If you sold everything you owned and paid everybody you owed, how much would you have left? That’s your net worth (net assets).
So a celebrity buys a luxury item for his girlfriend from his billions, he has probably just spent a tiny proportion of his net assets (let’s live potential future income for now). A regular Joe with a job in a bank buys a smartphone for his girlfriend, has probably spent a larger chunk of his net asset on that purchase.
Perhaps, if we started to think about our purchases in terms of what percentage of our net assets we are spending, we might act a bit more carefully.
•You earn N200k per month
•You life with your parents so you manage to save 30% of your income (#60k)
•After two years, you’ll have #720k in savings.
•If we assume a forced sale value of #280k for the shoes, ties and clothes you have bought.
•You buy a #200k smartphone.
The smartphone would have cost c.20% of your net assets.
Take some time, list everything you own and then deduct everything you owe, you might be richer than you think.
With this information you can track your progress from year to another.