EDITING : 2022.3.22 화 09:35
The Gachon Herald
Is This Appropriate Consumption?Let’s cultivate how to spend money wisely in 2022
Choi Seh-min  |  cchloe1006@gmail.com
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Updated : 2022.03.21  15:10:54
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 ‘Value-based Consumption’ is making a purchase decision based on personal values, and this expression has recently become popular with generation MZ (born 1981~1995). People who pursue ‘Value-based Consumption’ do not purchase on an absolute standard such as price or quality of the products. Instead, depending on one’s ethical beliefs or personal preferences, they are willing to purchase regardless of whether something is cheap or expensive. Donating a large amount of money is also a kind of Value-based Consumption, and this consumption culture is sometimes referred to as the 'angle consumption’. However, Value-based Consumption sometimes degenerates into extravagance or ostentatiousness consumption. They interpret Value-based Consumption as an unconditional preference for high-priced merchandise, so they pour money down the drain to purchase luxuries such as prestige products and electronics. Moreover, rising generations are willing to take any risk to raise money to purchase luxuries. They buy those products “to show one’s distinct and special individuality”. Buying with wrong values often leads to bad results. Two prime examples of this consumption are CarPoor and luxury investment. Let's find out what CarPoor is and luxury investment, look back on our consumption and see how to form the right spending habits in this article.
 
CarPoor
 CarPoor is a compound word of Car + Poor. It is similar to the neologism HousePoor. CarPoor indicates people who spend too much of their budget on an expensive car even though they cannot afford other necessities. They live in poverty because of high car prices and maintenance expenditure. People in this situation are mostly young people in their 20s and 30s. HousePoor can make a huge profit from the real estate business, but automobiles have a nearly 99% chance of falling over the period. Therefore, real estate can be the investment target, but automobiles are just expendables that unconditionally depreciate with some exceptions (rare classic cars).
 Nevertheless, the proportion of CarPoor is increasing. It is mostly because of the following three reasons. First, price hikes in real estate so people are hardly thinkable to buy houses. Thus, they buy cars which are the second most expensive consumer goods to show their wealth. Secondly, a principal deferment no-interest budget plan was introduced to reduce expensive car prices, especially it started around imported vehicle companies. Principle deferment no-interest budget reduces the initial cost by paying only part of the vehicle price first, paying only interest, and paying the balance at once 36 to 60 months later. Lastly, there are some people who love cars and have no reservations nor regrets about the money on cars.
 There is no standard judgment to decide who is Carpoor. Usually, a person who purchases a vehicle in full installments is regarded as a CarPoor. Let me give you an example with the BMW 3 series. The vehicle price of this model is approximately 50 million won, and if you make a five-year installment, you just need to pay 1 million won monthly. In addition, you need to consider operation costs such as insurance premiums, taxes, fuel costs, etc. which are going to be more than 1.5 million won. Assuming that the monthly salary is 3 million won, more than 50% will be spent on cars.
 Investing in cars can be one of your hobbies when you are interested in automobiles. People who love riding bicycles spend a lot of money on buying bicycles, people who enjoy eating spend a lot of money eating out, and people who like traveling spend travel expenses a lot. Like this, people who have a lot of interest in automobiles can spend a lot of money on cars. I also fully understand consuming based on one’s values like buying expensive cars. However, the important thing is that you should be responsible for your spending. There are many people going into debt after buying expensive foreign-made cars on the installment plan. Also, there are some cases that one cannot stop buying cars that they became addicted to purchasing automobiles and get into debt. In particular, cars can incur unexpected expenses and maintenance costs are high. Therefore, you must check if your pocketbook is tight or not. Remember, the joy of buying is short, but the pain of paying is long.
   
