Is luxury losing its luster? How status symbols became commonplace

There was a time, not long ago, when luxury handbags She made the loudest statement of status. If you wanted to say you had arrived, without using words to that effect, you simply bought yourself a luxury handbag, the cost of which onlookers could only guess would amount to a few hundred thousand.

Things have evolved now and the status statement that represents a luxury brand is not just a logo on a bag, but can be on a belt, a cap or even sunglasses.

When you cover yourself with brands, it costs you money. So your default statement is, “I have a lot of money.” But intuitively we also know that owning luxury brands has no economic value; there was a lot of media buzz recently about Christian Dior handbags, which cost $57 and were selling for more than $2,800.

In Indian rupees that bag costs more than ₹2.3 lakh What can you do with a bag worth more than ₹2 lakh, which you can’t handle with a bag worth ₹5000? Some will pull out the quality card, but if you consider that ₹2 lakh can educate at least 10 children in a government school for an entire year, the quality of the bag would have to be at least bulletproof.

This column is not really about the moral values ​​of owning luxury brands, but rather that it has become so common to see young and old carrying Louis Vuitton bags and sporting Gucci belts that one has to wonder if the premium one pays to display status is really buying one the exclusivity one desires or is it too high a cost to bear.

Gender dynamics and disposable income

India’s middle-class population, which spends, albeit not as much as our government would like, is on the radar of every brand, luxury or otherwise. Our aggregate disposable income has grown by about 2.5 times over the past decade (till 2022) to reach ₹2.72 million. At the same time, according to SBI Research, the ratio of household savings to GDP has declined from around 24% in FY12 to 19.7% in FY22.

The government is not happy with the consumption in the economy, which was once again made clear in the Union Budget speech on July 23, at the same time, sales of luxury handbags are increasing at about 100% pace. 7% per year.

The effects of constant social media use, the perception of being part of an affluent society that is constantly moving upmarket, and dual-income families without children are all factors that contribute to this type of luxury spending that goes far beyond the basics, alluding here to personalized bags with initials and people wearing three different luxury brands in one outfit.

Buy apartments in ₹50,000-70,000 per sq ft in Mumbai, sending his son to a ₹Undergraduate program worth over 2 crores in the US or wear a plain black round neck T-shirt from Burberry worth ₹45,000: These are all examples of spending options that have little or no economic value. However, they are options that we are increasingly pushed to choose.

In Personal finance, spending and saving They are two polar opposites, and yet big spending is more about emotions, sometimes without any practical use. Think about it: when we talk about budgeting or saving, shopping and movie nights are usually eliminated, rather than high-cost mortgages or luxury cars.

Luxury brands also have a similar special appeal, not least thanks to the invisible vanity they carry with them. Owning them makes you feel like you belong to a group and that you are not falling behind in society. It is the quintessential connection between money and self-esteem. Spending on all kinds of luxuries has the power to make you feel good about yourself too – not just to show it off to others, but it can also be a deeply satisfying experience for you personally. You feel good, you feel rich, and you feel elevated. You no longer need to buy a big car or a big house to prove your earning capacity – Armani jeans and Gucci handbags are perfect.

I don’t want to disappoint you, but cars and houses are assets that can be sold, the former even at a profit. Luxury clothing is perishable (who knows how many washes or outings it lasts) and second-hand items don’t command high prices. In trying to create our social and financial status in society, we drastically overestimate the impact of instant gratification through blatant display of status and underestimate the ability of our savings to turn into lasting wealth over time. Spending always comes at the expense of saving, and like it or not, saving is essential to Invest and increase wealth.

Unless you have an unlimited amount of money, what you spend today takes away money for tomorrow. Therefore, most of us should spend wisely. You will feel much more elevated and secure in life when your savings are enough to fund that business you always wanted to start or when you can afford a decent-sized apartment with minimal or no loan with the help of your own savings.

The key is to strike a balance between today’s luxury, long-lasting comfort over many days, future financial well-being, self-esteem and a display of status. It will be great to have it all, but in the real world one thing will come at the expense of the other.

Before you splash out on that next luxury handbag or belt, ask yourself what the real cost of luxury is and what balance you’re breaking by swiping that card. Also, if everyone has one, is it enough of a luxury to boost your self-esteem?

Lisa Pallavi Barbora is a financial coach and founder of Moneypuzzle.es