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Consumption Is Investment

This article was written by in Consumer. 22 comments.


This is a guest post from Mrs. Micah, who maintains the blog Mrs. Micah: Finance and Life, in which the author is starting to deal responsibly with her $100,000+ debt.

Every purchase you make is an investment.

Too often we think of our purchases as consumables. Some are, like food, but even those should be adding to your quality of life. Food, for instance, is an investment in your health and gives you energy for doing better stuff.

We may not think of it that way, but it’s like buying stock. Not that the purchase increases in value, but that it proves valuable to us over a long period of time or it loses all its value because we don’t use it and don’t (or can’t) resell it.

If you see your consumption as an investment, then it takes on a purpose–the purpose of improving your current and future situation for as long as possible. That allows you to ask whether you could have gotten more value by consuming something different that would have lasted longer, been more practical, more helpful, etc.

One good investment I made recently was a winter coat. My old one, bought cheap at a thrift-store (well-used), lasted me for 4 years. Now, it’s beat-up from some hard Pennsylvania winters and some rough treatment. It wasn’t in great condition to start with, but just fine for college.

I spent $83 on the new coat but don’t regret a penny. On the way to work, I no longer feel frozen (my old coat was not workplace appropriate anymore, so I was braving the cold with a light suitcoat) nor do I get wet in the rain (umbrella helps too). In fact, I feel comfortable as I slog up the hill. Plus it looks appropriate at work and good on me.

The style is pretty classic (and I’m not very fashion conscious anyway), the material seems good, and I’ll take care of it, so I expect it to last for years.

A smaller but excellent investment was an oversize latte mug Mr. Micah bought. He uses it every morning to make his oatmeal and every night for his tea. It cost about $10 (more than I’d normally spend on a mug) but he’s had it for years and uses it so much that it was a great choice.

As investments go, it’d be like buying stock at $10 and having its value shoot up to $100 and hold. Great ROI!

On the other hand, my friend Katie likes to buy electronic gadgets but doesn’t end up using them, making her purchases a very bad investment. For example, she spent a couple hundred dollars on a PlayStation 2, thinking it’d be a lot of fun in the evenings. The PS2 never made it out of the packaging. Instead, it remained in her closet until recently, several years later, when her now-husband discovered it and was thrilled.

In the end, he got some value out of it. But if she and her husband had bought it now (even unused) they could have had it for half the price or less.

It was as though she bought stock for $250 and it immediately dropped to $0 (not counting resale value, since she didn’t think about that). Then it rose to about $100 and now it’s worth something to her again because she can use it with her husband. Not a total loss, but not a good choice either.

She had an unused digital camera (for which I offered her $20) but she ended up giving it to her dad for nothing. Again, over a hundred dollars spent with practically no return.

Fortunately, Katie learned from this. She’s decided not to buy an iPod yet (or if she does, to buy a refurbished one for less) because she might use it for a week and then put it in a drawer. Now that she’s identified which purchases she shouldn’t make, she’ll have much more money to either save or put towards things she’ll actually use.

What you’re consuming (buying) isn’t simply being used up. It’s an investment. Your job is to make sure that it’s a good one!

Read more from Mrs. Micah on her blog, Mrs. Micah: Finance and Life.

Published or updated November 19, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar FinanceAndFat

Interesting take on spending. I like it.

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avatar Mrs. Micah

Thanks, Frank. :)

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avatar Consume

The only catch is…

I have seen friends of mine purchase a boat. The bought the boat when the could not afford the time. After a couple of weeks unused they guilted themselves into using the boat. This guilt of getting value from something made them use the boat twice a month for the next 2 years. The still never had the time but the forced themselves to get value on their purchase and the became slaves to their boat. I understand we don’t want to throw it into the drawer and not use it, but we don’t want to force ourselves to create value in something when it doesn’t fit. The bottom line is buy what you need/want, don’t want what you do not need.

