Investing · Spending

Afterpay and the Culture of Instant Gratification

If you have recently been shopping online or in a real shop (remember those?) you have probably seen Afterpay.

Afterpay allows you to ‘buy’ what you want and pay for it over four equal fortnightly installments. You can pay using your debit or credit card.

Just like like lay-by, you buy now, and pay later, with one key difference – you get to have your product or service straight away. You don’t have to wait.

And, best of all, Afterpay doesn’t charge you the buyer anything, except late fees if you don’t make your four payments on time. The cost is put back onto the retailer who pay Afterpay a commission for each sale.

Sounds great right?

Sure. It’s a clever business idea, but let’s think about the sort of behaviour Afterpay encourages.

You don’t need to save.

You don’t need to wait.

You can have what you want, when you want it and that means RIGHT NOW.

Have a think about why so many e-tailers and retailers would sign up for Afterpay, when THEY are the ones bearing the cost. Because it encourages you to spend. Spend more and spend more often.

Over 70 per cent of Afterpay’s users are millennnials (those born between 1980 and 2000) and the biggest group of retailers that offer Afterpay are female fashion brands. It would seem Afterpay’s target audience are young women which is no surprise.

The concept that you need a ‘new outfit’ for any and all upcoming occasions doesn’t seem to register with men, but for women it is standard fare. We also spend more on beauty and hair products.

When I see Afterpay offered on a $30 dress on The Iconic it makes me worry about the effect this has on young women. This facility encourages you to purchase items that you want, but probably don’t need.

Afterpay also encourages instant gratification. Why does that matter? Because studies have shown that when you have easy availability of something, it becomes less valuable to you. Easy come, easy go. Your hard earned dollars are precious and they shouldn’t be frittered away on things you don’t really need.

Do you actually need a new dress? Can you make do with what you have? Or borrow from a friend?

If you really do need (not want, need) a new dress, I recommend you save up for it and make sure you are buying quality over quantity.

Or, even better, don’t buy that dress and use your savings to buy some shares in Afterpay Touch Group Ltd (ASX: APT). The share price has risen nearly 30 per cent since July 2017 and is currently sitting at $4.13.

After all, it is a clever business concept, but you should be making (not spending) money with Afterpay.

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