Joshes and Joshettes, I’m in a good mood so let me give you the answer here in the intro. The hardest part of making money is not spending it. Simple enough but there’s more to it and one of the reasons for this is because of the Diderot effect. Do I have your attention now, good let’s learn about this social phenomenon.

Yes, you read that last line correctly, the Diderot effect is classified as a social phenomenon (by Wikipedia) and is named after the famous philosopher Denis Diderot. Diderot lived in poverty for most of his life and when he came into wealth he splurged and purchased himself a new robe. It’s okay to splurge every now and then but then Diderot noticed his new robe didn’t fit well with his other possessions. He kept on replacing everything in his home with newer fancier variants and once he was done, he was poor again and unhappy. The Diderot effect states obtaining one new item or new possession can lead to many more purchases that will never satisfy us or make us feel happy. How does this apply to us in modern times? Let’s say you get your taxes back and you go out and purchase a new iPhone. When you buy a new phone, you have to protect it with a case and a screen protector. Then the sales rep at the store will tell you about an offer for a discounted iPad. You might not purchase it and you’ll be on your way. You go home and look through your box and notice the phone no longer comes with a headphone dongle so you can’t use your favorite headphone. You go to the store to purchase a dongle but you see the new AirPods Pro and you decide to pick up a pair. You are in love with your new products and while at the gym you see a person tracking their workout with an Apple Watch. You can get a discount on your life insurance with it so why not pick up a watch? You’re enjoying your watch and life is good for a couple of weeks or months but then something happens. The new iPad is announced and it has this one killer feature that you want so you purchase it. I could go on for hours because it’s an endless cycle, so let me tell you a story.

At my new job, I dress to impress (button-up, slacks and dress shoes) and I felt that my wardrobe wasn’t the best. It started out with a small order of shirts and I was happy. Then I realized one of my pants were too baggy so I ordered some new pants. After a while, my shoes were too uncomfortable to walk a mile to and from work so I ordered me some crocs. I purchased a bunch of additional clothing before I realized I was suffering from the Diderot effect. So if I can fall victim to it, how can I help you guys avoid it? I can’t but as they say in G.I. Joe, knowing is half the battle. The key takeaway from this post is to track your spending and know where your money is going. If you can catch it early enough then you can stop it before it gets out of hand.