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avatar Mrs. Micah

That is a good point, Consume, we can’t force value. Your friends could have redeemed that purchase by selling it off and recouping some of their losses. Investments are flexible that way. Of course, this would involve admitting that they made a mistake, which people don’t like doing with big purchases.

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avatar Jessica

You make some good points on this subject, but I respectfully disagree with calling consumables investments. I prefer to think of investments in the classic sense, and what you’ve describe as making smart purchases.

I’ve often seen people use the term “investment” to justify a luxury purchase, to make themselves feel better about spending money on something that they may have not needed or more money on something they did.

It could be something like a designer purse, or a big house with even bigger mortgage payments. I’m speculating here, but that mentality is probably what drove at least some of the people who are now facing foreclosure to take on more house than they should.

For the already frugal this mindset would probably work, but I think if you’re climbing out of debt this could just become a way to rationalize spending more than you can afford.

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avatar Mrs. Micah

Good point, Jessica. This doesn’t work if you’re not of a frugal mindset overall. Even if you get a good return on something you can’t afford–you still can’t afford it.

I hope that this way of thinking would at least help people learn from their spending mistakes and understand their spending patterns. But like other ideas, it can be misused.

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avatar Peter

I agree that calling this investments may lead to excuses for spending. I prefer lost opportunity. Every dollar you spend is a lost opportunity for that dollar to be out there working for you and making you richer, so is it really worth it to spend this dollar that way? This should hopefully lead to a thought about value received, other ways to meet the same need, etc.. However, for the “I want it now” set, it won’t matter, they’ll spend it today. On the other hand, we shouldn’t beat ourselves up over every single purchase, if your within your budget or spending plan, either let it go or make a quick decision and rest easy, you’re still on track.

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avatar vh

This is a pleasant piece of insight. I’d never thought of “food” as a kind of investment, but on reflection, it surely is. And thinking of it that way helps incline you to buy healthier foods at the market and stay away from those empty calories.

My parents, who were decidedly in the working class, also thought of things like a good coat as “investments” and so would try to buy the best quality they could afford in products such as appliances, clothing, and furniture. Thank goodness! When we returned to the U.S. after 10 years overseas, my mother bought a very nice set of solid birch furniture, which she cared for well and left to me. Because of her wise investment in quality products, I had decent bedroom, living room, and dining room furniture to fill my apartment when I left my marriage. All that (now retro!) stuff is still in use, and occasionally admired by friends.

One drawback to thinking of consumables as investments, though, is that some marketers pitch their (unnecessary, extravagant, why-do-i-really-need-this) products as “investments,” when more likely the word they’re groping for is “indulgences.”

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avatar Frugal pursuit

I found your guest post quite thought provoking. You reasoned this out well and I wonder why I never thought of my purchases in this fashion before. In fact, I am still ruminating about it.

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avatar Marcy

I think it’s important to note the overwhelming influence on society to spend, spend, spend. This encourages people to make bad investments. We are told that we “need” iPods, HDTV, the newest gaming system, etc. Like your friend, Kate, who bought things and never used them. Instead of making irrational purchases, we must ask ourselves if the item is really needed.

Like the coat, which is a good investment. You could spend $50 on a “cheap” coat that wouldn’t last as long. Or you could spend a little more and have an item that will last for years.

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avatar Atul

Money is earned to be spent or to be invested so that it can be spent later. After your necessities are met, what else do you have it for except to donate, save for your kids, or buy things that you want?

I don’t think of consumption as a financial investments. Rather, these transactions are emotional investments. They make you happy to some degree. If I spend a little more on a car that I enjoy driving, it gives me much more joy than driving a lame car and seeing the numbers in ink on my bank account statement be $100 a month higher.

I don’t think we should spend spend spend to just consume and chase that never-ending target of wanting more and more, but we shouldn’t feel guilty for spending and we should enjoy our money.

Any one of us could die tomorrow. When my dad passed away, my mom felt sad to have life insurance money that she couldn’t enjoy spending with him. I wish he could have enjoyed using more of it before he died given that he knew his kids would be ok financially.

Atul

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