Have you ever bought something because you envisioned it would help you get closer to leading a different lifestyle? Maybe your thought process followed this formula: “If I just buy x, I’ll be more like y.”
That’s aspirational spending. It can stem from good intentions, but you may find it doesn’t serve you quite as well as you had thought.
Let’s dive into identifying aspirational spending and how you can be more intentional with your funds.
What is Aspirational Spending?
Aspirational spending, or aspirational consumption, stems from a desire to change or be different from what reflects reality. Spending money in this way usually comes from some other deeper desire, problem, or need, and often, buying something feels like a way to achieve that aspiration.
In fact, in terms of consumer behavior, “aspirational shoppers” refers to a subset of consumers who aim to buy luxury goods but are not quite in the same financial position as those high-net-worth individuals who truly can afford to pay the prices of luxury goods. Forbes describes it as: “Aspirational is the industry code word for consumers who limit spending to the lower end of their price ranges, unlike true-luxury consumers who can afford to pay at the top.”
On an episode of the podcast No Stupid Questions, behavioral scientist Angela Duckworth describes it as, “very bound up with identity.” Some of these driving factors behind this type of spending could be related to a desire for improved health and fitness, social status, ego, education, or career advancement.
Let’s illustrate this a bit. For example, Steven wants to get more active to improve his health. So, he purchases an elliptical – because after all, he needs some way to exercise, right? He tells himself he will work out more if it’s convenient by having the elliptical in his home.
Steven aspires to get healthier, so he buys something to help him meet that aspiration. But, simply buying the elliptical doesn’t actually make him healthier. Using the elliptical to exercise could help Steven fulfill his aspiration, of course. But, so could exercising in a way that he can already access with no additional purchase required. Bodyweight exercises require no equipment, and you don’t even need shoes to do yoga!
Aspirational spending manifests in lots of different ways. Someone wants to read more, so she buys more books, despite not actually dedicating the time to read in her schedule. If someone wants to satisfy his ego or fit in with a specific social group, he might buy a luxury car or designer goods to signal wealth and success.
Sometimes aspirations overlap, as there are more and more name brands and luxury goods across all types of services. Our example spender, Steven, may want to get healthier and signify social status at the same time, so he purchases a name brand exercise bike or gets a membership at the more expensive gym. When he casually drops the name of his high-end equipment while chatting with his coworkers over lunch, it serves to communicate, “I can afford to spend more than I have to,” even if the purchase is actually causing financial strain – but he won’t share that part!
To clarify, aspirational spending is not about buying things you actually need. It also doesn’t always apply to purchasing nonessential things that you’ll actually use – that would mean the spending does reflect reality. If an avid camper’s tent breaks and he buys one for the next camping trip he has booked, that would not be considered aspirational spending. That’s just spending on hobbies or recreation – and everyone needs some kind of hobbies and recreation in their life!
What’s Wrong with Aspirational Spending?
So what’s the big deal with aspirational spending? Why is it important to understand? It’s a substitute action for what will help make progress toward the aspiration. In the same podcast referenced above, Duckworth also describes repeated aspirational consumption as irrational – because it’s not logical to spend money on something that won’t get used, or to spend money in place of taking action.
When it comes to finances, aspirational consumption can cause people to spend more than they really need to, or downright waste money, because often the purchases go unused. Or, if the purchase does get used, the cost may outweigh the true benefit. In the long run, this can hinder people from making progress toward their personal and financial goals.
Everyone has a different budget, interests, and motivations for their purchases. There is no one-size-fits all guidance when it comes to spending. That’s why for some people, buying camping gear or an exercise bike is aspirational spending, but it’s not for others.
For an individual, reducing or eliminating aspirational spending may help you find more overall satisfaction with your financial situation if you’re able to dedicate those funds to other areas of your life.
It’s also worth mentioning that on a broad scale, this type of spending can drive others to overspend too, or struggle to keep making strong financial decisions. Spender Steven’s coworker Saver Stephanie might feel inferior to her peers since she doesn’t have a membership to the high-end gym and instead works out in her apartment’s fitness center, which she does because it’s free. However, this allows her to put hundreds of dollars a year toward her financial goals, which makes more progress to her building true wealth! Steven’s disconnect between reality and his consumer behavior can distort what people around him think regarding saving and spending. This can cause a cycle of “keeping up with the Joneses” where everyone spends more than they need on stuff they won’t really use just to keep up appearances.
Combating aspirational spending for yourself can be hard, but it also does a service to others around you, by setting a financially responsible example and recalibrating expectations.
How to Reduce Aspirational Spending
So how can you combat aspirational spending? It starts with understanding your values and how they align with your past purchases.
We’ll share a holistic approach you can use to review what you have, and help you identify purchases you made due to aspirational spending. From there, you can use that information when evaluating future purchases.
We know it can be overwhelming to even know where to start to change your purchasing habits, even if you are deeply compelled to do so. This process may be challenging, but this is a judgment free zone! Remember that taking these steps can help you in the long run to make choices that will align with what matters most to you.
Step 1: Get familiar with what you already have
Luckily, this process starts off easy. Getting familiar with the things you already own is an important foundation. Take inventory of what you have. Look through typical storage areas like closets, sheds, garages, shelves, desk drawers, and cabinets. You’ll also want to review any intangible purchases, such as services or subscriptions. Break it down into sections – you don’t have to tear apart your whole home and inspect your financial picture all in one go!
By getting familiar with what you already have, you can be more effective when evaluating future purchases. You may be able to skip a potential purchase if you remember you have a similar thing at home and redirect those funds that you would have spent. Or, you can feel confident in your purchase, knowing it’s something you truly need.
