Glory of money ‘friction’
I’m undergoing a terrible ordeal in my battle with frittering.
My workplace has moved into a super-modern office on top of a supermarket.
It is now dangerously easy to put a thought like: ‘‘I fancy a sausage roll’’ into action.
Thoughts like: ‘‘Mmh, I fancy a double chocolate stout tonight’’ are coming with greater frequency now I spend my days over a nice beer selection.
I have experienced a massive decrease in what a retailer would call ‘‘friction’’, which is shopping industry jargon for the difficulty of buying something.
The greater the friction, the less money people spend, so the harder retailers work to get rid of it.
When I was a nipper, it was hard to spend money. No-one had credit cards. Shops shut early, and didn’t open on Sundays.
Once the closed sign was up, you couldn’t buy anything. The internet had been invented, but you couldn’t shop on it.
These days your lounge is a shopping mall whenever there’s a screen open. If you are awake, you can shop.
Even the action of buying has lost friction.
Writing out cheques and counting out cash have largely gone. These days PINs often don’t even need entering. If you’re too lazy to get a card out, just wave your wallet at the terminal.
As friction diminishes, people need more willpower and anticonsumer defence strategies. Here are some of mine. Willful ignorance: I virtually stopped watching TV years’ ago, so I don’t see much advertising. I’m squeamish about violence, and bored by reality shows.
I know less than I used to about things I could buy. As a result, I don’t yearn for them. Cutting screen time reduces consumer pressure.
Place avoidance: I dislike shopping. I detest malls. Replacing recreational shopping with more healthy pursuits (walks in the bush, trips to the beach, etc) increases willful ignorance, and physically separates you from temptation. Double win.
Big picture thinking: Do you want another shirt, or do you want a mortgage until you are 72? Fair question.
Is that coffee a coffee, or is it the partial sacrifice of your early retirement? Focusing on the big uses for money makes it easier to avoid frittering.
Happiness focus: Focus on using money to bring deep happiness. Ask yourself: ’’Will knocking four months off the mortgage make me happier than bringing forward the purchase of a new car by a year?’’ Train yourself to ask the question.
Increasing personal friction: Many people do it. They leave their credit cards at home, or don’t carry change, if there’s a vending machine at work. They’re sabotaging their ability to spend.
Joyless sneering: I know it doesn’t sound very pleasant, and I don’t do it out loud, but I am suspicious about the personal finances of the best-dressed, besthoused people I know. When I find myself inclined to envy, I defend myself with speculation about the state of the envied party’s debts.
Beware frictionless spending. Focus on spending for deep happiness.
Work on your willpower Last week, Auckland’s average house price reached just over a million dollars, making the City of Sails an even more expensive location than London.
For any Britons who have been hoping to escape here in the wake of Brexit, the bad news in the Guardian newspaper was that ’’New Zealand has the world’s most frenetic property market’’.
This extraordinary property boom continued to outstrip the ability of Parliament to respond.
Last week, Building and Housing Minister Nick Smith was championing legislation that will create eight special housing areas totalling 762 hectares of greenfields land for housing in Auckland.
Gradually, the legislation will also help to free up land elsewhere via a national standards process that will take three years to fully take effect.
‘‘There is no silver bullet to New Zealand’s longstanding housing issues, but this bill takes a further step in the right direction,’’ Smith conceded.
Smith’s Parliamentary efforts were consistent with the government’s insistence on treating supply as the real problem, and its faith that cranking up the housing supply will eventually make prices affordable for most people.
If only the Auckland City Council zoned even more land, more favourably, for development - so the theory goes - this would boost the supply side of the affordability equation, and all will be well. Eventually.
Not so, alas, in the real world. Yes, many will welcome the emphasis on new state houses being built, rather than old ones being sold. However, new homes comprise only a fraction of the housing market.
Any relief that an increase in housing supply can offer on price will continue to be swamped by demand side factors like the he said. ‘‘Nobody has ever shown … that you can supply enough housing into a market to effectively make prices fall. New supply is two per cent of the housing market. Even if that doubled, what impact would that have?’’
More to the point, the only people able to afford to buy houses, old or new, are the ones who already have a foothold in the property market. With interest rates sloshing around the zero to 2 per cent mark existing homeowners can leverage their access to this cheap credit and to the mortgages involved.
Speculators can do likewise. But for everyone else? Arguably, the government may need to use its own access to cheap money to fund people into housing at a rate beyond its current efforts. Ultimately, we cannot simply build our way to affordability.