Compared to other countries, we here in the UAE wear our taste for luxury on our sleeves - and handbags and shoes and caps and sunglasses and car hoods. You get the picture. This thoroughly unsurprising news was delivered recently in the form of a global survey by the research firm Synovate, which delivered tidbits such as the fact that 26 per cent of UAE residents consider luxury a lifestyle, compared to just 17 per cent worldwide. And only 20 per cent of UAE respondents said they consider luxury something that is "over and above what you need", whereas almost double that number said they feel that way in the 11 other markets surveyed.
No doubt the local buyers for Gucci, Ferrari, Louis Vuitton and the like find the report a reasonable excuse to pop the cork on yet another bottle of Veuve Clicquot, but what does it mean for the rest of us? Is the unofficial national motto really "If you've got it, flaunt it"? Per-Henrik Karlsson, Synovate's director of business development in Dubai, put forth his theory that the attitudes revealed in the survey can be attributed at least in part to the onslaught of high-end brand advertisements that overwhelm visitors and residents while in the Emirates. In other words, the perception of ubiquitous luxury creates the reality.
I don't buy that argument - pun intended - as I've never been fully persuaded by the notion that we consumers are powerless in the face of almighty advertising. But I do believe that we are mightily influenced by our peers and the perception of how we stack up against them. It is a perilous weakness almost all of us possesses. One of the most treacherous pitfalls in personal finance is the compulsion to keep up with the Joneses (or whatever the last names of our friends and neighbours might be). It's particularly risky because our perceptions of the financial health of others are based on incomplete - and often incorrect - information.
We may assume that the stylish gent wearing the Rolex and the Charvet tie is perfectly fixed for an early retirement, when in fact he could be leveraged to the max and unable to sleep through the night. The huge best-seller from a few years back, The Millionaire Next Door, was built on observations like how the richest man in town is typically the one driving the six-year-old Buick, not next year's Rolls.
We should strive for affluence, not the appearance of affluence. There's a new website in the US called bundle.com that essentially turns the whole "keeping up with the Joneses" problem on its head by providing a quantitative peek into the checking accounts of our friends and neighbours. As Citibank is one of the site's backers (along with Microsoft), it uses aggregated transaction data from Citi customers as well as information from the US government and unnamed third-party sources.
The idea is that once I am able to see how people like me save and spend their money, I can identify areas where I will be able to re-evaluate my spending and perhaps cut back. Or maybe once I see how far behind I am in saving for retirement, I'll be that much more motivated to catch up. The site doesn't cover international markets as of yet, so I checked in on the residents of my old neighbourhood in New York. What I found surprised me.
When I was leaving the Big Apple, I chastised myself for not making a more diligent effort to enjoy the city's culinary delights. There are literally hundreds of fabulous restaurants and it seemed like I'd sampled only a measly portion. As I trudged home most nights, it seemed like the sidewalks were full of glamorous couples savouring their fabulous meals, while my wife and I haggled over who would stop at the grocery store to pick up more pasta.
The truth: I spent a lot more on food and drink than my peers. While I was eating out two to three nights each week, the average family was eating out only once each week and stretching leftovers into several additional meals (either that or they were eating at much cheaper restaurants). This minor discovery is not likely to revolutionise my spending, but it should make me think twice next time I am planning a night out on the town on the sole rationale that everyone else is doing it.
The good news is that the site tells me I spend far less on clothes than my peers. Maybe I'll head out to the Dubai Shopping Festival this weekend and snag that Ralph Lauren suit I have had my eye on - but only if it's on sale. @Email:breagan@thenational.ae