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Luxury (ChaTech-샤테크)
 ChaTech is a combination of ‘Chanel’ and ‘Technique’, which means making investment techniques through purchasing luxury goods. The most representative luxury brands are Gucci, Chanel, and Hermes, and they are famous around the world. Luxury goods are cheaper abroad, especially in Europe. So, a lot of Koreans go on a ‘luxury trip course’ to buy a lot of luxury goods when they go to countries in Europe. According to one of Korea’s largest department store chains, luxury shoppers have been steadily on the rise despite Covid-19’s negative impact on most other industries. They buy luxury goods as a self-reward since there are many restrictions in this pandemic especially with the difficulties of travel. Ultimately, people really have become crazy about ChaTech(샤테크).
 In the first half of 2020, the luxury brand Chanel made headlines when it confirmed it would be increasing prices up to 25%. From then people started to line up for the same event, the so-called open run, the freestyle sprint to buy luxury goods especially the Chanel as soon as the store opened in the morning. You might understand why people do this by looking at the price fluctuations of the classical flap bag, which is one of Chanel’s signature bags. The price of the small-size classical flap bag was 6.32 million won at the end of 2019, 7.69 million won in 2020, and 7.85 million won in 2021. In a year, the price has gone up by about 2.25 million won. It shows that many people have a lot of interest in the luxury brand, especially Chanel, and their attention was also drawn to the second-hand product. On the luxury brand information community ‘Sagment’, there was a post selling Chanel Classic 13 large size bag for 3.8 million won and it was sold in two minutes. People regard Chanel bags as an investment technique and even take loans to purchase them. Can we consider this a financial technique even when it increases debt?
 Luxury brand items were once considered to be something for wealthy middle-aged people, or at least younger people with high-paying jobs. But in recent years, people in their early 20s and even teens are splurging on luxury brands. This is because the 20-30s are influenced by the ‘flex’ culture. ‘Flex’ is a slang term meaning to show off, which is spending a lot of money on luxury goods such as luxury bags and home appliances from saving money by reducing expenditure on food and daily necessities. The word ‘flex’ became a w popular slang expression when a rapper said, “I just flex it.” Flex culture results in consuming luxury goods becoming a part of peer culture. According to an interview in the Korea Herald, the reason teens buy luxury goods is because “looking at my friends posting luxury goods make us think ‘I also want to buy it.” Indeed, YouTube and social media are full of temptations for teens. One video uploaded on YouTube features an 18-year-old high school student buying a Chanel jacket, Dior shirt, Louis Vuitton shoes, Gucci scarf, and more in a single shopping spree. These kinds of videos have become their genres, called “unboxing” and “haul” videos, in which predominantly young YouTubers show off luxury goods they recently bought. Moreover, they carry all the receipts or certificates of authenticity to prove their luxury goods are genuine. This shows us that there is a lot of show-offs purchasing. Like adults who are dealing with Chanel bags on second-hand websites, teenagers also buy and sell luxury goods, as a result, teens’ second-hand market has grown a lot. You can easily see people carrying luxury goods, it is because of the perception that people think ‘carrying luxury goods make oneself cool.’
 People all around the world love luxury goods like Koreans. Already, people think that luxury goods are expensive and therefore those who carry luxury goods are rich. Companies use this psychology in their marketing. So, we must think about why we like luxury goods and the reason for consuming them. If someone works hard to pay for a coveted luxury item and gets immense joy and satisfaction out of it, that’s a healthy thing. On the other hand, buying luxury products for the sake of keeping up with others, when they don’t even give you joy, is not wise; especially if it’s an impulse buy. Just be careful not to spend beyond your income or get into debt.
 
   
 
How to save money wisely 
1. Separate living expenses
 It is important to decide how much you will spend on living expenses based on the amount you earn. There are two ways to wisely plan your spending. These two methods are on the monthly basis. The first method is to itemize. This is a method of thoroughly dividing living expenses into items by purpose and setting usage by items within a limit. For example, if the monthly living expenses are set at 1 million won, divide it into 100,000 won for communication fee, 50,000 won for transportation, and 450,000 won for eating out. You should set usage in each item and spend money within the fixed usage for a month, it is important to save all the remaining money. Also, it is important to flexibly adjust each item. This is because there are always unexpected situations where you have to spend a lot. This method is quite cumbersome because you have to check your spending, so I recommend using an application that automatically organizes your card details of usage.
 The second method is to split spending by the week. For example, excluding transportation and communication fees, if you decide to use 600,000 won in a month divide it into four. In other words, the maximum amount you can spend is 150,000 won a week. Same as the first method, you should save the remaining money. If you expect there is going to be an event that requires a lot of money, don’t forget that you have to leave money behind for another week.
2. Reach for your debit card instead of your credit card
 Most people use credit cards these days, but using a debit card may be a better way to manage not to overspend. You should stay away from credit cards for proper consumption habits. A credit card has a deferred payment system, so you might easily overspend and have credit card debt. Bank account emptied; credit cards are easily maxed out. A debit card will help you to avoid going deeper into debt because you can check your money out right away. You can avoid merchant fees and debit cards also have a lot of reward programs as credit cards.
3. Set savings goal
 One of the best ways to save money is to set a goal. Well, it is too common to mention but you should avoid an impulsive purchase. It sounds simple but it is hard to follow. Therefore, there is ‘Detox Consuming’ that can help you to prevent impulse purchases. It is a newly-coined word like ‘minimal life’ in an effort to cut consumption. Like ‘Detox Juice’ that remove toxins in our body, ‘Detox Consuming’ is one of the plans to reduce consumption and build up healthy spending habits. In other words, it helps remove a toxin called vanity, which is one of the bad spending habits. Practicing ‘Consuming Detox’ is very easy. You can only buy daily necessities except for a fixed period of about four months a year.
4. Investment in self-development is important
 ‘Experience Consumption’ is spending money on enjoying cultural life and traveling and people feel more fulfilled, satisfied and happy, in this consumption. Also, this consumption will help you to develop yourself and gain happiness through leisure time. It is important to save money, but it is a good spending habit to spend money to maximize your happiness. However, do not forget that you must consume within reasonable bounds.
 
 Outer beauty is just a wrapper, but inner beauty is the beef. Even the wrapping paper is beautiful, it will not be worth it if there is trash inside the wrapping paper. On the contrary, even if it is packaged with newspaper, it will be much more valuable if there is a diamond inside. Rather than caring more about what to wear, where to live, and what to ride, which are the things that our society sets a high value on, I wish you to think about what true beauty is. We are obsessed with our appearance, but from this year on I hope we all develop inner beauty. We spend far too much money merely trying to maintain an image. From fancy cars to brand-name clothing, much of what we buy has more to do with impressing others than it has to do with purchasing something that we want and enjoy. Buy the things that you enjoy and care more about your inside beauty from this year. Don’t fall prey to the feeling that you have to spend money to impress other people.
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