Luxury Brands Are For Broke People

if you've ever thought it was the rich who bought verin bags LV shirts and Gucci belts you've got it all wrong today I'll talk about how luxury brands are actually for broke people and why it's a big problem so by 2023 the global luxury goods Market was worth about $370 billion and it's expected to reach 629 billion by 2030 but with the economy in such a downturn who's buying all this expensive crap this $2,000 trash bag this $14,000 pair of jeans or this 3 ,000 bag a 2021 study found that nearly 75% of spending on luxury goods came from the middle and lower class 40% of which from people making 50k a year or less and 34% from people making anywhere from 50 to 125k a year which sounds pretty strange why are everyday regular people dropping this much money when you get something that looks exactly the same for $20 thoron Vin once said the accumulation of wealth is not what gives the wealthier status it's the evidence of wealth it's pretty natural for people to want to be seen as successful we all want to look like we have our lives together and have value even if none of us know what the heck we're doing animals in the wild do it fireflies flash their tails to find a mate Penguins scaven for Pebbles to show their value and people by fancy designer Brands the more expensive it seems the more status you feel but the reason isn't just because lower and middle class people want to feel validated it's also because these luxury brands are specifically targeting them in 2023 this guy I'm not going to butcher his name the CFO of lvmh the company that owns LV Dior fendy and a ton of other luxury Brands said we don't sell products to rich people it is to people who have money and want to indulge themselves the advantage of this cohort is much much bigger than the super wealthy basically admitting that luxury Brands intentionally Target everyday people because it's way more profitable for them to produce millions of bags that cost $55,000 than it is to produce a dozen $100,000 bags for a few billionaires but looking back it's clear that this strategy was put in place decades ago a blueprint that laid the foundation for how the lower and middle class were set to change forever signaling three major elements first before 2008 luxury Brands had only relied on Buzz around wealthy circles in the occasional fashion magazine feature but in 2008 lvie made headlines as the first luxury Brands to advertise on TV to Everyday People it created a new tier of status and validation for everyday people to Aspire to and fast forward to today luxury brands have integrated themselves as part of everyday pop culture the problem is during a time when the American dream seems increasingly Out Of Reach luxury brands have become the most accessible symbol of status and wealth buying a house seems impossible but a $3,000 shirt yeah I can make that work in fact research found that JZ by luxury goods about 3 to 5 years earlier than Millennials at 15 versus at 20 and it's expected that these younger Generations will make up 80% of luxury spending by 2030 next just showing the aura of exclusivity on TV and the internet is one thing but actually experiencing it is another luxury Brands needed Everyday People to bridge these two realities that's why when you walk into one of these stores everything seems luxurious with complimenting champagne in our collection and overly smug workers who have a holier than thou mentality all this is designed to make you feel like you've made it in life further validating your status third luxury Brands know they need to perform a very delicate Balancing Act appeal to the masses while still retaining some Aura of exclusivity but there's a problem it's impossible to predict exactly how much demand there will be for a design that they make sometimes they'll produce too many shoes bags or whatever and there won't be enough customers to sell them at the retail price normally if a business has excess inventory they'll put it on sale do a BOGO deal or whatever to incentivize people to buy the rest of the inventory the problem is if luxury Brands like Rolex or LV did that then they're going to seem less exclusive so what do they do instead in July of 2018 Burberry admitted to destroying $ 36.8 Million worth of its own merchandise richm owner of cardier and P or pette admitted to destroying $563 Million worth of watches from 2017 to 2018 which sounds absolutely bizarre but it's all part of the plan to preserve its Aura of exclusivity even though it's a type of manufactured exclusivity the entire premise of status symbols like luxury Brands is to show the world that the owner is successful the reason we don't see the ultra wealthy like Bill Gates it's Mark Zuckerberg or Elon Musk decked out in Versace is because we already know they're rich they don't need to prove it but when you see a regular Joe Schmo in the street wearing a designer outfit you're going to start to wonder how did they afford that but for everyday people who splurge on luxury Brands to show off their wealth there are three major problems the first problem most of the people I know who buy luxury Brands can't easily afford them like I have some friends who are obsessed with buying a lot of fancy things Gucci B Hermes or Hermes sunglasses and birken bags but I know that they need to save for at least 2 months to be able to afford them and what's ironic is none of my wealthy friends who can easily afford these things own any luxury Brands psychologist wall and brown know a thing or two about this in 2015 they analyzed the most common Google search results across regions in the US and they discover that areas with more income inequality tend to have more demand for luxury goods out of of 40 Search terms used the most frequently in areas with greater income inequality More than 70% of them were about status Goods like Ralph Lauren David Yurman and jewelry you know expensive stuff but to be clear I don't believe buying luxury things is inherently bad if you want to treat yourself to a Rolex after grinding for years or a nice pair of PR sunglasses all the power to you it's totally okay to splurge once in a while like many things building a healthy relationship with money is about finding the balance bance between enjoying a treat occasionally and spending more than we can afford but I do think it becomes a problem when you're splurging too much that you end up sacrificing your own financial goals like dipping into your savings using your emergency fund or taking money out of your retirement accounts next dipping in your savings