Why People Spend Money - concept #4

It's essential that we understand why people spend money. If we understand it, then we can formulate an approach to earning it by addressing the "whys" in their life.

Most people part with their money based on the expectation of getting something that is pleasing, satisfying, rewarding or otherwise gratifying.

Sometimes it's based on hope, guilt or coercion. It can also be based on "expected value" where you're making an investment with the idea that you'll get (or have a chance of getting) some sort of return.

And, many people spend money based on the expectation of getting something useful. Let's look at just a handful of reasons why people spend money:

  • necessity
  • satisfaction
  • entertainment
  • feel affluent
  • convenience
  • escape reality
  • make money
  • escape guilt

Do any of these look familiar? They should. We've either used them as reasons or excuses to spend money, or we've seen others do much the same. Here are some examples to consider:

  • Once I saw a woman give a small child $50 as a birthday gift. I asked why, and her answer was "He has leukemia!" So what? The sicker you are, the more money people should give you?

    How does that make any sense?

    It probably doesn't, but perhaps she was dealing with her own guilt about how she treated her children. Or perhaps in her mind, money could buy happiness, and she was trying to buy the boy some.

    It's hard to say for certain, but something motivated her to give an exceptionally large amount of money as a gift.

  • Many years ago at an industrial facility, an organization had just won a safety award, and the senior manager was very pleased with the group's performance. One of the supervisors in the group took the opportunity to "hit up" the senior manager for some items that he had been wanting for his group.

    The senior manager was in a good mood and agreed to spend money for the items. It was perfect timing. Agreeing to buy the items could be justified as a type of performance reward.

The point is that those of us interested in selling our products or services, or just looking for some money from someone else need to understand why people spend money.

Whether it's making a sale, getting a raise or obtaining a donation, we need to understand what motivates people to part with their money. It's essential if we're going to be a good player in the money game.

Done with Why People Spend Money, back to The Money Game

There certainly is a broad scope of topics here at Frugal Living Freedom. When you think about it, money permeates so very many activities in our lives, therefore, being frugal encompasses a wide range of interests, from being employed to taking a vacation, and just about everything in between. Enjoy the variety, pick up some new ideas, and start making frugality a part of your signature.

I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.

If you ever hope to see an abundance of wealth, you need to plug the hole in your boat. The wealthy don't necessarily make lots of money, instead, they know how to hang onto what they make, and make it work for them.