You don’t need to go back and review all of your past purchases for things you no longer own. However, for any past purchases that fit within the aspirational spending definition, keep those in mind.
Step 2: Set aside any purchases that were aspirational spending
When faced with how much stuff you have, you may feel the instinct to declutter right away. But, if you’re working through combating aspirational spending, decluttering is not the goal. When reviewing items you have, consider if you made that purchase because you wanted it to help you change your lifestyle or match a different lifestyle than the one you currently lead.
Think back to why you felt inspired to purchase the item, and if you rationalized it in any way. Were you meeting a true need, or buying something because you felt like it would solve a problem? Maybe it was a blend of both – perhaps you did have a need, but bought a nicer or more expensive option because it aligned with an aspiration. For example, maybe you needed a dining set, but envisioned hosting elaborate dinner parties so you bought a larger table and more chairs than you need most of the time.
Then, visually identify those aspirational purchases in some way. Write them down on a sheet of paper or put bright sticky notes on the physical items in your home. This way you can visualize the scale of this behavior.
This may be uncomfortable, but being honest with yourself is critical to this process. Remember – no one is here to judge you, and this exercise is to help you ensure that your spending habits support what genuinely matters to you.
Step 3: Calculate the cost of the aspirational purchases
When you have all of your aspirational purchases listed, it’s time to review. To the best of your ability, add up how much you spent on those aspirational items. You may recall the item costs, or need to go through order confirmation emails or online bank statements. Estimate if you need to. You’re not turning this in – it’s just for you.
Now, reflect on the total sum, then put it in context. Ask yourself:
- Did you get an equal or better value out of the items than the funds you spent?
- Could that amount of money have gone toward a different expense you would have valued or used more?
- Could that amount of money have made an impact on bettering your financial situation, such as adding to savings or paying down debt?
Be introspective. This is an opportunity to explore alternative scenarios regarding the funds that went to these purchases. The culmination is to see how that makes you feel, and if you start to see other ways you could have spent your money in a way that would bring you more long-term fulfillment.
There’s no right or wrong answer here! No matter how you react, this may bring up feelings you weren’t expecting. Take time to process those feelings and know that you’re doing meaningful work to set up your future self for success.
Step 4: Use anything you’ve already purchased that was driven by aspirational spending
After you’ve identified any purchases driven by aspirational spending, and done some reflection on your purchases, it’s time to take action. Remember – this type of spending is usually driven by making a purchase to change or obtain a different lifestyle.
It’s important to follow through on aspirational purchases by completing the action that the purchase was meant to accomplish or aid. That means actually using the sporting goods or sewing machine, styling your hair with the specialty hair tool, wearing the special outfit, finishing the online course you bought, or reading the books – whatever it may be. This isn’t meant to be extreme. The point here is just to go through the process, make use of past purchases, and learn about yourself and your usage habits.
In the process of using the items, you’ll need to reflect on those feelings again. Are you enjoying using the purchases? Are they bringing the satisfaction you hoped they would? (We hope so!) Sit with those feelings. Journal about the experience and what you’ve learned about yourself along the way.
After you’ve given everything a genuine try, you can decide what to do with the items. Keep, sell, gift, donate or swap – it’s up to you.
Step 5: Be mindful about future purchases that would fit within aspirational spending
You’ll likely be tempted with aspirational spending in the future – but now armed with mindfulness, you can combat that. Going forward, reference what you learned about yourself from this exercise when making more purchasing decisions, with your deeper familiarity with aspirational spending.
Here are some actionable ways to curb aspirational spending when considering buying something new:
- Set up funds to save in advance. Saving up for a non-essential purchase means delaying the gratification. If you find the item or service is still on your mind by the time you have saved up the funds, that can be a sign it aligns with your true values. Milli’s Jars can be a fantastic tool to budget and save up!
- Consider the deeper motivations driving the purchase. Are you meeting a true need, or using the purchase to satisfy something internal? Identify if this is part of a pattern for you.
- Make use of what you already have. You may find you don’t need to buy something new at all.
- Borrow from someone. See if a friend, family member, community member, or library will lend you whatever it is you’d like to purchase.
- Be realistic. A healthy dose of realism can help you identify if this purchase will fit in with your lifestyle or go to waste.
- Set a number of times that you’ll do the action before buying something new. For example, tell yourself if you play tennis four times with a borrowed racquet and want to keep it up, then you can buy your own. By prioritizing the action before the purchase, you’re more likely to use your funds in an efficient way.
- Get items secondhand. If you decide to purchase something, shopping secondhand for it can save you money. That way you can honor your interests and make financial decisions that will set you up for success! You can take it one step further and add the difference between the retail price and the price you paid to your savings.
Conclusion
The pressure to live a certain lifestyle drives people to make all sorts of decisions – and a lot of those involve purchasing. We face internal and external pressure to be the best version of ourselves. Many feel compelled to portray a certain image to our friends, family, professional network, and on social media. Spending can help us feel like we are achieving the things to which we aspire.
But the cost of aspirational consumption can add up, especially over time. It can delay us from making progress toward or accomplishing other financial goals.
Countering this type of spending is totally possible. If you’re up for the challenge, you’ll need to make lifestyle adjustments. Ultimately, combating aspirational spending is worth it in the long term because being more mindful and intentional with spending can result in building stronger long-term financial habits.
Looking for a bank that can help you along your journey to reduce aspirational spending? Check out Milli! We’ve got helpful spending insights (to help you build better habits!), automated savings features, a highly competitive annual percentage yield, and customizable Jars – all designed to help you save more for the things that matter most. Download Milli from the App Store or Google Play and sign up today.
Keep reading more on the Milli blog:
5 Common Financial Mistakes and How to Avoid Them
10 Ways to Save Today to Gain Financial Confidence
