Nobody Gets Rich Owning Plenty of Nice Stuff

I could remember growing up having thrifty parents while surrounded by people who had extravagant parents. It was when I studied in a rather pricey school that I felt so out of place. There were the "cool kids" who were spoiled brats. One person I knew was easily given what he wanted. Another I knew felt he was cool because his parents gave him what he wanted. I remembered an idle talk that we had such as how I was bullied for not having the nice stuff other people had. Another said that so and so was richer because they had this and that. It was common to say so and so is the rich kid because he or she had the latest video game console or a luxury car. It made me so green with envy that I wanted a Limousine or a Mercedes Benz just to impress those spoiled brats. My thrifty parents said no to such requests--telling me one day I'd understand.

A conversation I had with my mother was based on the people I envied. I gave reasons that so and so was rich because:

1. They have very thick wallets while I had a thin wallet. My parents gave me very limited allowance and I had the tendency to overspend.
2. They are brought to school with a luxury car while I was driven in a Mazda.
3. They have rather luxurious houses to live in.
4. The dumbest reason was they keep talking about how rich they are. Someone even said he had a million pesos last Christmas--something I dismiss as childish bragging these days.

However, my parents would only shoot down such claims and say such people may be rich now but lose it later. Then, I thought of what they would say (or what my late paternal grandmother who was also rather thrifty) said the following rebuttals:

1. It's possible that parents who give very generous allowances to their children may have very thin bank accounts. They may have more debt than money to pay the debt. The bank may no longer be their friend.
2. It's possible to be driving a BMW or a Mercedes Benz but one's broke as a joke. It so happens someone who had a Pajero later ended up borrowing tons of money to repair it.
3. It's possible to live in such a big house which will be only later mortgaged by the bank for failing to pay it.
4. A prudent rich person keeps silent about how much money they have. Some who brag about their so-called wealth don't have it.

Savings opportunities vs. branded goods

I once owned an Apple product and never wanted another one due to the cost of repairs. I had it junked and I no longer wanted another one. Why I don't plan to get a Mercedes Benz is due to the cost of labor is much higher. Having rubber shoes that cost PHP 7,000.00 is a real rip-off compared to if you bought regular rubber shoes. Someone I knew bought rubber shoes that were expensive to brag off even if he wasn't wealthy. These products aren't necessarily better. In fact, I remembered my Apple product was gone with the wind during a lightning storm. Meanwhile, I had very little cost to repair my Samsung laptop (which I might replace it soon) which I used during my MBA days.

However, we've got such people with the wrong perception of quality based on price. It's often said that the best is the most expensive. It's like the best school is the most expensive school. However, the same person who once said it ended up transferring to a high-standard public school instead. This is one thing Investopedia says about the problem of branded goods psychology:

Are Higher-Priced Goods Really of Higher Quality?

One possible explanation for this is the human tendency to overemphasize the positive elements of a product and ignore its disadvantages. For example, in the case of Apple Inc. (AAPL), consumers wait overnight for new releases of iPhones, iPads, and Mac computers. This despite the fact that Apple products are not technologically unique or superior.

In fact, Samsung makes phones with better features (compared to most models of the iPhone), and Microsoft Corporation (MSFT) and Xiaomi make phones that typically have a cheaper price point. Nevertheless, Apple experiences a high degree of brand loyalty and seems to break sales records year after year.

Because some people perceive non-luxury goods as inferior simply by virtue of them being non-luxury (and not on the basis of their characteristics or qualities), they also come to the irrational conclusion that higher priced goods are of better quality. Contrary to the evidence, they may believe that you get what you pay for, regardless of whether the goods are actually better than their more affordable counterparts.

I personally am willing to pay higher for better quality. For example, I was actually willing to spend PHP 40,000+ for a new Samsung until I realized that the Xiaomi POCO M4 Pro phone had better battery life at a lower cost. If I spent money on a new iPhone XS which came out a few years ago worth PHP 69,999.00 up to PHP 86,990.00. Let's just say that I decided to purchase that phone over the Xiaomi which I purchased just now. Pretty much, I spent PHP 12,490.00 for my new POCO M4 Pro which gives me a savings of PHP 74,500.00. I could afford to buy the expensive phone but I feel saving it for a rainy day is better. Having PHP 74,500.00 for a rainy day is better than having a nice phone but not having an extra for a rainy day. In the end, if I dropped that iPhone--it would be more painful than if I dropped my POCO. I wouldn't have so much pain buying another phone worth PHP 12,490.00 over buying another super expensive phone. The same goes for I wouldn't mind paying the fees at a Toyota repair shop for a luxurious-looking car overpaying extremely high fees for a branded car.

Avoiding luxury goods when you can is a good thing. Instead, the best thing to do is to have a balance. Be willing to spend more for quality instead of perceived quality. It's like I decided to get a slightly more expensive POCO phone so I can have better cooler features. Somebody might be cool with the new stuff but the new stuff isn't branded. Sometimes, a nice bag that's sturdy isn't a branded good. Sure, that bag may cost less but it may contain plenty of money's worth. Doing so can be the start of having higher savings.

The real meaning of financial wealth is never about the stuff you own or having an expensive lifestyle. Rather, it's all about having plenty of legitimate money. Though this isn't always about being wealthy but making sure one has the money to meet one's needs and enjoy life. People with lots of money (whether they are wealthy or not) usually shut up about their wealth. More often than not, those who hardly have money are trying to impress others with money they probably just borrowed from others to make themselves look rich. 

References

"The Psychology Behind Why People Buy Luxury Goods" by Vanessa Page, Reviewed by Ebony Howard (Updated: February 13, 2021)

https://www.investopedia.com/articles/personal-finance/091115/psychology-behind-why-people-buy-luxury-goods.asp