Financial Planning and lure of capitalism

In my last post, I listed some of the main barriers to financial planning. In this post, we are going to look at how factor obstructs some people's ability to think about financial planning. But first, let us define the term "lure".   

According to the Merriam-Webster dictionary, luring is a process of enticing or seducing people to pleasure or gain which may lead astray from one's true course. Goods and services are generally presented to the public through advertizing on television, radio, the internet, newspapers, magazines, banners, billboards, among others. Advertizing Agencies are hired to create needs so consumption can occur. The role of the ad agencies is to find very creative ways to entice people with products or services. Another way of luring people and creating demand is by constantly creating new versions of existing products using elegant packaging and labels.

These methods are used by many industries, such as those in the high tech sector, automobile, apparel, cigarette sector, among others. Have you ever asked yourself why the auto industry launches new versions of the same cars every 2 or 3 years? What of the launching of smart phones every 3 months? What about the transformation of notebooks into tablets? Or transforming smart phones into wearable technology? What of the latest designs in sneakers of top brands? The list goes on and on and on. 

These innovations occur so the attention of consumers can be constantly held in such a way they will continue buying the products or upgrading them. In this way, the companies will continue making profit. If you buy one car and there is no new design for a long time, for example, the auto manufacturer will go out of business and their staff will lose their jobs.

Another example is the smartphones. New smartphones are launched every 3 months. These are launched as 1, 2, 3, 4, 5, 6, etc. A person with an old version sounds out of fashion and obsolete. In order to follow the trend, may people keep on buying the updated smartphones. Even the poorer ones show the same habit of changing phone.   

The lure of capitalism is a strong barrier to financial planning. From the examples given above, it becomes clear that many are trapped in the continuous cycle of purchasing new products or upgrading them. This practice consumes the income of many people to the point that they cannot save anything. 

Consider the case where some people buy brand new cars every 2 or 3 years. Instead of buying a used car which their budget can support, they prefer leasing a new brand car. The problem of new car is not only restricted to paying high monthly leasing cost, but also the insurance cost, gasoline, maintenance cost, car tax, among others. At least, the costs of insurance and yearly tax are directly proportional to the cost of the vehicle. In Brazil, for example, yearly car tax is 4% of the value of the car. The car tax must be paid for a period of 20 years. These extra costs are never considered before buying a car. 

It is impossible for one to submit to the lure of capitalism and at the same time make financial plans. The decision is yours. Do you prefer working all your life and die in misery or retire in abundance? Think about this!