In the recession era, the bar has been raised on why and when consumers decide to buy luxury goods. Merely liking something is no longer enough. But if you can somehow justify that a product—one that’s expensive, that you clearly don’t need—saves you time or money, or somehow betters your health or quality of life, then whipping out the credit card is OK. This is how some consumers are rationalizing purchases like iPads (which presumably can save you time compared to traditional reading) and discounted designer handbags (cheaper than paying full price), and how one man carefully decided he needed a flat-screen TV—for his backyard gazebo. He’s shopping around, and is waiting for a good deal, of course.
Why would you need a flat-screen TV in your backyard? USA Today, which reports on the shift in luxury purchasing in the recession era, explains the justification from the gentleman in question:
On weekends, the federal government physician from Albuquerque likes to do yard work and prune the fruit trees he has in his backyard. But he also likes to watch sports on TV. By placing the Sony TV in his gazebo, he says, he’ll be able to do both.
He only wants a Sony, he says, because that’s the only electronics brand that he trusts. But he’s waiting to buy it until he finds a really good deal.
“I’m not an impulsive buyer,” he says. “I can wait.”
Executives at Sony have concocted a new term for the brand: “functional” luxury.
I like that: “functional” luxury. It’s certainly easier to justify a purchase that has utility, rather than one that’s merely amusing, or something that you buy to demonstrate how wealthy you are, or one that’s downright silly and pointless.
The lead anecdote in the USA Today piece features a man who has scaled back in many ways in recent years. But while he no longer buys pricey jewelry for his wife, and he sold off his Jaguar convertible, he also bought a $6,500 outdoor artisan pizza oven. Why? I guess the guy really likes pizza. He justifies the purchase by saying, “Cooking healthy is a big priority.” You can’t put a price on your health. And while this investment may take quite a while to pay off, cooking pizzas at home is cheaper than buying them out at restaurants all the time. The pizza oven is certainly “functional” in a way that expensive jewelry is not. You can’t eat jewelry.
I’m fascinated with the how and why of consumer purchases. For example, there are folks out there who absolutely believe that they are saving money by buying $17 jars of spaghetti sauce. And, in fact, they are saving money—but only compared to eating out at a ritzy restaurant.
In the same way, you can justify that you are saving money by purchasing a handbag on “sale” for $300—but only compared to paying the retail price of $500 or whatever.
Of course, there is no real saving going on in either of these situations. And that’s OK, so long as you understand the tricks played on us by marketers, and you also understand that tricks that we play on ourselves to justify all sorts of wants as needs. Jeff Yeager, author of The Cheapskate Next Door, has a word for this: “wantonizing.”
There’s nothing wrong with wanting to have things. Many purchases make the owner genuinely happy. I’m sure the family that owns the oven love making and eating those pizzas. In many ways, the best function a product can hold is its ability to save you time, which you can otherwise spend doing the things you truly enjoy. So many techie purchases can be justified in this way: They’ll save you time (even if what they wind up doing is distracting you and wasting even more of your time).
The key is to spend your money intentionally — the way you want to spend it, after giving it adequate thought. Frugal Dad recently had a good discussion about the concept of intentional spending, about spending money for a worthwhile purpose of your choosing.
No one wants to throw money away for no good purpose. When you purchase something on an impulse, there’s a good chance you’ll regret it. And if you find that your closet, garage, and attic are full of purchases that you regret and have no function, well, then there’s a name for you: a dysfunctional shopper.