Frugal Honey

Psychology of Money

The Spending Game

I play this silly game in my mind where I deliberate over what I would do if I suddenly came upon x amount of money. It’s usually good for a few minutes of entertainment when I’m really bored (like now) and serves as a gauge of what my priorities are right that very moment. Let’s begin!

If I had an extra…
One Million Pesos, I would use it to fully pay off one mortgage (Php550,000) and split the remaining money 50-50 to pay down the second mortgage and form part of our Central Europe fund for next year.

Easter 2016 in Prague!
Five Hundred Thousand Pesos, again it would be split between paying of the mortgage and funding our Central Europe vacation, with the mortgage taking 4/5 of the cash and our vacation fund the remaining 1/5.
One Hundred Thousand Pesos, mortgage payments would still be king but I would set aside enough cash to buy or have a cross leg dining table made. Our current dining table is plastic fantastic and I’ve been dying to upgrade to a wooden table. I’m really loving the distressed look and feel of this table:
One of my best childhood memories is playing under the dining table, creating forts on top of and around the table and then squeezing myself underneath it with my siblings and cousins. Thus I look forward for my son and his cousins to also discover the magic of pretend play and the endless possibilities that a dining table can offer if you only use your imagination.
Ten Thousand Pesos, it would be spent on a dining table no doubt.
One Thousand Pesos, I would buy a tube of Bobbi Brown Creamy Matte Lip Color simply because lipstick guru Rae talks so highly of it, and for someone like her who takes her lipsticks seriously to give that level of praise means that this is The One. I’m thinking a fun, pink lippie would be a nice addition to the 2-3 tubes that I already have (excluding lip balms) since my lip color arsenal is mostly limited to reds and variations of red.
Okay, enough daydreaming and back to work! No way are those pre-employment forms going to fill themselves up.

Peddling an Experience

“Marketing is the mystical science of figuring out what makes people behave the way they do so you can make them behave the way you want.” Paul Richard “Dick” McCullough (“Exploiting Human Nature: How to Successfully Market High-Tech New Products“)
For a while now, I thought I was already immune to marketing strategies, because I’ve been on that side of the fence and I’ve seen how it operates. But after reading some posts on how marketers exploit human nature, I began to look around my house and I was dumbstruck when I realized that all of the products on my bathroom shelf are either colored blue, white or green. 

I have problematic skin that easily breaks out in rashes and years ago, my derma prescribed medications to keep my skin at bay. Those cleansers and topical medicine came in nondescript white tubes and simple packaging, so I’ve always associated doctor-recommended and sensitive skin safe products with white and no-frills packaging. I also tend to gravitate towards blue and green products because of how clean and fresh they are (Aha! Another marketing construct right there!).
Earlier this year, my friend and I thought of putting up a small bakery/restaurant within my condominium compound and I was adamant that it should be “Instagram-worthy” to entice my mostly young neighbors to make it their hangout where they can do their selfies, in effect generating free advertising for our bakery.
Little did I know then that my “Instagram-worthy” bakeshop was actually what Starbucks peddled, an experience. People don’t want to merely eat or drink coffee, they want to spend time with their friends, people watch, enjoy the ambiance, take a break from studying or working. And Starbucks delivers all that, that’s why people line up for its overpriced coffee. Absolutely brilliant.
I asked my husband, a marketing graduate, if there was anything morally questionable about this practice, because it seemed quite deceptive on some level. But he answered that on the contrary, marketers were giving people what they really wanted: something that made them feel good about themselves.
Again, it’s never about the toothpaste, the coffee or the facial wash. It’s about the promise of what you can be with those products and how they make you feel.
As a personal finance geek, I think it’s bullcrap, but as an avid observer of human nature and behavior, I am fascinated.
However, now that I’ve uncovered my own bias and triggers, I’ll be more careful about what I put inside my shopping cart, as I might just be spending a bit more on something that is actually no different than the cheaper variety just because Juday (my secret BFF) endorses it.
P.S.
Fitz Villafuerte’s fantastic article on Starbucks is a study of how brilliant marketers really are, and their uncanny understanding of human nature and frailty. Go read it now.

A Year’s Worth of Excuses

(clickable image)

“Bakit Hindi Nag-i-invest ang mga Pilipino” is a very insightful piece from Richard Macalintal that pretty much sums up why a huge majority of Filipinos fail to invest year in and year out.

It’s actually a funny piece, but as Macalintal warns in the end, such financial recklessness is sheer idiocy and will result in tragedy sooner than you think. And I quote:
“Sa tingin nyo pag ganito ng ganito taon taon ang takbo ng buhay nyo, anong bukas ang naghihintay sa inyo at sa pamilya mo?

Pano kung wala ng magpautang sayo? Pano kung magsawa ng kabibigay sina mommy at daddy, sina kuya at ate?

Ayusin maige ang kaperahan Bago pa mahuli ang lahat…”
I really do hope people wake up and be brave enough to go against the flow. So what if people think you’re poor or stingy because you didn’t spend your entire Christmas bonus on gifts? So what if you don’t go all out with your handaan once fiesta rolls in? So what if your car is 10 years old?
Step away from the pack, and be secure in the knowledge that for every peso you save and invest, you’re building a better future for yourself and your family.

Are Further Studies Worth the Cost?

One of my good friends is attending an Ivy League university on a scholarship this coming September. But even with her partial scholarship from her hotshot university, she still has to shell out a staggering amount and since she wasn’t born rich, her friends helped out by holding a fundraiser. However, even with what we raised for her, she is still several hundreds of thousands of pesos short.

She’s leaving the country in a few days without knowing where she will get the rest of her tuition money from, and after a year, when she comes back from her studies, she has debts to pay off.

Which now brings me to ask, are further studies worth the gargantuan cost?

(more…)

The Mortal Sin

I’ve started on my case study for my Registered Financial Planner accreditation and for this I tapped a good friend and her husband to become my very first clients. While going through their numbers, I was struck by just how much they are both earning from employment. I honestly thought I was already making a decent amount at work, but apparently, I was mistaken.
And then one brother has set up a second boxing gym, while another one is the sole provider for his family of four (wife + 3 kids), but he does this while staying at home and going on constant vacation breaks.

And have I mentioned that my friend and my brothers are younger than I am? 🙁
But at work, I’m the only one with a portfolio of investments. Also, when I whine that I don’t have money, it only means that I wasn’t able to withdraw cash, unlike some members of our staff who count the days until the next payday.
That’s why I really should stop comparing myself and my financial situation with others. Doing so can only lead to two results, either I’ll feel demoralized about my bottomline or I’ll feel smug about my bottomline. Either way, I’m bound to lose.
So blinders back on, and eyes on the goal.
Happy Sunday y’all!
 

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