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Millennials under threat of 'affluenza'

FX Iwan
FX Iwan

Independent wealth management advisor

Jakarta | Wed, April 11, 2018 | 04:50 pm
Millennials under threat of 'affluenza'

The term ‘affluenza’ first appeared in 1908, in an article written by James Douglas, entitled, ‘Things I Think About.’ (Shutterstock/File)

Since the early 2000s, Hollywood has shown how a consumptive culture causes destructive addictions. In some cases, these addictions can even become “contagious”. A case in point is Confessions of a Shopaholic. Through this film, Rebecca Bloomwood (Isla Fisher) portrays the millions of cinema-goers who share her habit of using credit card debt to fund an obsessive lifestyle. Meanwhile, The Joneses depicts a consumptive lifestyle by a harmonious and wealthy family who push their neighbors to buy the luxury products that they show off.

These Hollywood predictions haunt the millennial middle class in Indonesia.

The Boston Consulting Group (BCG) has stated that in 2012 the number of middle-class and affluent consumers (MAC) in Indonesia was 74 million people, and predicted that this number would continue to increase to 141 million people in 2020. The middle class has always been known as the engine of change, especially in relation to economic and social changes in the history of various countries.

The term “affluenza” first appeared in an article in 1908, written by James Douglas, entitled “Things I Think About”.

This term resurfaced in 2013 when the child of a wealthy conglomerate owner from Texas, in the United States – by the name of Ethan Couch – arrogantly killed four people through drunk driving. People were furious when his lawyers claimed that he suffered from affluenza – a behavioral aberration caused by a family life full of luxuries and other external factors. This returned to become a hot topic of conversation when Couch was freed on April 2 this year after spending two years in prison.

After examining this case, several supporters of the affluenza theory stated that people who suffer from it believe that money can buy them happiness, which often makes it impossible for them to relate to the wealth they currently have. The “business of getting rich” makes it impossible for them to feel happy and satisfied at the same time. Other than that, they often experience problems in achieving a normal life within society, starting from an inability to distinguish between right and wrong, to the point where empathy has been replaced by an increase in arrogance.

Several symptoms of affluenza, among others, are a feeling of depression or poor self-image, which is directly related to a person’s financial situation. One of the most familiar issues for the millennial middle-class generation is the competition to improve their self-image by uploading photos of themselves on social media.

Read also: Millennials love experiences, Tourism Minister says

If this trend continues among our millennial middle-class, it could have an impact on their knowledge about investing. It is important for wealth advisors to be equipped with skills in the psychology of wealth management.

While the psychology of wealth management is normally handed down by parents who wish to bequeath their wealth to their various children, which can also result in a transfer of emotional wealth to the child – the psychology of wealth management must be understood by every income-earning individual, including the millennial middle-class generation, in order to avoid affluenza.

In addition to the millennial middle-class generation equipping themselves with the psychology of wealth management for their future benefit, I also suggest that every relationships officer within a financial institution facilitates their clients with a wealth-management service that is based on the psychology of wealth.

Several things that must be applied by the millennial middle-class generation from the psychology of wealth management in order to avoid affluenza are as follows:

Set an expenses limit

Financial freedom is basically having passive income, which continues to flow without being affected by the income generated through someone’s work. There are two variables that can be adjusted to ensure financial freedom, namely increasing passive income and decreasing expenses.

Setting spending limits is the first thing that must be done, one day before our salary is transferred to our account. Every month, we certainly have fixed and unexpected expenses. Set a spending limit for each month. Just like making a target, gradually reduce unexpected expenses and entertainment expenses per month. In order to achieve success in the reductions you have already made, keep all your bills to read the next month, as a form of “evaluation note.”

Read also: Saving is (not) hard

Do not make a habit of “shortcuts”

Many studies report that millennials are an impulse-buying generation, in which many of them are unable to control their desire to get something now, rather than waiting – to the point where debt is used as a shortcut rather than saving money for an item. This can have an adverse effect when they are unable to pay their debts, as debt is one of the most common symptoms of affluenza.

Become a smart shopper

With the help of technology, various applications for managing finances have been made widely available. One of these app types is the “smart shopping” application. This type of application assists users in maximizing the amount of shopping done in comparison to their needs.

Start to invest – even a small portion

As mentioned above, the key to financial freedom is having passive income. One of the ways to obtain passive income is through investments.

If you do not know how to start investing due to a lack of knowledge, start by being a conservative investor with a low risk tolerance. This will provide an alternative way to make money grow, while learning more about investments.

Ask the investment advisors at your bank to advise you during this learning process. Although it is only a small amount, you will learn how to develop your funds into funds that are more productive. (dev/kes)

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Graduating with a double degree in Industrial Engineering and Information Systems from Bina Nusantara University, FX Iwan continues in his ambition to become a financial expert in the field of wealth management. In 2010, Iwan succeeded in getting licensed as a certified financial planner (CFP) and investment fund selling representative agent (WAPERD) from APRDI and investment manager (WMI) from the Financial Services Authority (OJK) in 2017. FX Iwan established PT Jagartha Penasihat Investasi (Jagartha) in late 2017 and is cofounder and managing partner. His feeds and updates can be found on Instagram @fxiwan and LinkedIn FX Iwan.

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