Is The Stuff You Want To Buy Worth It? Read More To Find Out

Have you joined the #52WeekChallenge powered by M-Shwari? To join, set up an M-Shwari Lock Savings Account, start saving and you just might get a cash reward. As I post this, we are kicking off Week 4 of the #52WeekChallenge, use the MoneyBox App (for Android) to calculate how much you are supposed to save on a weekly basis and start today!

Are you planning to upgrade your phone/car/TV/couch etc because the ones you have no longer make you happy, or there is a newer version that has been released? Before you do, read this post to the end to see the true value of that upgrade. 

What is your definition of success? I find myself in conversations about this, sometimes as a willing participant other times a listener.  It is always fascinating to hear what our success markers are / what we define as living a good life. In our society today, I would not be wrong to say we have come to see these things as success markers:

• The cars we drive. I have always wondered where Nairobians take their older cars because we always seem to have newer and newer models on the road.
• The houses we live in, and the addresses those houses are on. It is not enough to live in a good house, the house must be at an address that insulates you from the common mwananchi problems such as dust, loud matatus, too many people, and water shortages. The last one is getting harder and harder to achieve.
• The kinds of jobs we have. This is why, “what do you do?” is the first thing people ask after you are introduced to them. We want to know what people do, so we can decide whether to be impressed with them or not.
• The phones we own. This is no joke, the jokes about the different phone models are still a thing. 

The problem with pursuing what we call “nice things” is that you will never have enough of “nice things”.

Corporations exist to make sure of this. Advertising exists to convince you that you have not truly made it until you acquire the next nice thing. There is always a better car, a better address to move to, and even when you get to the peak where you travel by private jet, there is a bigger jet to buy.

If your goal is to always have nice things, then you are setting yourself up for a lifetime of work to keep buying that stuff. This is because as you have seen above, external factors determine what nice things are, and the goal posts keep shifting.

Today’s latest iPhone is tomorrow’s old iPhone in need of an upgrade. 

If the idea of working to buy stuff does not sound appealing to you, consider taking a utilitarian approach to stuff. The things we buy are here to serve a purpose. A car is a means of transportation – and if we lived in a better country, it would not even be the most efficient way of moving around. A phone is a communication tool. A computer is a work tool. A television delivers entertainment (and sucks up our time as it does so). A house is a shelter over your head.  And so on. 

The advantage of shifting your outlook this way is that the stuff we own stops being a success marker. They are only as good as the utility they bring to us. There is, therefore, no need to spend more than we need to on these things unless the added utility far outweighs the price we are paying for it. A utilitarian approach makes contentment a possible goal and makes you less susceptible to external influences and more likely to achieve financial freedom. 

How much is stuff really worth??

Instead of accumulating stuff, we then can focus on building experiences that last and truly add value to our lives. There are two ways of investing in experiences: 

• “Buying” experiences. This is the most discussed form. Where we spend money on travel and other such experiences that make us happy; or
• Buying time. By choosing not to pursue a consumerist lifestyle, we are buying time with our loved ones, and time to pursue stuff we are passionate about even if that stuff does not make us as much money. 

Think about this: if I told you that your next car upgrade will cost you three years of time with your family (or even chill time), would it be worth it? Well, let us do a simple calculation. 

Let us assume you are a well paid Kenyan earning say KES 250,000 per month, and you have a couple of side jobs that bring in another 70,000 bob per month.  So every month, you are earning KES 320,000. Assuming you spend 50 hours a week making this money, it means that your gross pay per hour is KES 1,600. Take away about 28% in taxes and your take-home pay is KES 1,152. 

Say you want to buy a Subaru Forester that is worth KES 2 million bob. At a take-home pay rate of KES 1,152, it means to pay for the car, you have to dedicate 8.8 months of your work to this and nothing else. If you usually upgrade your car every five years, this means that 14% of your time at work goes towards funding the car – which depreciates. This assumes you have saved the money. However if you are like most people and will need to borrow to finance the car, add another 0.5 million shillings to the cost, which means you work for 11 months for nothing but the car. What about the additional cost of insurance and maintenance because you now have a more expensive car? You will easily need to work for a year every 5 years, to finance your car!

That is not the only cost though. The second cost is financial freedom potential you are forgoing by choosing to work to buy a car. Assuming you would like to retire in 15 years. By choosing to spend KES 2 million bob on the car (instead of investing it), you are actually forgoing KES 5.5 million (net of inflation) of retirement income. To do this calculation, I assumed that your investment grows at 12% annually, and of this, 5% is inflation.  That is another 17 months of work to pay for your car. Is it worth it? 

Only you know.