is one thing but it's a completely different thing to go into debt for something nowadays it seems like taking on bad debt is the cultural norm by the end of 2023 Americans had over a trillion dollar in credit card debt the highest it's ever been the problem is the average credit card interest rate is 27.9% which can easily turn the cost of a $3,000 LV bag into tens of thousands of dollars if you're not able to pay it off in time then there's also the buy now pay later platforms that have been linked to some of the booming luxury spending it's easy to be convinced you can actually afford a Versace jumpsuit if you don't have to pay for it all at once the problem is this creates a ripple effect effect of debt in low and middle inome neighborhoods a 2014 report by the FED found that your neighbors indirectly influence how much you spend in Psychology this can be explained by a concept called keeping up with the Joneses basically it's when you use your neighbors as a measuring stick for Success if you see your neighbors upgrade their house get a nicer car or start wearing luxury Brands then you'll be much more tempted to do the same get a brand new Porsche why not open a new credit card to gain a St lauron jumpsuit for sure when everyday people sacrifice their financial goals and take on debt just to buy something fancy it can get really tough to get out of the debt spiral the average American has about $66,000 in credit card debt if your credit card has a 24% interest rate and you only make the minimum payment every month it'll take you over 25 years to pay off your debt of $1 17,330 which is nearly 3x the original $6,000 amount thanks to Interest next most people people believe that if they spend more money they'll get a higher quality product that will last longer but that's not always true sure in the past luxury Brands were expertly crafted and were designed to last decades but with the industrialization of the production process this Artisan culture has been virtually wiped out nowadays it's normal for luxury Brands to subcontract thousands of factories in Tuscan to produce their products the problem is in 2008 Italian police undercovered a massive fraud happening in these factories they conducted 250 raids in Italy and ended up finding metric tons of counterfeit bags and shoes with Prada and fendy logos plastered all over them when the luxury Brands were asked to explain themselves they simply said they thought the claims were exaggerated and un quote they could not be expected to be on top of all their suppliers but to really prove the point in 2018 PS a discount Footwear chain ran an experiment they opened up a retail store called pesi and made the inside look really fancy and when influencers checked out this store they openly said that they'd be willing to pay hundreds of dollars for these pessi shoes but the funny part is these were the exact same shoes that pal sells in their stores for just 20 to 30 bucks which shows people are willing to pay a lot more money for brand names in the aura of luxury despite the disconnect between quality and price but if you're watching right now and you still want to buy nice things without going to debt or struggling here are three steps you can take to get there first understand that it's totally okay to treat yourself once in a while building a healthy relationship with money is about finding the balance I personally believe 90% of goals like diets fail because the more you hear you can eat pineapple pizza the more you're going to Crave pineapple pizza when it comes to getting better with money deprivation does not work but the problem is if you don't know exactly how much you can safely spend and Save you're going to be in a lot of trouble so how do you figure that out the general rule of thumb is to follow the 50 3020 rule basically 50% of your take- home pay goes towards your needs like food housing and utilities 30% for your wants vacations entertainment in Mr Magic lambs and 20% to your savings I built this savings goal tracker to help me save money a lot faster I just put in how much I want to save and then I can track my progress and Visually see where I'm at for a limited time I'm giving away my ultimate savings goal tracker for free with the link below so if you're earning about $6,000 a month $3,000 would go towards your needs $1,800 would go into your wants and 1,200 should go towards savings for future investment if you can save more or spend less for your needs that's fantastic but the beauty of the 50320 rule is it gives you flexibility and encourages you to look for cheaper alternatives but the 503020 rule isn't a one-size fitall solution you need to understand your own personal financial situation and readjust the ratio accordingly personal finance is personal for a reason and this rule is just a great starting point next it's really easy to start bashing people for buying luxury Brands when they don't need it but just put yourself in their shoes for a second in their designer shoes this is tressy McMillan when she went for an interview for her first professional job at a call center the hiring manager looked her up and down and told her that she was too classy to be working on the call center floor and instead she was hired as a trainer trusty makes a great point that looking nice can mean the difference between having a good job and uh less than good job while that's partly true there's always going to be a middle ground where you don't have to sell your left kidney just to buy a pair of shoes but you also don't need to look broke AF because you're Penny pitching for retirement chances are you can find cheaper dupes for most of these luxury products that look exactly the same and if not then consider buying them secondhand at thrift shops or sites like eBay next what if I told you that there is a way to buy whatever you want without worrying about money but for you to do that you need to learn exactly how the 1% manages their money click here to find out what they do so you can start today

Channel: Vincent Chan

Views: 57,057

Keywords: luxury shopping, luxury life, luxury lifestyle, luxury brands, luxury brands keep you poor, luxury brands are scamming you, luxury is a big trap, luxury is dead, luxury is over, luxury is for poor, luxury is overrated, luxury is not worth it, luxury fashion, luxury fashion is for broke people, luxury fashion brands, luxury fashion marketing, luxury fashion industry, is luxury fashion a waste of money, are luxury brands worth it

Id: f0bIApjLBzA

Length: 12min 47sec (767 seconds)

Published: Sun May 19 2024