6 Lessons I’ve learned from a Shopaholic
Are you getting busy thinking about what to buy for Christmas? Or with the year-end bonuses coming up you’re thinking about what could you splurge on for yourself for working so hard for the entire year? I’ve recently re-watched a favorite movie of mine which is inspired by a novel titled Confessions of a Shopaholic and these are the lessons I’ve learned from Rebecca Bloomwood — a self-proclaimed shopaholic.
With Christmas coming up, most shops and malls are starting to decorate their stores with pretty lights, Christmas ornaments, decorations that draw you in, and most commonly with their Christmas sales! Some of us might be thinking about what to wear for Christmas parties or what presents to get for our friends, family, and colleagues coupled with our year-end bonuses, sales, and pretty decorations, isn’t it likely that we might be tempted to spend extra things that make us feel good and happy?
While some of us might not be frequently shopping at physical stores, online stores are just as tempting as those with physical stores such as selling limited edition Christmas goods that are luxuriously decorated. While all these are nice things to get for yourself or for others, it’s also good to remind us lessons of what we actually need and not to go overboard and go on a shopping spree. So, these are the personal finance lessons I’ve learned from the movie and how it might be relatable to you and might be able to learn something along the way.
1. Real prices and mum prices
In the movie, Rebecca’s childhood was filled with mum prices while she sees her friends get real prices. Real prices gets her shiny sparkly things that lasted 3 weeks while mum prices got her brown things that lasted forever. Whenever Rebecca looks through the window shops from the outside, she sees another world, a dreamy world full of perfect things. A world where gown-up girls got what they wanted and look like fairies or princesses. To her, they didn’t even need any money. They had “magic cards”. She wanted one but ended with 12 later on as an adult! To her, seeing a store is like having a warm buttery feeling when she looks at a cute guy and he smiles back but only better. Rebecca describes a store that was also able to awaken a lust for things she never even know she needed. Sounds familiar? So to satisfy her needs to shop, Rebecca felt that as long as she has fulfilled her dreams of becoming an editor at Alette Magazine, she’ll be happy forever. But, reality comes in when she receives the bill later on.
Lesson: While most of us millennials are likely to fall into the trap of purchasing shiny objects that last for a short while especially during the Christmas season and year-end sales just because it looks good, they ended up the year with higher spending and guilt. Although real prices could get you really something nice, the pleasure that it brings will likely subside over time and the cycle continues. Most of us will then think that if we were to increase our income or get a job with increased pay, the guilty pleasures of purchasing an expensive product will then subside. Wrong. It doesn’t. Why? Because Parkinson’s Law states that expenses will always rise in direct proportion to income. So as long as you lust for shiny things that give pleasures that last for a while, you’ll never be satisfied and the cycle will keep on continuing. The solution? Have a conscious lifestyle that goes hand in hand with your financial goals in mind. Which is more important? The goals that give you meaning or short-term satisfaction?
2. Honesty and credibility
Rebecca started to live her life a lie because of her huge debt. One thing led to another. Firstly, to buy a green scarf for an interview with Alette Magazine and not have sufficient credit, she requested a hot dog stand to give her cash back for buying his hot dogs urgently because she needs it to buy a scarf for her “dying aunt” to which she met Luke, a lead editor at Successful Savings (Finance magazine). Her second lie was about her skills and abilities she filled in her resume to get a job at Alette Magazine and interview at Successful savings. Rebecca ended up with a job at Successful Savings because she was offered the job and could be her entry ticket to work with Alette Magazine. Thirdly was her lie to Luke about Derek Smeath, a debt collector that has been after her for a year claiming him to be the ex-boyfriend that has been stalking her. Fourth, Rebecca was also in self-denial to admit that she is a shopaholic. Despite her friend’s advice and concern to attend a shopaholic rehab, Rebecca does not think that she needs it. Lastly, was her deception towards her readers! Giving financial advice to her readers about credit card debt without even taking her own advice.
Lesson: Being honest about your debt and finances are important because it gives you the actual facts about your financial standing. While some might tug their overdue bills under the pillow or chuck them to a corner either being in denial or thinking that it’s not that important, are very likely to be struggling financially. But believe me, it’s not going to work. Finding a date at least once a month to track your spending and not overspend is important to make sure you’re financial standing is fine. For example, a simple budgeting system could be the way to go to make sure you don’t overspend. It also ensures your credibility with the bank is still satisfactory.
3. Having an emergency fund
Rebecca lost her job when the company she was working with folded. Unfortunately, she had just spent $900 on a dress and a green scarf and obviously, without any savings. This was a huge concern to her. Rebecca’s only income had disappeared. So like a band-aid, Rebecca and her friend decided to start opening up her credit card bills one by one while drinking to ease the emotional pain. What were her spendings? $200 on Marc Jacobs underwear, lavender honey because she felt bad for the shop assistant, foot spa, and more. Her total credit card bills amounted to a total of $16,262.70 and she has no job! Rebecca’s idea to that was winning a lottery. But her friend suggests she write an article to Alette Magazine instead to showcase her talent.
