How to stop overspending with online shopping for millennials and Gen Z
Research shows a lot of millennials and Gen Zers are overspending, and it’s about time that we talk about personal responsibility when it comes to spending. I know that this sounds like the start of some ridiculous right-wing talking point, but personal responsibility is extremely empowering. There’s so much outside of our control, but when we can get our spending in order, it’s a lot easier to fix our financial lives.
Although I’m extremely empathetic, I gotta hit you with some tough love.
The idea for this post was inspired by this video from the YouTube channel The Financial Diet. I just came across it, and they make some really cool video essays. If you have the time, I definitely recommend checking them out. The videos can be an hour or so, but I watch at 2x speed, so it’s only about 30 minutes.
To summarize this video, technology has made it too easy to overspend. The video primarily about Gen Z but also discusses millennials a bit. It talks about how easy smartphones has made it to order stuff on Amazon, order food from delivery apps, and order useless items from the TikTok shop. It also talks about fast fashion and some other ways young people splurge.
The video then talks about all of these services offering “buy now pay later” options, which can get people to rack up debt and pay way more than they originally intended to.
In this video, they interview one young woman from Gen Z who now teaches others about getting rid of their debt. Why? Because she racked up $36,000 of debt by her early 20s. And we’re not talking about student loan debt. We’re talking about credit card debt.
We need to address the elephant in the room so you don’t think I’m a complete jerk when I give you some tough love.
I’d argue that the majority of people have little to no financial education. If you’re drowning in debt or a reckless spender, it’s not 100% your fault because you may not fully understand how all of this stuff works. I get it, and I’m very empathetic to this fact because I was in the same boat. Hell, it’s one of the reasons I started this Substack.
You’re already making a great first step by getting some financial education here. But I will say that although many of people don’t fully understand how compound interest works (see my last post), most people know that it’s not great to be in debt.
My parents never had credit cards, but my dad basically raised me on his own, and I always saw him borrowing money. He was constantly “borrowing from Peter to pay Paul”, and I saw how it hurt his relationships with friends while also making him extremely stressed.
Debt is bad, and if you’re starting to rack up debt into amounts you’ve never had in one of your bank accounts, it should be a major red flag. So chill out on the spending.
Let’s break this down into a few sections. First, I’m going to give you my overall philosophy about online marketing.
Online marketing and free will
I’ve worked in some form of marketing or sales for most of my adult life, and I’m also a big psychology nerd. I understand that the average person doesn’t understand the psychological tricks used in marketing, but I do believe we have a certain amount of free will.
As a father, I hate the arguments that you shouldn’t market to kids. I grew up watching Saturday morning cartoons that were flooded with toy commercials. But guess what? I didn’t have any money. Most kids don’t have any money. This means that marketing to kids means they have to ask their parents to buy it, and if you can’t tell your kid “no”, I don’t think that’s a problem with the advertisements.
There’s a good chance that if you’re reading this, you’re not a child. You have access to your money, but you also have a prefrontal cortex that’s more developed than a child. So, it’s time to practice some free will and self-control.
Personally, I love targeted ads. I love the fact that social media apps, Amazon, and Google know the type of stuff of like and markets it to me. I pay extra on my streaming services for no ads because I hate getting ads for things that I don’t need. It’s a waste of my time and a waste of the company’s marketing budget.
People call this “predatory”, but even though I’m flooded with targeted ads for a lot of things I may actually want, I don’t buy 99% of it, and neither should you.
I personally find it insanely infantilizing to say that we need laws to calm down the targeted ads. They’re basically saying, “You’re all little children who have 0 self-control, so we need to put up all of these safety precautions to ensure you don’t buy things and go into debt.”
I’m a progressive leftists and believe in a lot of protections for a lot of different people, but this is one that I think is a waste of time because we all need to learn how to “just say no” to buying silly stuff we don’t need.
In my post about “how much money is ‘enough’”, I discuss how many of us spend as a way to display status and impress other people. I think this is the root of a lot of overspending. Most of us are buying things to show off to others. Once you realize this and stop doing it, I promise you’re going to start making money.
Like many kids, my son was obsessed with Fortnite. He still plays, but he plays a lot less these days. For those of you who aren’t gamers, Fortnite and many other games sell “skins” to make a lot of their money. These are purely cosmetic items that change how your character looks. Some games charge $20 or more for one skin.
Back when my son was younger and playing a ton, he always wanted the newest skins the second they came to the game. He’s really good about hoarding his money from his allowance and holidays, and he’d spend it pretty much exclusively on skins.
Once I realized that he wanted new skins the second they came out or super rare, exclusive ones, I knew it was time to have a talk. I sat him down and discussed this same topic with him. I told him that whenever he wants to buy something, he needs to pause and ask himself, “Do I want this because I like it or because I want to impress other people?”
I taught him this about 5 or 6 years ago when he was 9-10 years old. He’s never forgotten that lesson, and now he’s much more intentional about his spending.
Start practicing some self-reflection and self-control, and you’ll start to make better financial decisions.
