The Key to Frugality: Avoid the Fear Tax
Have you ever purchased something for one of the following reasons?
- If you didn't, you wouldn't look good enough.
- If you didn't, others might think less of you.
- If you didn't, you weren't rewarding yourself like you should be.
- If you didn't, you would be missing out on something more in life.
- If you didn't, you weren't safe enough.
We all have. And probably multiple times every week. And we probably didn't think about it at the time we handed over our hard-earned money, but we were paying a tax on our fears. And in doing so, we were playing right into the hands of marketers and advertisers. Damn! (See also: Look, But Don’t Touch: Avoid Marketing Manipulation)
Almost every purchase has a fear tax option
Perhaps there are a few items out there still that don't have a fear tax on them, but in my little brainstorming session here, I'm having a hard time thinking of them. Sometimes these purchases are more expensive versions of necessities. Other times, they are the things we don't need at all. There are the obvious ones:
- You want to have a nice looking vehicle because anything less might be looked down upon by neighbors, co-workers, or the next hot date, no?
- The shiniest, fastest, most advanced cell phone to stay on top of the latest trends.
- Your entertainment? HD and Blu-Ray is the wave of the future. You wouldn't want to get behind and miss out on the obvious upgrades.
- That custom tailored suit so that you can look the best in your next interview or business meeting.
Then, there are some less obvious but incredibly costly purchases that you'll be taxed on:
- An MBA from a top 5 business school. Otherwise, why would the best employers want to bother with you?
- The extra $300k on your spouse's life insurance beyond what you realistically need if they were to pass away.
- That lower deductible on your car insurance, because why the heck would I want to pay $2,500 if I got in a total wreck?
And even the most basic of necessities have a fear tax associated with them.
- The organic dog food vs. the regular version because Fido will be healthier and live longer.
- The organic human food vs. the regular so that you can live longer.
- That premium gasoline so that your vehicle's engine lasts longer.
- And don't forget the 2-ply toilet paper, because one is never enough!
Is overcoming the fear tax the key to frugality?
Not 100%, but it sure is a huge part of it. There are smart frugal things you can do to shop for the lowest price, cut down your total consumption, reuse things, etc. — but even then, the fear tax is at least an influencer in all of those strategies.
So how do you become '"fear tax exempt"?
It takes years of training, goof-ups, and trial, but it all starts with one simple question you should ask yourself every time you are about to complete a transaction:
"Am I purchasing this (or paying too much) out of fear?"
If the answer is no, then congratulations.
If the answer is yes, the follow-up question you may want to ask yourself is:
"Is it worth it?"
Overly simple? Yes. But it's a practice that many of us forgo all to often.