Plastic money has opened way for impulsive buying more than ever before and the younger generation is the one that seems to be doing most of the spending
After spending a restless summer afternoon at home, I garnered enough courage to venture out to a mall close by my house to make some necessary purchases. I was second from the counter in the queue to pay the bills when out of boredom I begun observing the youngster before me who was billing his purchases. He took out his debit card with a flourish and punched in the pin number. But, the satisfactory sound of the click and whirring sound of paper rolling out of the card swiping machine remained elusive. Instead insufficient funds flashed on the screen. The youngster did not look in the least bit perturbed and flashed a credit card, made his purchases and went with a big smile on his face as if he had not incurred any debt. I wondered if the idea even occurred to him!
They say literature is the mirror of the society and this incident made me recall Cedric Mount’s Never Never Nest that I had read long back. It talks of a young married couple with a child who own a house and myriad luxuries of life, all on installment plans. Everything they own is not truly their, it’s on loaned money, the beautiful house, the car, the piano and even the sofa. In fact, they have not even cleared the bills of the doctor who delivered their baby. When their aunt visits them she is shocked at the extent of debt they have incurred, Jack’s income being less than what he has to pay every week to repay the debts. The play ends with the wife, Jill sending money gifted by the aunt to the doctor as she exclaims, “Why; just one more instalment and BABY’S REALLY OURS!”
The end of Mount’s play may be a little drastic and unreal but borrowed living has sneaked into our lives and has spread its tentacles so comfortably that we do not even feel the pinch till those not so pleasant calls from credit card companies make their way to us. Many of us still go on ignoring it to the maximum possible time. Just like the youngster on the billing counter, some of us hardly think as we swipe our credit and debit cards at multiple kiosks and shops, shelling out money on luxurious, feel good purchases.
A survey conducted in Mumbai, the financial hub of India in 2013 showed that among the respondents, 90 per cent youngsters between the age group of 17 and 30 own a debit card and 75 per cent owned credit cards. Another survey done in the U.S. by the Ohio State University revealed that the young adults are accruing credit card debts much faster than the other age groups. Tragedy is that this age group is much slower in returning those debts and a still bigger tragedy is that some of them do not even realize that they are getting into a debt.
Before the era of ‘plastic money’, loans were still available, but not that easily. If you saw a particularly tempting dress in the shop window or an alluring watch on display, checked your wallet and found no money, chances were that you would pass. And, if a person was not very much committed to the purchase, it might never happen as well. But, the plastic money that we carry with us has made this easier. All we have to do is to dip our hands in the wallet, take out our cards and make that purchase. The procurement of these cards has also become way too easy. On an average my phone rings three times every week with one or the other representative from a bank offering either a loan or credit card. The talks go around the same line, “I will come wherever you are ma’m. All you have to do is to keep the papers ready and sign the documents.” Surprisingly, these representatives see walking to the bank as the only problem in taking a loan or becoming the owner of a credit card.
Somehow, spending money through credit and debit cards does not seem the same as taking out a thousand rupee currency note from one’s wallet or going back home and getting the cash for that much coveted pair of sunglasses. Easy availability of credit therefore, pushes us into impulsive buying without actually spending paper money. Same goes for the online purchases made by using cards and facilities such as Net Banking. Online spending is much easier. No need to visit the shops, no hassle of crossing through the smoke spewing traffic. Sit in the cool comfort of your home with a cup of coffee and with a few clicks you can order everything from trendy laptops to furniture. True, India’s online retail market is smaller than American or European markets, still it is making its presence felt in the urban India, especially among the youth. Market researchers are predicting that it is most likely to double and reach $3 Billion dollars in three years and could very well reach $15 billion by 2017. With improved connectivity and more and more brands making online shopping available these numbers are all set to grow further. So, where does it leave our spending without even realizing that we are indulging ourselves and walking towards mounting debts? It can only move north, that is for sure, when we look at the current trend.
One would think what could be worse than incurring debts that we might not be able to pay. But there is darker side to it. Many of us have lapsed into a practice where we do not keep a track of our spending. Keeping accounts is not considered an ‘in thing’. Surveys show that most youngsters who have just one or two bank accounts to maintain often draw a blank when asked about their balance.
Stemming from the ease of making purchases, the younger generation that has far too many prosaic financial demands than its predecessors, gives a short shrift to financial literacy before applying for cards and using them. It is only when the monthly statements knock at their doors that they wake up. And, many still, choose to press the snooze button on their alarms and go back to sleep till the next wake up call. It is hardly surprising when Mumbai, the commercial hub of India has an overall financial literacy of just 60 per cent.
Is there a solution? Cards and net banking cannot be done away with, no matter how much we attribute excessive spending to the ease with which we can spend. But, knowledge of how much we are spending and to what extent we are credit worthy would definitely be helpful and save us from the plight of the couple in Mount’s play.