Tips for managing personal finances under the wave of consumerism

With all the negativity and bias that consumers blame, consumerism emerges as a phenomenon of the economic two-edged sword. It, indeed, has profitable impacts on the progress of the economy in general. However, in the long term, it leaves dreadful consequences regarding our finances, lifestyle, and environment. Understanding this tendency wholly is the very first step to employing the tips for managing personal finances that VietNam Review later shares with you.

Definition of personal finances and consumerism

Personal finances

Generally, personal finances include all of your income resources and consumption, concerning how you spend, save, protect, and invest your money. Hence, the term personal finance management obviously refers to the ability to use your budgets.

Personal finances come from several sources that matter if you don’t control them properly

In particular, there are 5 main areas in personal financial planning that you needs to understand clearly:

• Income: This is the foundation of your financial stability. How well you manage it is the key to managing personal finances.
• Spending: Making brainy purchases and always checking on your spending helps you control the amounts for your financial growth.
• Savings: In a nutshell, savings is the amount that you want to set aside to meet both planned and unplanned short-term needs. This sum should be sufficient to cover basic needs in case of force majeure arise.
• Investing: Some people don’t have this kind of amount. However, if you want to manage personal finances more successfully. In the long term, it can create a noticeable supply of passive income.
• Protection: Obviously, protecting yourself and your loved ones from financial risks is also counted as one of the tips for managing personal finance since insurance helps prepare for unpredictable circumstances.

Consumerism

Consumerism is a theory that says a country consuming goods and services in large quantities will benefit the economy. It is sometimes known as a policy that encourages greed because it often encourages the purchase of the latest products.

How consumerism wreaks havoc on your personal finances

Excluding the apparent advantages such as increasing creativity, stimulating social improvement, and encouraging fair competition in the market, consumerism is often considered a detrimental factor that causes harm not only to our way of thinking and deciding but also to our community including its habitat, not to mention the method to manage personal finances. Below are the two dominant manners by which we often get affected relating to this kind of living.

Consumerism can affect our mindset unconsciously

Technology applications and digital advertising

The current drastic advent of technology generously allows advertisers to apply useful apps and tools to effectively promote their products. They know exactly when consumers are most likely to make purchases on a whim. So one of the tips for managing personal finances relates directly to your plan to manage your personal finances.

Digital advertising tools know your interests more than you think

To be specific, thanks to AI and Big data, a processing machine can understand you even more comprehensively than you do. All of your traces that are left behind when you surf the Internet or other social media like Facebook, Twitter, etc. will be collected and classified, thereby functioning as a foundation to draw an overall image of yourself regarding sex, age, habits, hobbies, interests, financial status, and so on.

Discounts and offers selected from customers’ information are the tricks brands use to entice them

In addition, the Internet has also accelerated the progress of e-commerce, setting no limit for buyers to pay or get a loan in no time. Also, the shopping bag, with the feature of storing without placing, makes it possible to buy without considering the number of goods, therefore reducing the quality of thinking about how to manage personal finances.

Digital shopping bags free people from the warning of products’ weight

More importantly, consumerism with the notion that the more you buy the more you live to the fullest inspires people to pay without feeling regret and lulls them to placement. The remarkable thing here is that this message is repeated continuously and appropriately, changing your mind gradually in unconsciousness. Eventually, you will assume that happiness only comes when buying, which marketers wish to see. 

Tourism

Don’t be astonished. Your eyes don’t deceive you. This is the crucial mark if you want to apply tips for managing personal finances. Yes, it’s tourism that accompanies consumerism in the journey of stealing your personal finances. Despite the fact that traveling can bring you joy and other so-called elation, it may imply another significant effect on your finances. 

Youngsters are heartened to travel as much as possible to find contentment but is it really necessary to be happy in that way

In the same way that shopping is instilled in your opinion, tourism is also propagandized as an approach to achieve pleasure.  In 2022, according to a report of Coc Coc, a popular web browser in Vietnam, the search volume relating to keywords such as “villa”, “resort”, and “5-star hotels” correspondingly increased by 53%, 35%, and 21%. This means that tourism becomes more and more prevalent.

Tips for managing personal finances

Given the potential threats of consumerism that VietNam Review demonstrates above, it’s not that urgent to scrimp and save. Just follow our tips for managing personal finances to better use your money and truly enjoy your life. 

Be a smart buyer

A smart buyer knows where he should invest or what to buy. Now recall that you were in the COVID-19 pandemic when everything was kept on strict distribution, what could you buy at the time? 

Only spending when you’re in need

There are tips for managing personal finances: Consider reducing the amount you consume by discerning what you like from what you need. If you’ve ever heard of Maslow's hierarchy of needs, mind that your life won’t worsen when there’s the absence of cosmetics or trivial things like junk foods.

Make a serious plan for managing personal finances

Having said that, you must carefully apply personal finance strategies and strictly follow the plan so that consumerism impacts will be narrowed down practically. 

• Dividing financial goals: Depending on your time resources for each goal, classify all of your personal finances and start saving for them. You can apply the 50:30:20 rule, in which 50% of your income should be spent on daily needs, 30% wants, and 20% savings and investing.
• Don’t forget the emergency fund: Life is full of uncertainties. Be well-prepared to have enough money in case any crisis takes place so that you don’t have to rely on debt. This fund should include at least six months’ expenses. 
• Managing debt: Try to keep the ratio of debt over income under the 30% threshold. Particularly, it is wise not to let your EMI (equated monthly installment) exceed 40% of your salary. Too many EMIs means you’re unlikely to afford unexpected expenses.

Living a significance-oriented life

Leading a demanding life can pull you to the brink of tension once your budget cannot fulfill your quest for something fashionable yet unnecessary. VietNam Review suggests 2 tips for managing personal finances by dealing with lifestyles, namely Lagom, and minimalism.

• Lagom: In Swedish, lagom means not too much, not too little, just to the right amount. This kind of living is a philosophy that aims for equity no matter what areas of life you’re facing. The Lagom lifestyle has its roots in social awareness, calmness, and sustainability. 
• Minimalism (also referred to as Voluntary Simplicity): Based on the concept that we only have a limited amount of time and space, minimalism suggests owning only what and who actually adds value and meaning to your life, then removing the rest. Keeping the clutter is just a waste of time and energy.

Minimalism has been more and more popular these days as a contradiction to consumerism

To conclude, sustainable consumption and production are one of the 17 Sustainable Development Goals (SDGs) set forth by the United Nations. This goal requires consumers to be more aware of the negative burdens of consumerism on our lives as well as the environment. Together with adopting the aforementioned tips for managing personal finances, readers are encouraged to teach their children the consumerism impacts and how to protect their communities, countries, regions, and the world.