The Millionaire Next Door

The Handbag Challenge

For many of us, handbags hold our entire lives. My life is held in a six-year-old mom purse, coated on the inside with a thin layer of dried Cheerio powder mixed with applesauce and regularly confused with a punching bag. I have a running joke with my colleagues at Data Points that I’m not buying a new handbag until we’ve reached specific company goals. It’s quite motivating.

Last week’s article in the Wall Street Journal on satisfaction and handbag purchases made me smile. It seemed strangely appropriate both personally and professionally. First, it was timely given the state of what is housing my life right now. Second, it was the type of article my father would have clipped (literally, with real scissors) and written notes all over before sharing with me, highlighting this in particular:

The study found roughly four in 10 women ages 18 to 34 said they started thinking about their most recent handbag purchase more than a month in advance.

He would have praised their research and thoughtfulness: he understood the importance of quality in goods that need to last, like a quality pair of shoes and furniture that withstands time. The idea that time spent researching a purchase and the level of satisfaction one has with its purchase is compelling: the article states that returns on high-end handbags is quite low. The author continues:

The result of all this due diligence: Shoppers are feeling much more satisfied with their purchases.

If I had to guess, my father would have contrasted the time spent researching and making accessory decisions as compared to time spent on their financial affairs. For example, according to a study by TIAA-CREF, only 15% of Americans spend two or more hours investigating IRA investments…in contrast to 25% of Americans who spend two or more hours researching a restaurant for a special occasion dinner. Handbag shopping was not included in that particular study. Millionaires, those successful at transforming income into wealth, spend a substantial amount of time planning investment decisions: The average millionaire next door allocates about 10 hours per month to studying and planning his investments. 

For these 18 to 34-year-olds to achieve financial success, perhaps they can transfer the research and planning skills honed in consumer decision-making to financial decision-making.

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