According to Glenn Stevens Governor of the Reserve Bank, it is said that as Australians, we handle adversity well but prosperity badly. In other words, we like to spend what we’ve got, with no regard for leaner times ahead. Although Stevens was mainly referring to the public purse, the extent of our personal debt suggests the assessment can probably equally be applied to us as individuals.
We are taught to “Just say No” in other contexts. When it comes to our spending, reinforced by our rampantly consumerist society, we find it difficult to deny ourselves. And when we want it now, we don’t like to wait. Hence the profusion of no-deposit, no-interest deals (what’s that they say about something too good to be true?).
Remember the marshmallow experiment conducted in the sixties – kids were offered a single treat immediately or two treats if they managed to hold out for fifteen minutes. Only 30% of the children held out for the full fifteen minutes. Those who resisted temptation grew up to be more successful teenagers - better at coping, at holding down friendships and achieving higher grades.
Granting ourselves each and every desire is akin to those four year olds unable to resist the puffy little treat although infinitely rational to do otherwise. Just as, against rationale, we find it hard to resist that perfect set of heels, or designer handbag.
Stevens correctly points out that consumption deferred can easily be enjoyed in the future. A gift to our future selves. Put aside, or even better, wisely invested in our superannuation or personal portfolios, we can enjoy potentially multiples of the original amount in the years ahead. Let’s resolve in 2011 to practice the lost art of denial in pursuit of a prosperous future. Off to do some Christmas shopping...
Wishing peace and prosperity to all our clients, followers, friends and family for the year ahead, 2011. Signing off ‘til then!
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