Watch what you spend
26th November 2018
I wanted to share a story told to me by Uncle Phil (not a real uncle) last week. I’m not even sure I’ve fully worked out the moral of the story…but I’m pretty sure it tells us something important about human nature and how we behave with money.
Uncle Phil was a TV engineer, back when TVs looked a bit like the the picture (left). As well as servicing and selling TVs, the shop Uncle Phil worked for also did rentals.
As anyone who rents out anything knows, now and again you get a customer that isn’t very good at paying their rent. The solution that the TV rental company came up with to try and deal with these troublesome customers was to fit a coin meter to the TV. You put 50p in the slot and the TV would then work for an hour before cutting out. Another 50p would need to be found to allow you to continue to watch your favourite program.
Once a week it was Uncle Phil’s job to go round and empty the coin boxes. The 50p pieces would be counted up and the total would be credited against the outstanding rent. TV rental company gets some dosh, and the customer still gets to watch Eastenders. All good.
But here’s the interesting bit. Many of the customers who were previously getting behind with their monthly rental payments were putting more money into the TVs in 50p’s than what they owed in rent. So much so, that these clients were building up credit that allowed them to buy other household appliances! Remember, these were people that apparently couldn’t afford the monthly rental payments.
So, it would appear that our problem with instant gratification is not a new thing. Even back when TVs were massive wooden boxes people still had difficulties paying for something that they wouldn’t benefit from immediately…and overspent when the benefit was instantly available.