Financial Wisdom in the Era of Stunting for the Gram

It is so easy to get caught up in the headiness of  Instagram posts that portray (in nauseating abundance) neatly-curated and closeted collections of luxury items, bright-colored Ladurée macarons displayed eye-catchingly amongst multiple other fanciful confectioneries complete with the Eiffel Tower back drop, foil balloons, and decorated boxes of everlasting roses .

As a result of this natural HUMAN tendency to be drawn to these images, it is sooooooooooooooo crucial to take social media pauses and perform regular self-checks to ensure that your feet are firmly planted on solid-groundedness, especially since your IG notifications are hell-bent on sucking you right into eternal “star-gazing” oblivion.

As a bonafide lover of all things luxe who loves to share my love of fashion and travel (amongst many other things) on social media, I believe it is my responsibility to make sure I do not lead any vulnerable eyes astray. By astray I mean I do not want anyone to be misled down a road to financial perdition or emotional upheaval because of any of my posts. This post is about finances.

So here they are—10 IMPORTANT pearls of financial wisdom that you MUST keep in mind as you process social media:

1. All that glitters is not gold: The external appearance of something is not always a reliable indicator of its true nature—this applies to people, places and objects. For this reason, you have to be very careful with how you let the social media posts of strangers (especially strangers with unclear or unverifiable sources of income) dictate or influence how you spend your money. For example, I buy a lot of designer dupes especially dupes of trendy designer pieces (trends that may die even before the next season). There are also times that I have no choice but to buy dupes (not fakes) of classic pieces when the original designer piece does not come in my size (most typically with shoes). Sorry Manohlo Blahnik—I am a collector of multiple hangisi-inspired shoes that cost a tiny fraction of the true Hangisi.
   

   My collection of Hangisi-inspired shoes

2. Cut your coat according to your size: Just because @luxelover4lyfe has 12 Birkins, 5 Cartier love bracelets, 4 Bentleys, and a Partridge in a Pear Tree does not mean that you have to aspire to that lifestyle or that you have to start bemoaning your life. We are all given enough cloth so focus on yours and yours alone in order to create the best coat for you that is possible to make out of your allotment. The coat does not have to carry a Chanel label either.
   

   This coat cost $75 on ASOS

3. Before you waste money on luxe goods, invest money to protect the most luxe commodity you possess: your life!

There are three types of insurance you need to get while you are young and healthy: Health Insurance, Life Insurance (Whole life versus Term Life), and Disability Insurance (Short Term and Long Term disability). For us young people, we are more likely to be disabled (and unable to work to earn for our and our family’s upkeep) than we are to die, so it is crucial that we invest in good disability insurance.

Checkout this brilliant NewYork Times article—a primer on buying life and disability insurance. Click this link.

4. Resist impulse buying by mastering the 30-day rule: As someone who loves handbags and lots of other “beautiful” things, it is my firm rule that I must wait 30 days before I buy any luxury item. This allows me to plan my purchases wisely balancing them out strategically with other competing (more important) priorities (like investments, savings, charitable endeavors, etc) As a result of the 30 day rule, I also largely avoid buyer’s remorse because if I am still interested after 30 days, I must truly (really) want that bag. Delayed gratification is much sweeter and longer lasting—trust me!  
5. Call a spade a spade: I tell myself the hard truth—you hardly ever “invest” in a luxury piece, you waste money on a luxury piece. 99% of the items in your (and my) closet are liabilities not assets. What is a liability? A liability is anything that takes money out of your pocket. The 1% of your closet that can be described as assets are often depreciating assets. Even the best performing Chanel bag would only retain 90% of its value on resale, and for most other designer bags it is 63% on average.  

So you need to make sure that you are amassing more assets than liabilities in order to build and pass down true wealth. What is an asset? An asset generates positive cash flow. Income producing assets are stocks, bonds, promissory notes, rental properties, flourishing businesses, etc.

*Of note, there is a category called Neutral—assets that appreciate in value but still take money out of your pocket like your house and other collectible items that you pay for (like art pieces, gold, etc). A lot of times in this case, the level of appreciation does not surpass inflation, so you truly have not gained much).

**A luxury car is one of the worst liabilities. It depreciates in value as soon as you purchase it and drive it off the lot; also, it requires monthly cash infusion to stay functional (gas, maintenance etc).

6. Your children will enjoy playing with the packaging just as much as the actual toy: So, do not waste a lot of money trying to entertain your kids. They want more of your time than you stuff. Most kids are just as happy with an activity session involving a Mickey Mouse coloring book as they have been with dancing with Mickey Mouse in Disney World. So if you cannot afford that luxury Disney Cruise, don’t sweat it as it is mostly a waste of money (refer to Pearl #5 with any hard feelings).  
7. The 6 month rule: If I do not use something in my closet for 6 months, I will either give it away or sell it (my husband keeps me honest in this matter). Most importantly, I try my hardest to not repurchase the same item or its equivalent. I like luxury items that combine form and function. Plus why let items just collect dust in your wardrobe?
8. Second hand of the 20^th century is the 21^st Century’s Pre-loved: There are so many impulse shoppers out there who can take the first and bigger hit of the original purchase of a luxury item for you. They will quickly realize that they do not really want said item as much as they originally obsessed or they cannot afford to keep it. This is where you and your noble self come in and purchase the item (that you too craved, but diligently waited for) for anywhere from 20 to 50 to 75% off full price. Refer to rule #4: the 30 day rule can be instrumental to getting major discounts. 

*Please note, just because you got a discount on a luxury item does not mean that is no longer a liability. It is STILL a liability—just a cheaper (and I guess less painful) one.

9. It is infinitely better to give than to receive: Ask yourself, are you doing enough to help others around you? For me, no amount of luxury items can compare to the feeling of making someone else happy or helping someone solve a problem.  When I want to buy a luxury item, my rule is that I have to give its equivalent or more to a charitable cause and to my savings account or to an investment. When I do that, I automatically control how I spend (because I have to save up 3 times the price of each luxury piece to fulfill this personal rule). I also feel less stupid buying the luxury item (less stupid—so I still feel somewhat stupid…LOL! Again, refer to #5 with any hard feelings).
   

   My Eloquii dress cost $75; the Self Portrait original worn by Beyoncé and the model cost $395

10. Don’t let Beyoncé (or any social media influencer) make you shell out major cash to buy something that she herself got for FREE.

That statement requires no further explanation.

That’s all!

So what do you think? Please share your thoughts and other pearls of financial wisdom you have in the comment section below and let us build a strong community of lifelong learners.

Love,

Chichi