It’s Valentine’s Day so this morning, we gave our son Beau two of his favorite things: cars and clothes. The car-thing comes from my side of the family. I come from a long line of car enthusiasts who can tell you the make, model, and year of a random vehicle on the road. But the clothes-thing, though, also comes from my side of the family. Ha!
I’ll admit it, I like clothes, but not as much as he does. He loves clothes in a way that only an almost-seven-year-old can, and there’s something about fashion sense at that age that’s both utterly baffling and deeply philosophical at the same time.
You ever seen a kid like that? Just bold and unbothered about their style? They’re the type to wear a superhero cape to a wedding and act like they’re doing you a favor by bringing a little class to the event. They don’t care what anyone thinks, they’re just expressing themselves through their outfits.
I really admire that about Beau and his peers. They’re so young, but also wise enough to understand that clothes are not just something we wear. What we wear communicates who we are, what we value, and how we relate to others. In many ways, our clothing can even reinforce the social hierarchies of American life, determining who gets seen and heard, and why.
That’s why we have such a complicated relationship with clothes. They’re so connected to our identity and our status that we don’t always pay attention to how much we spend on them.
We do it without thinking because we believe we’ve found a cheat code to happiness. but it’s just another empty promise of consumerism that doesn’t pan out. Instead of becoming more successful, we become more addicted to buying stuff that we don’t need. On top of that, our constant need for novelty has lured us into the trap of fast fashion and created a throwaway culture. Our landfills are currently full of textiles with nowhere to go, while our closets are full of clothes and we complain about having nothing to wear.
Somehow lower prices convinced us that there were lower stakes. The average person buys 60% more clothing than 15 years ago, and wears them 35% less often. That’s bananas. Why do we do this? Are we really expressing ourselves through our clothes, or are we hiding behind them?
According to a recent survey by Credit Karma, 39% of Americans identify as emotional spenders (defined by the study as someone who spends money to cope with emotional highs and lows.). Lately, as our spending reached new heights, both defying logic and baffling economists, they had to coin a new term to describe it: doom-spending.
If status and identity are the two most unspoken expense categories, then doom spending is the third because it’s the only term that describes the act of buying things to escape from reality and cope with the uncertainty of the world.
We spend because we’re stressed, we’re bored, we’re lonely, we’re sad, we’re angry, we’re happy, we’re anything. We spend because we want to feel something, anything, different from what we’re feeling right now – but the money is not infinite. We still have to invest for the future, or we risk being homeless or hungry. It’s easier said than done, but it’s so worth doing.
Last week, the S&P reached a milestone when it crossed 5000 for the first time ever, leading some people to suggest we’re in the early stages of a new bull market. That means this could be the best time to buy stocks if you have extra money left over but, unfortunately, most of us don’t.
Now the problem of not having enough money isn’t new and the fastest solution isn’t a mystery: You have to cut back on your spending. Don’t worry, it’s not just the big stuff like housing, transportation, or food, a modest effort to save $5 here and $10 there can add up, too. Then you use that money to aggressively chip away at your high-interest debt, build an emergency fund, and ramp up your retirement contributions to take full advantage of your employer match.
Eventually, like slowly chiseling a statue from a block of marble; each of your cuts reveals more of the masterpiece. The point is that you can usually find more money to invest when you’re also willing to stop wasting it, but if you really want to speed up the process, you have to dig deep and examine why you’re spending it in the first place.
A lot of our discretionary spending is motivated by an unmet psychological need. I know this because I’ve been there. When I was shopping to cope, it was a way for me to temporarily fill up the gaps in my life. My wake-up call was when I looked at my clothes, all I saw was clutter, and all that clutter used to be cash.
The thing I had to realize was how often I was spending money “on myself” to impress other people. The irony of status signaling through materialism is that when we buy expensive things to show off, the intended audience rarely notices and leaves us underwhelmed by their reaction.
Despite our best efforts, most people are usually too wrapped up in their own lives and goals to care about our stuff. If anything, they use our stuff as a reference point for what they believe they’re missing from their own lives. It’s like one of those fun-house mirrors; when they look at you and your decisions, all they see is a distorted image of themselves reflecting back.
This “mirror effect” sheds light on how social norms operate by triggering comparisons, regardless of your intentions. Whether you’re striving for more status, or just daring to challenge the existing status quo, this effect is what shapes how others perceive your actions.
I noticed it when I got sober-curious and started to cut back on drinking. Every time I declined another round, people felt a way about what my decision to abstain meant about their decision not to. Instead of seeing it as a personal choice, they saw my decision as a warped reflection, or judgment, of their drinking habits.
I’m not here to grandstand about how self-actualized I am. The pursuit of status and approval is a completely natural part of life and isn’t going anywhere, and I’m mostly OK with that. But the mirror effect highlights how using material wealth to do it leads to a never-ending cycle of comparison and competition. And if you want to play the game and still have some money left over, you have to start by defining your “enough”.
If you have a proactive sense of how much “enough” is, you now possess one of the most sustainable financial strategies around. It will be a shield against overspending that can keep you from getting in over your head with consumer debt. Again, easier said than done, but totally worth doing.
When it comes to clothing, one way we can redefine “enough” is by introducing the concept of a capsule wardrobe. A capsule wardrobe is kind of like the meal planning of fashion. It’s a minimalist collection of clothes, typically around 30-50 pieces that can be put together in different ways to cover a variety of outfits and occasions. The aim is to streamline our choices, and the perks include saving time and money.
This week on the rich & REGULAR podcast, we’re joined by one of Julien’s oldest friends to discuss all the advantages of streamlining your wardrobe. He is the only person Julien knows who has done this; though [interestingly enough] he refers to his capsule wardrobe as an “alphabet” and chooses to always wear the color black.
We talk about the high costs associated with maintaining a professional wardrobe, how men and women differ in their adoption of capsule wardrobes, and how others have reacted to his decision over the years. It’s an insightful conversation that shows the unexpected benefits of simplifying our clothing choices.
Whether it’s doom spending, the pursuit of status, or the desire for approval, we all have our reasons for spending money. But by examining our motivations and redefining what is truly important to us, we can gradually shift our focus on building real relationships, having meaningful experiences, and taking care of ourselves and shift our dollars towards financial stability, mindful consumption, and a simpler, more fulfilling life.
The mirror effect offers a metaphor for the importance of distinguishing what is real and what is fake when playing status games. Our self-worth is real, but its dependence on material possessions or others’ opinions is just an illusion. When we free ourselves from the distorted images of society’s expectations, we learn to not just live below our means – but to love it, too.
And that, my friends, is the most romantic shit ever. Happy Valentine’s Day.