As we’ve discussed previously, the #1 reason why people who don’t have life insurance fail to purchase it isn’t that they don’t think it’s wise or that their family wouldn’t benefit: It’s because they don’t think they can afford it.
For many, thinking they can’t afford life insurance is a misconception, and it’s likely based on two underlying falsehoods. First, many non-insured people have an inflated concept of how much life insurance actually costs. (For a realistic view, check out this online calculator or the app.) Second, most Americans have a false perception of what they need along with a lack of financial discipline.
In this post we’ll be considering a few potential underlying causes of overspending.
The Comparison Trap
Many people may chuckle at the old adage about buying things we don’t need to impress people we don’t like with money we don’t have, but it’s often all-too-true. And it can have devastating results.
The #10, #9, & #2 reasons people overspend, according to this list, both tie into the idea that a person’s sense of worth is tied to possessions. That ideology is at the heart of materialism. In his book “What Do You Think of Me? Why Do I Care?” Ed Welch decries codependency traps into which many people fall. The increased connectivity via social media, along with the tendency people have to compare their real lives with posts they see of others’ “highlight reels,” is certainly doing nothing to lessen our tendencies to compare ourselves with others.
Divorcing our sense of self-worth from possessions is key to more than financial stability: it’s also a necessity for healthy relationships. This keeping-up-with-the-Joneses mentality is fueled by propagandistic advertising: many commercials show new items appreciated in light of envious neighbors looking on.
The #4, #5, & #6 reasons for overspending are all tied to the idea of instant gratification and the idea of feeling a sense of entitlement. Again, advertisers play into this with phrases like “you deserve it” and “must-have” items. Instant gratification obviously fuels credit card debt, which ends up meaning that we pay more for items than we should, through interest.
When we save up for something we really want, we not only eliminate the extra fees associated with spending money before we have it, but we also give ourselves a chance to consider whether the amount of time and effort needed to make the purchase is really worthwhile. If it is, we’ll enjoy it much more, having worked hard to save up for it, and without the guilt and anxiety associated with adding to our indebtedness.
In Part 2, we’ll consider practical ways to get a handle on your finances so you can afford to care for your family by purchasing life insurance as well as other practical necessities.
The Nicholas Insurance Agency, led by Greg Nicholas, is a family owned business serving the York county, Pennsylvania region. In the insurance business since 1981, Greg Nicholas helps families, businesses and individuals understand the value of different insurance products and make wise decisions when selecting the best insurance products for their specific situations.
Offering exclusively Allstate insurance products, the Nicholas Agency provides auto, homeowners, rental and landlord insurance as well as life & disability, recreational vehicle, motorcycle and personal liability insurance.
For more information, visit our two York, PA locations at Westgate Plaza or York Marketplace or call us at (717) 764-2024.
Image credits: Top © Marzanna Syncerz/Fotolia; 2nd © Monkey Business/Fotolia; 3rd © Golden Pixels LLC/Fotolia; 4th © Patrizia Tilly/Fotolia.