The following is a guest post from Glenn Sosa, Author of SOLD: Don’t Go Poor and Miserable Being Sold Happiness. To find out how you can guest post, read my guest posting policy and contact me through the page.
ESPN recently aired a 30 for 30 documentary titled Broke. The documentary featured the stories of several formerly prominent athletes who went from millionaire status to bankruptcy. The stories poignantly showed how someone’s inability to control spending can destroy their net worth – not just financially but also emotionally.
Since the original airing of Broke, I’ve had a few discussions with college counselors at prominent universities that produce a lot of professional sports talent. These counselors are responsible for teaching their student-athletes the life skills that can help them avoid the fate of the players featured in Broke. It was interesting to hear how those curricula, for the most part, focused on explaining financial products.
Marketing Tricks and Gimmicks
There was no indication that any of the curricula dealt with the root cause of spending problems and what leads consumers to feel that “wants” are “needs”, and that root cause is marketing. Without an understanding of the marketing tricks and gimmicks that organizations and salespeople use and how those techniques tug at emotions, consumers will remain very vulnerable. This is true regardless of whether you are an average consumer or a superstar athlete.
Yes, it’s smart to understand how credit works and it’s wise to have a budget (there’s no questioning these two personal finance tools), but credit histories and family budgets of all sizes have been blown out of the water by a well structured sales pitch or marketing promotion that pushes the right buttons. So how can you protect your credit score and your bank account? Here are three tips:
1. Understand the difference between “wants” and “needs”
All good personal finance authors, especially when dealing with budgeting and consumer credit, will help consumers understand that needs come before wants. But what is a “need?” You’d think that these would be easy to agree on; food, a place to live, and clothing are some commonly noted needs. And yes; consumers need to eat, live and sleep somewhere suitable, and clothe themselves adequately as well.
But what if you think you need a $500,000 McMansion versus a more modest $150,000 2-bedroom house? Or you argue with your spouse about needing a late model Lexus rather than a practical, attractive, and reasonably-priced Ford?
You are not going to find a one-size fits all definition for consumer “needs” and “wants”. The differences will vary from person to person. It’s up to you to figure out where “needs” end, and “wants” begin. A written budget will go a long way toward helping you figure this out. The sooner you do this, the easier it will be to manage your spending moving forward.
2. Learn about the marketing techniques that are used to sell to you
I gave a talk on the traps of wants versus needs and I asked everyone who attended whether they have ever had to sell something and whether they were trained to sell that something. Almost everyone raised their hands – that is; everyone who had worked in sales, quite naturally had been trained to sell.
I then asked the same group whether they had ever purchase something. Of course, everyone raised their hand. The next question was the most interesting; “Who here has received buying training?” No hands went up; not one. You see, buyers are at a disadvantage. You need to equip yourselves with an understanding of how organizations and sales people sell to you. That’s why I wrote SOLD: Don’t Go Poor and Miserable Being Sold Happiness; to be a consumer guide to help level the marketing playing field.
3. Have a buying process
Knowing how not to be sold is great. And knowing the difference between wants and needs is also important. But when you have a true need and go to the market place to buy it, how can you do that in the best way possible? You need a simple buying process. Fortunately, my book covers this as well. From step 1, “Realize a Need”, to step 7, “Purchase and Experience Ownership”, you’ll learn simple tools on how to avoid the most common pitfalls.
Don’t repeat the mistakes that so many superstar athletes have made! Learn how to handle the root cause of credit and budgeting problems and by understanding how marketing tricks and gimmicks lead you to believe that wants are really needs, when they’re not!
Glenn Sosa is the Author of SOLD: Don’t Go Poor and Miserable Being Sold Happiness