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Waste of money – my Top 10

Here’s my Top 10 list of the ways that we waste money, and in many cases at the same time waste the earth’s resources:

1.  Houses: Why do so many of us aspire to have the biggest house we can (or possibly can’t) afford? The book Affluenza suggests that 100 square metres per person is the maximum that we need. Most people in the world get by with a tiny fraction of this.

2.  Cars: Do you, and every person with a driving licence in your family, really need your own car?

3.  Credit cards: For many, the temptation to spend ‘not real’ money and the resulting excessive interest and penalties is like a middle-class ‘poverty trap’.

4.  Food: 20% of the world’s population is underfed. Can we justify eating excessively and, even worse, throwing food away?

5.  Drugs: We spend vast amounts on drugs, including alcohol and tobacco, and the medicines to counteract their effects, and the effects of excessive, bad food.

6.  Water: Do you run the tap while brushing your teeth? And there are countless ways that we use clean water to do dirty jobs.

7.  Clothes: How many sets of clothes and shoes does one person need?

8.  Phones and other technology: Do phones, laptops etc. really become obsolete (in terms of what we actually use them for) every couple of years?

9.  Travel: We have the technology to communicate remotely far more then we do, so why do we still travel so much?

10. Finally, interest used to buy anything that doesn’t grow in value or give you a positive (cash) return on investment, including the above.

(11. Tax: This is not on my personal list, but it would feature highly for many people because of the government wasting money on our behalf.)

How much of your spending is on the things on this list? I’d like to think I have become very frugal in recent years, after recognising that the financial distress caused by overspending massively outweighs the marginal and short-term benefits of having these things.  I’d like to think that for me it is less than 10%.

What’s your percentage, and do you agree with my list?

6 Responses to “Waste of money – my Top 10”

  1. Andrew Scott says:

    Very interesting blog post.

    I think that we often judge someone’s success on the size of house they own, the car that they drive and the clothes that they wear.

    I have had it said to me that ‘I must have an expensive car because without the apparant trappings of success my potential customers / clients will not take me seriously’.

    We like to be associated with successful people, the ownership of ‘expensive’ assets can be seen as being succesful

  2. Andrew Gray says:

    Thanks for your comment Andy. I think that ostentatious assets like cars aren’t used as much to judge people as they used to be. The criteria for my next car will be CO2 emissions not price or marque!

  3. Andrew Gray says:

    I missed one major item off my list: Jewellery and ornaments lacking any aesthetic merit.

  4. Very interesting, I am thinking about all this at the moment and thinking that the phrase “financial maturity” or “immaturity” drives our expenditure patterns.

    There are a number of issues, one being that we are not programmed very well for the modern environment. We live in a land of plenty (as the song from Men at Work goes) but act like nothing will be around tomorrow.

  5. Tony Armstrong says:

    Thought provoking as ever, Andrew. And I think I am going to have to hang my head in shame at my own ‘wasteful’ expenditure on some of the above! A few thoughts, though:

    Some of the items you have listed above are on my own list of mindless expenditure but there are difficulties in attempting mass reduction in consumption of these categories.

    Top of my list for elimination is waste of water – a truly scarce resource in global terms. However, water is not an easily transferable resource and saving it in an area of excess is going to have no beneficial effect on hunger on the other side of the world.

    Credit cards (unless they are used for the convenience of paying off one bill in total at month-end) come next as my strong belief is that they do not increase overall consumption, they merely produce a one-off cash flow benefit and drive many into debt.

    Some people have an innate need for recognition and status and the purchase and display of these items is central to their beliefs and self-image (houses, cars, clothes and technology items fall into this category). Achieving a mass change in human nature is beyond any of us, though.

    Consider that, with the exception of water and credit, there is a positive benefit even to the most apparently wasteful expenditure. As long as all economic activity contributes to the wealth of a nation, one man’s expenditure of £100, say on his 20th pair of fashionable jeans is worth no less than his neighbours same expenditure on her essential household living expenses. If we all stopped ‘wasteful’ expenditure what would happen to our economy, our tax take, our unemployment levels and government’s ability for essential expenditure (even if they do waste a lot of it)? How much aid could we afford if our efforts to stop waste plunged us into severe economic decline?

    Even carbon has a plus side; carbon dioxide is the most powerful fertiliser, converting energy from sunlight into organic compounds through photosynthesis. Perhaps fuel consumption alone is a more important criterion for that next car?

    Having said all this, Andrew, there is much we can do to reduce waste on resources that are scarce and which are transferable, whilst maintaining overall economic activity in a wise way. Keep up your insightful posts.

  6. Andrew Gray says:

    Thanks for your comments Tony. I agree that a mass change in human nature (away from over-consumption etc) is not easy. However, I do think we are making progress even here. For example gas guzzling cars are no longer a required status symbol for successful business people (that’s my perception, anyway).
    I fully accept that the economy in it’s present form could not carry on without high levels of consumption (good or “bad”). My thinking is that the 20th pair of jeans should still be produced, but should go to someone who really needs them, eg in the developing world.
    As for CO2- probably best to save that debate for when we next meet!!

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