Online shopping and the curse of convenience
Something that Financial Diet video discusses is how back in the day, shopping was much more difficult. You had to go to a store or order something through a catalog. Now, we have Amazon Prime next-day delivery, and sometimes, we can even get it same day. We’re living in crazy times!
Next, there are the food delivery apps. Out of curiosity, I wanted to see how much people were spending on these. I just googled it and found that people are spending an insane amount on these services. This article shows the following:
“The average delivery service customer is spending $407 a month in 2023, up from $157 a month in 2021, according to a recent survey from LendingTree, the personal finance site.
Four-fifths of consumers reported using on-demand delivery in the past year. Millennials spent the most, $575 a month. Boomers spent the least, $153.”
Reading this made me want to puke.
Aside from spending to impress others, we also need to realize that we all pay for convenience, and it’s why some of the most profitable companies are the ones that offer the most convenience.
Amazon allows us to shop without leaving our home.
Uber saved us the time and hassle of flagging down a taxi or calling a taxi service.
Restaurants and food delivery apps save us time and effort by not having to go shopping or cook.
I want to be transparent and let you all know that when I was younger, I ate out constantly, so, I get it. Fortunately, I was able to break this habit by the time food delivery apps became a thing.
Look at those numbers above. Spending hundreds of dollars per month on food delivery apps? That’s not even counting just eating out and not having it delivered. That money could be an entire car payment or go toward investments, savings, or a nice vacation.
My girlfriend and I still use these apps sometimes, but it’s maybe once or twice a month. I’m terrible with numbers, but my brain is somehow able to know how much things “should” cost. I can’t tell you how many times I open up a delivery app and decide to just drive and pick up the food to save $5-$10.
If you don’t know how delivery apps work, they charge the restaurant money for using their service. In order to recoup that money, the restaurant charges more for their food in the app. Not only is the app charging the restaurant money, but they’re charging you a delivery and “service fee”. Sometimes they’ll say, “Hey! The delivery is free!,” but then you look at the service fee and it’s lik 3x the delivery fee.
Also, you should tip the person because they get paid slave wages.
All of this adds up.
With Amazon, you need to simply start realizing that you don’t need stuff and to stop spending. I have people in my life who are literally addicted to Amazon shopping. At one friend’s house, when you walk in, their front room is filled with unopened Amazon boxes. It’s the craziest thing I’ve ever seen. They just can’t stop buying stuff they don’t need.
To save on food delivery, I cook 90% of the time. I enjoy cooking, and years ago, I turned cooking into a bonding activity with my son. My son and I have been cooking together since he was about 9 years old. We love trying new recipes.
I also do all of the grocery shopping in our house, and I’m usually planning our meals around what’s on sale. This allows us to save an insane amount of money.
Again, most of us are blowing money on stuff purely out of convenience and to save time. If you’re exhausted, I get it. I work full-time and then have side hustles like this, and I’m exhausted too. But if you’re hoping to fix your financial life and stop being broke, you need to create a schedule that works for you.
I won’t lie, either. I’m not making elaborate meals every night. Some nights, I’m making us a frozen pizza. Other nights, I’m tossing some stuff in our air fryer. If you go on TikTok, YouTube, and Pinterest, there’s an endless amount of people showcasing super simple recipes that take minimal effort.
Before we wrap this section up, I do want to address the people who aren’t exhausted from working too much. Yeah, I see you.
If we’re keeping it 100, some of you are just ordering through delivery apps multiple times a week because you want to sit and binge watch shows. Get up, and cook yourself a meal. I love binge watching shows, but we can all spare 30 minutes to save $30.
Personally, cooking and shopping are “me time” too. When I’m cooking or grocery shopping, I have my ear buds in and am listening to books or podcasts. It’s a great time to squeeze in some extra learning.
Buy now pay later
There are so many services offering this now that I can’t even keep up. What you need to understand is that literally every company is trying to make money off of you. You should never look at a service and say, “Gee, this really does help me out.” No. That’s not how it works.
Banks aren’t loaning you money to be nice. Credit cards aren’t hoping you just spend what you can afford to pay back later. Buy now pay later services aren’t allowing you to do this out of the kindness of their hearts.
All of these places are hoping that you’re irresponsible and are going to screw up. They’re hoping that you have to owe them a ton of money in interest so they can make money and increase their stock price.
I remember when I was super broke and financially illiterate, I wanted a credit card so bad so I could buy things I couldn’t afford. Fortunately, I couldn’t because I didn’t understand that they wanted to screw me over. I thought it was such an amazing service, but no, they’re hoping to keep us trapped forever.
Again, when you’re about to buy something, ask yourself the following:
“Do I want this or need this?”
“Am I just getting this to impress others?”
“Can I afford to pay this off before I rack up a ton in interest fees?”
There’s a way to do this to turn the tables and take advantage of these services, and I do believe in having some debt. Make sure you subscribe because I’ll teach you how to do this in an upcoming post.
But until then, practice some free will and self-control. You got this.
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