Lesson: Unfortunately although the majority of people do not spend more than their income, there is also a huge subset of people that spends exactly how much they earn. In other words, they don’t save! Or even have emergency savings. According to CNBC, 51% of Americans have less than 3 months’ worth of emergency savings as of July 2021. If these individuals were to be out of a job, they’ve immediately fallen into debt instantly! So the solution? Start saving! How? Find ways to lower your expenses or get an additional part-time job to increase your income for the short term until you’ve hit your target of at least 3 months worth of savings. My recommendation would be to have at least 6 months instead.
4. Knowledge in personal finance and investment
Rebecca and Luke attended a hearing at Comitex, a company that had apparently awarded its CEO and directors bonuses of $24 million while their investors had lost 8%. Luke explained to Rebecca the reason for attending the hearing and read her article out loud. “Security can mean different things to different people. For some, it’s going to the right party wearing the right shoes. This might leave you feeling secure for an evening, but have a crippling effect on you in later life.” Luke explained that companies like Comitex thrive on a lack of public understanding and get away with it because normal people don’t understand. What do normal people know about what these CEOs or businesses are doing? If an ordinary investor looks to the magazine for answers that aren’t asking the right questions, it isn’t good for their readers. Hence, Luke wanted Rebecca to write the TRUTH in a way that normal people can understand.
Lesson: Most people think that as long as they spend below their means, invest in a unit trust, and purchase an insurance plan that is recommended by a “professional” or banker, they are good to go. Just like how Rebecca explained in her article that security can mean different things to different people and for some, it’s going to the right party wearing the right shoes. In other words, for some people managing in their finances, it’s going like going to the bank or a financial planner and purchasing the “right” products that might leave them feeling secure for the day or week or year but later on has a negative effect on their finances in later life.
Ever had an encounter of a banker or a relationship manager coming up to you and explaining it in financial jargon that you don’t understand and multiple reasons to invest in a certain product and you ended up placing your money with them just because of trust and that you’ll feel safe? Well, most likely you’ve either been missold or led astray. Knowing what products you’re purchasing and understanding their risk is vital to avoid being mis-sold to or losing your hard-earned money in the long run. It would be a pity to know that after investing into a fund that you’ve been invested in for years and into retirement only to find out later that it wasn’t safe at all.
The solution? Start educating yourself. Finding out the truth is your responsibility to ensure that you’re not being misled or mis-sold. No one can be more concerned about your finances except you.
5. What defines you?
To Rebecca, having to wear expensive clothes, shoes, bags, and perfume are what she thinks defines her. Hence, urge to shop. On the other hand, Luke instead does not want to be defined by clothes, labels, or family (Luke’s family is a socialite). Instead, he wanted to be defined based on his ability in publications. Rebecca’s dad offered to sell his RV which was part of his retirement life to offset Rebecca’s debt but Rebecca refused. She told her dad that the RV defines him. But her dad disagreed and explains that nothing defines him except for her and her mother.
Lesson: So what defines you? Is it the BMW that you drive? The Rolex that you wear? The Prada shoes that you wear? Or the relationship you have? Or the abilities you bring to the table? Don’t get me wrong. Although there is nothing wrong with buying material stuff, one tends to overspend what they can afford for luxurious things because they think that it defines them. Their identity. For me, what defines me would be the relationship I have with my family. Hence, the time I spend with my family this Christmas is what I look forward to the most.
6. Cost and worth
Rebecca learned about cost and worth from Luke when he paid $23 for a hot dog because she was cutting in the line and delaying his time to get his hot dog. Although he paid for an “expensive” hot dog, it was worth it to him. It saves him time and Rebecca gets her scarf. Throughout the entire movie, Rebecca’s urge to shop has always been about cost. Take, for example, her frequent trigger for the urge to shop was whenever a “Sale” sign was displayed. Rebecca thinks that having a 10% or 50% off a product was “worth” the money only to realize at the end of the day that it wasn’t 100% authentic. She bought a cashmere coat at a major discount from a designer sample sale only to later find out that the coat had actually 95% acrylic and 5% cashmere.
Lesson: It’s important to differentiate between cost and worth. Cost is just a number on the price tag but worth is something that is intangible and the most valuable which is trust. For example, one might purchase a $400 branded shoe with no discount that is meant to wear every day and another person might purchase $500 heels that look pretty at a 50% discount. Based on cost, the $500 heels might seem worth it but based on worth, the $400 shoe is likely to provide better quality, experience, or trust that the product will be able to serve its purpose usefully.
Overall, the lessons I’ve learned from the movie about debt, managing finances, and the importance of financial literacy have given me a different viewpoint and to become a literate shopper this Christmas season! I hope this article finds it useful to you as well!
