Since I remember myself, I’ve seen people here in Latvia expressing their financial and social status through owning fancy goods, such as luxury cars, brand clothing, latest gadgets etc. Till I had any chance to start travelling and meeting new people that weren’t locals, the passion towards status symbols seemed natural to me.

However, with time and experience, I saw that it’s not the same in other countries–elsewhere wealthy people looked a lot more humble and modest.

My observation got me thinking–why is it so that luxury stuff is nearly worshipped in the Eastern part of Europe?

Has it anything to do with the historical background of the region? Or is it a trait of a particular society that needs to be accepted just the way it is?

To raise some awareness on the status symbol topic, I decided to dig a bit deeper into exploring topics on wealth, luxury goods, and psychological reasons behind it all.

The rebellion against uniformity

Being humble goes hand in hand with maturity. The more confident people are about their place in the world, the less they need to show off their status through luxury possessions. While maturity is often considered to add up with age, it’s not necessarily the case when it comes to your relationship with wealth.

Amazingly illustrative example: Eastern Europe.

For most people from this area being wealthy is something relatively new and unknown. Locals who are in their 30s and older have grown up within a different political ideology where being richer than somebody else was NOT a good thing at all, moreover, it was quite impossible (howdy, communism!). Whenever somebody had any “luxury” item, they were secretly or openly admired for it. No wonder why possessing anything that wasn’t common became a life goal for many people.

The historical background makes sense for the status symbols’ “game” in today’s Eastern Europe. It’s a direct heritage from the historical period of communism in the region. And although around 30 years have already passed since the collapse of the regime, deeply rooted habits don’t die or change that fast. The tendency to desire luxury goods and admire people who possess them most likely has transferred through time into today’s reality.

The paradox of status

While scrolling through some scientific sources on wealth and luxury, I stumbled upon an article about status symbols and friendship. Turns out, there’s a psychological effect called “Status Signals Paradox” which explains why people are so drawn towards luxury goods as symbols of their status level.

According to the paradox, we all genuinely think that symbols of status will make us look more socially attractive to others. However, a series of six studies showed that people rather befriend those who look more humble and simple–in other words no Prada or Gucci.

The urge of wanting to be liked and accepted by others is pure human. The well-known needs’ pyramid of Abraham Maslov rates esteem and belonging just after our basic physiological needs like food and water. Even though a sense of esteem can be internal, in many cases we need an external source. And that’s when we choose the esteem-building path made of owning things that are desired by others and seen as luxurious. Howdy Rolex watches and Gucci belts!

Wealth and youth in the 21st century

Despite the love towards luxury goods that I’ve noticed in the region I come from, I’ve spotted another, a more positive tendency. There’s a shift in perception of money and wealth within younger generations.

20-somethings now tend to strive more for a sense of purpose than for money.  The younger generations aren’t ready to slave at a job if it’s well paid and nothing more. Employers, therefore, need to think of more meaningful benefits to offer to young knowledge workers, like opportunities for growth and improved work-life balance. So, on the one hand, young people need less (in terms of status and luxury), but on the other hand, they want more than just money – they need to see the difference they’re making.

Turns out, my observations are supported by discoveries of sociology. The oldest part of the Gen Z, the generation born between 1996–2014 (add or take a few years), has seen the recent 2000’s recession and their parents struggling with money. With fresh memories of what their families experienced during the economic crash of the 2000s while they were growing up, now Gen Z-ers tend to be more careful with their financial choices. To them saving up for the future feels a lot more logical than spending money on luxury goods.

Another interesting fact about Gen Z that I stumbled upon while reading this Fast Company article was that they’re a generation less tolerant of bulls*it. Gen Z-ers are, for example, slower to trust brands and more quickly to spot when any kind of information isn’t legit. The generation has been born and raised in a time when information is easily available.  Which leads to the fact that transparency and authenticity are crucial values for them. That’s why luxury lifestyle doesn’t appeal to the Gen Z-ers as they find it inauthentic and controversial.

However, it’s not just the Gen Z leading more authentic lives and making more ethical choices. Their older siblings, millennials, are slightly following the Gen Z-ers lead (or is it the other way around?). Millennials DO spend more on eating out, taxi rides, gadgets, clothing beyond necessity and other extras than, for example, their parents, baby boomers generation. But they also tend to choose transparent brands a lot more often than generations before them.

Be wealthy, stay humble

So, are all of the other generations besides Gen Z-ers and millennials prone to luxury?

Definitely not.

Here’s a wonderful and inspiring example – Sundar Pichai, an Indian-American technology executive, CEO of Google & Alphabet Inc. since 2015, who is actually the inspiration for this article. His net worth is estimated to be more than $600 million, and the story of his career path up until now is quite remarkable.

And yet, despite joining the club of wealthy people, Sundar has remained extremely modest. His humbleness may be a result of growing up in Chennai, India without having anything extra–for a long time Sundar’s family didn’t own a fridge. However, the significant climb Sundar has made up on the career ladder hasn’t changed his perception of life much. He still remains the very essence of simplicity.

What’s his secret?

Instead of focusing on being wealthy, Sundar focuses on his personal growth and growth of the company he’s leading. Moreover, he’s not afraid to be open about his failures. Setbacks are inevitable and if you can learn from them, they become your treasure.

That’s actually a trait that most of the wealthy and successful people have in common. Psychological studies have discovered that many wealthy people tend to seek the cause of their failures within themselves and not in people around them. The ability to analyze inner reasons that have led to a setback, boosts the self-esteem of such people and decreases the need to seek an external evaluation. That way they’re able to be rich without the need to express it through status symbols.

Miswanting, misconceptions and other annoying features of our mind

When seeking guidance on a happy life’s content, Laurie R. Santos is the guru with all the answers. Her course “Psychology and the Good Life” is the most popular class in the history of Yale University, and, due to the high demand, it has been made externally available since 2018.

The most unexpected takeaway from the course is probably that people have no idea about what makes them happy. Not exactly something you would expect to learn from a happiness class, right? And yet it’s true.

Turns out, we’re all led by a bunch of annoying features of our minds. For example, a phenomenon called miswanting. It applies to the fact that people often mispredict the extent of both good and bad feelings – we think we’ll like and enjoy something much longer than we actually do. This makes us chase after things that make very little or no impact on our well-being. And luxury is such a thing.

However, there’s something worth buying that may lead us towards happier selves – experiences. Spending money on new experiences is one of the best trade-offs you can make. The positive effect of attending a concert (be it socially distant or Zoom-ish, hi there 2020) will last much longer than an effect of purchasing, for example, a new piece of clothing. Do you really want to waste money on stuff that won’t matter in a week or so?

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Simplicity is the new luxury. In a world where everything adds complexity just because it’s developing faster than ever before, being humble and simple is an advantage. Seeking out authentic and transparent brands, saving up instead of recklessly buying expensive goods, working at a job that brings a sense of purpose besides paying your bills, and spending money on gaining memories that will last a lifetime.

These are the essentials of the new luxury lifestyle to explore.