With apologies to John Bruggeman, whose new blog highlights Silicon Valley narcissism and conspicuous consumption at its best (heck, why not), I'm attempting to raise a family with Spend Management values.
First, let me say that I'm not in favor of economy for economies sake (though I believe strongly in Benjamin Franklin’s adage that we'd be a whole lot better off if people spent more time studying economy rather than the economy). I firmly believe that it's OK to spend, but by all means, spending should be smart. For example first growth Bordeaux and cult California wines can be purchased, cellared for years, and some of the costs offset by strategic donations to important charities along the way (even as your collection mounts in value). However, a sixty inch plasma TV and four Tivo boxes would just not fly in a household practicing Spend Management values, as cool as it sounds.
Along the same lines, a Spend Manager in the home understands the difference between price and value. For example, spending thousands on a complicated Swiss watch from a prestigious maker is a smart purchase that is virtually assured to rise in value over time (while providing decent utility along the way to the wearer). Sure, a Seiko could do the job for less, but from a total value perspective, it just doesn’t stack up.
Not every purchase in the Spend Management family need be expensive at the start. The family practicing Spend Management family values should consolidate their purchases with fewer suppliers by frequenting Costco, Sam’s, and similar bulk stores as often as possible, though product waste and spoilage should be kept to a minimum by purchasing only what one needs. High fashion should be limited to Target’s apparel isles (well, at least as much as possible).
Indeed, economy should drive many decisions, but practicality should be a factor as well. For example, one should always purchase used cars (or demo models), letting someone else take the initial depreciation hit. A smart car purchase can almost be seen as an investment. Well, sort of. Our demo BMW 525 station wagon was so in demand only a few months after we purchased it for 25% off the sticker price that the dealer tried to by it back for more. Since then, it has barely depreciated from our purchase price, thanks to its combination of size, performance, scarcity, and reasonable economy (around 27 MPH on the highway) in a post gas-guzzling SUV world. Now that was a smart Spend Management-driven purchasing decision made at the right time.
It's important for parents to pass on a value system to kids by actively teaching Spend Management principles. For example, it would be a wonderful lesson for my son to see his father wait patiently to purchase a Porsche 911 that’s between 3-4 years old for a significant discount off of the sticker price, and to later observe that the car would barely drop in value from that point forward, while also providing maximum utility to the dad (baby seats, after all, do fit in the back). We're still trying to convince the CFO in this household of this to bring her on board with the concept. Indeed, the business case is not fully baked yet. But as procurement's influence continues to rise and as I finally obtain a CPO title in the home, I'm confident she’ll come around eventually.