?  What areas of financial uncertainty would you like more information on?

 

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