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Today Market

01 Apr 2018

How People Spend Their Money

Money also known as assets, property and resources owned by someone or something; wealth, is one of the most important resources these days. It helps live the life style that one can only think about. People have their own needs and demands and money helps one fulfill the demand and needs accordingly. Most of the time we humans don't know what we need and chase the things we want and that brings us to utter disapproval and disappointment of what we have. While money can fulfill a void for sometimes it doesn't completely make us content.  


Online purchase of goods is one of the most used luxury of our times, it focuses on the comfort and facilitates its user to buy and sell products right from houses and offices at ease. Surprisingly Amazon and E bay are the most used online shops in the past 20 years and there was no looking back after that. They have profited billions of dollars through this in the past few years and the upside is there are authentic and genuine products sold by authorized people but the downside is , it is made convenient for all the users to sell the products and services which also has resulted in a lot of scams and negative results. This although has not brought any change as they still continue to shop online for the sake of convenience and ease.


Hotels, Accommodations, restaurants are as well one of the most growing service but this has been the case since the mid-17th century when hotels were inns and used to usually only provide the services breakfast and bed to travelers and truth seekers back then but we have evolved a long way and now hotels are mostly used for leisure, comfort, family holidays etc. They are now categorized into business hotels, family friendly hotels and such. People mostly go to hotels for refreshment and sometimes because they are away from their own country or homes. The fact about the hotels these days are people still going to the hotels and using accommodations these days even if their houses are actually quite nearby and the concept is quite absurd as to why people would want to stay in a hotel rather than in their own houses. The need outweighs the want at situation like this.


It is not an unknown fact that every day there are new gadgets and accessories being created and manufactured. It is a known fact that over this 100 years people have stopped using the term ‘IMPOSSIBLE’ which signifies how forward we have come from those times. Investors aren't hesitating to throw money in talking robots who can minimally walk, talk and also perform chores in a daily basis and additionally are also eco-friendly. Gadgets like iPhone, Samsung, Go pro, Drones with a 360 angle and the list goes on. People stood in queues for days when iPhone X was launched, these are the people who already had an iPhone 8 which was pretty much the same and had also quite the same features and advantages as an iPhone X, the only difference that was a visibility was that they differed in sizes . The only thing they were competing with was other people when in fact they actually don't need it consciously or subconsciously.


What is Consumer Spending?

“Consumer spending is another term for private consumption in a voluntary manner for the exchange of any goods or services"

When the industrial revolution dramatically increased, it rose with the availability of consumer goods and services. Consumer goods can be durable or non-durable for the exchange of money or services. There always has been a debate for savings and spending but matter a fact both are the need in a balanced way for wellbeing.

Does the consumer spending affect the state of the economy?

The consumer spending is an economic indicator which measures the degree of optimism that consumer feel about the overall state of the economy and their personal financial situation which is derives something new in the spending basket and that is known as consumer confidence index.

As the consumer spending drops off then economic growth slows, prices of consumer goods will drop and creates deflation. Slow consumer spending is a clean way for recession for an economy and a fine indicator towards stimulus package. There are multiple structures of tax materials with core regards to the consumer behavior to the business and the overall economy basically known for consumerism.

What is Consumer Confidence Index?

An indicator articulated to measure consumer's confidence, the degree of optimism on the state of the economy that consumers are expressing through their savings and spending activities.

What is Consumerism?

The protection of consumer's need and the promotion of consumer's interest can be defined as consumerism.

What are the "should aware" factors for the consumers before spending?

Be your own financial planner beside the factors of tax for the development of the economy, consumers should be aware of their own spending in various aspects:

1. Remember 50 30 20 rule.

    Divide after-tax income, spending 50% on needs and 30% on wants while allocating 20% to savings.

2. Create your budget plan.

    Organize your purchase category and set your limit.

3. The impulse purchases won’t work for all.

    Don't browse for fun to avoid buying on the spur of the moment and take no decision when your judgment is impaired.

4Try to shop alone.

    Don't take advises from store employees, just politely listen to their responses neglecting advises in a need of question answered.

5. Payment in full by cash.

    Credit and debit cards contains intangible values while paying and don't get more cash than you need to shake your budget. 

6. Don’t be fooled by marketing.

    Don’t purchase on a basis of advertisement, be aware of pricing tricks, don’t automatically buy mid-priced product within the category. Wait for sales and discounts.

7. Know when to spend more for quality.

    Price doesn't guarantee the quality.

8. Take all costs into accounts.

    Calculate and pay, then give yourself occasional, inexpensive treats.


                                                                    -Aishwarya (Hedgerow Assets Management (P) Ltd.)