Managing Money, Value and $1,200 Handbags
My girlfriend loves fancy expensive handbags. We walk by them in a department store and I’ll hear “ooh, isn’t that
absolutely gorgeous?†I’ll look at the $1,200 price tag and reply, “noâ€. If she had the extra $1,200 I’m sure she’d buy it although she isn’t going to spend $1,200 on a handbag when she needs the money to pay back her student loans and save up for a class she wants to take instead. Those things are slightly more valuable to her right now. The concept of value is what I want to discuss.
How can the same handbag represent no value to me and high value to her? The price tag certainly conveys price but it apparently doesn’t convey value. Would the same hand bag be as attractive at $10 in a bin at Target? That is up to you because an object’s value depends on you (or should) rather than the price tag. You assign value to things; the things don’t assign their own value. Keep in mind that the job of marketers is to try to do this for you which is why making things super expensive sometimes has the effect of inflating value to customers.
Thinking about and understanding the relative value of things in your life will help you to save money, to make good financial choices and to stress-out less about incurring debt. You are the master of value in your life and you need to learn to be a shrewd evaluator to stay out of debt and to get ahead in life.
Only you can answer questions concerning value. To illustrate this, here are some questions which I can’t answer for you due to reasons mentioned above. I want you to think about them and I bet you’ll find that you can argue both sides of the value discussion.
- Are 4 years at a private college more valuable than 2 at a community college and 2 at a private college given that the cost is vastly different?
- Is a more expensive new text book more valuable than a used text book?
- What is the value of an insurance policy?
- What is the value of an undergraduate degree? A graduate degree?
- What is the value of a new car vs. a less expensive used car?
If you decided that a graduate degree is valuable, can you point out how it will pay for itself at some point? If so how long will it take? Is there another investment you could make with that money which would be better? Let’s say you want to be a doctor and you feel your salary will be enough to pay back your loans and then live more comfortably than you otherwise would be able to. Fine, then don’t stress about the loans you take out. Now let’s say you want to be a software programmer. Can you calculate the value getting a graduate degree will have vs. getting extra time working in your field? That may not be so easy but as I say, it’s up to you but look at it through a financial investment lens.
A car is a bit more complex than spending money on college. You’ll find no shortage of people to tell you how purchasing a used car is smarter than buying a new car due to the fact that new cars depreciate. But if that used car breaks down a lot and you get fired from your job for being late, which was more valuable, the new car with the warranty and no mechanical problems or the cheaper car with the hidden defect?
What’s even more complicating is that the “personal†in “personal finance†means that emotions do play a part in our valuation of things. You’ll find no shortage of people who will tell you the sweetest smell in the world is “new car smellâ€. Are you going to graduate from college work hard and live your entire life driving somebody else’s fishy-smelling cast-off? In your valuation of things you also should consider emotional value. In reality most of us lean towards that anyway which is why marketers exist. What I am trying to get you to do is to consider a financial valuation of things rather than just emotional because that will help you make better and less stressful decisions.
My girlfriend attached an emotional value to that handbag, I attached a financial value to it and that is why it had different values to us. I suppose my girlfriend will someday have the $1,200 handbag. I’ll have to give it a smell when she does and see if it smells like a new car.
PS. Free things that can make you money are really valuable, like this code for 15 points at www.ScholarshipPoints.com. Enter GOODVALUE to get your 15 points.
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hmmm kind of makes me want to be responsible with the graduation money i recieved. But at the same time I NEVER splurge. I think certain times it is ok to treat yourself, as long as you are responsible. In my case I am taking the rest of the money after I purchase a Playstation 3 and put it in savings. It’s responsibly splurgin I guess you could say.
Good Info.
This if very helpful info to know.
this gave me something to think about. great info and it brought me a new perspective when shopping.
interestin.
Very informative and helpful
this article was very informative and is surely useful…thanks for posting it
I am a handbag addict but the way I see it, you need to stay within your means and not go over the top or you will get hurt in the long run
…..Learned something…..
Interesting article. Thanks
I can relate to this blog because I “love” coach purses. However, if I see the same purse at Target, I would buy that one because of the cheaper price. I am more about the design of the bag, and whether I like the outward appearance, and if it would be useful for me. (not the price)…I am this way about all purchases.
This article is funny. My sister is the same way. She love luxurious handbags.
Its the astetics. People are drawn to the newer, over priced item(s) rather then cheaper used items. A good example: If you put a new $50,000 car next to the same car of the same year, make, model, and with a slightly duller paint finish, but priced at $15,000, most people would look at the $50k first. Though it is a hard concept to grasp, its something we all learn eventually.
Its totally true what others have submitted, but one must also take into account the volition one carries with onesself.
Great information! Thanks
I would never buy something that has has the purpose of holding money and in which costs more than the money I could afford to carry around in it! I know a lot of females buy handbags on a regular basis and I just don’t understand why?? They use them for a month or so, give it away, and are out buying another. I would much rather spend this money on a vacation that would have everlasting memories.
Good info…I let my bf buy me the exspensive handbags!!
INFORMATIVE
I think you have a very good point. It was a good way to explain the message you are trying to convey. I have a fetish for shoes and when I look at the designer brands I always want them but know since I am in college my money can be good else where!
interesting. It’s crazy that the actual price of something is the exact value that something ISN’T. I mean, the store puts that price on it because they figure the bag is worth less than that and a good deal for them. The customer who actually buys it, considers the bag more valuable than the price. Others of us don’t consider it that valuable and so, will never buy it. Hmm. Interesting.
wE ARE ALL THE SAME BUT YET SOO DIFFERENT IN THE WAY WE BEHAVE/INTERESTING ARTICLE
spending my hard earned money on things that i can get cheaper and do just the same as the expensive. foolish.
I’m glad my girlfriend likes the K-Mart brand!
if only money really grew on trees
dollar store lol