Buying for pleasure or necessity?: the dilemma that can put your wallet in a bind

‘How much do I need it?’ That is one of the thoughts that most often runs through the mind of someone who is about to purchase a product or service. However, There are times when necessity takes a backseat.

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In economics there is a term known as ‘conspicuous consumption’. This concept was conceived by the economist and sociologist Thorstein Veblen to explain the spending of money and the acquisition of luxury goods with the sole purpose of displaying wealth.

Veblen pointed out that this mode of consumption was not intended to satisfy basic needs, but rather its purpose was for the buyer tor could show their economic power and social status. In other words, buying to impress others.

To better exemplify the topic, some of the reasons that drive this behavior are associated with feeling more successful, being afraid to say ‘no’, wanting to show themselves on social media or building a better image based on their socioeconomic level.

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According to the financial services firm Skandia, although this concept was formulated more than a century ago, it still has weight today, since being aware of spending intentions can have an effect on the way finances are managed personal.

In this regard, he points out that, although the spending focus should not always be on need, it is important to maintain a balance between this and buying for pleasure to avoid falling into bad financial habits such as impulse spending.

Along the same lines, emphasis is placed on the consequences that can arise from ‘conspicuous consumption’, including over-indebtedness, the impossibility of financial growth and the difficulties in covering essential needs.

In this context, the firm recommends rethinking consumption habits and the functioning of personal finances based on financial and investment education, with a view to having better control and management of one’s income.

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