When I first heard the term perceived obsolescence I had no idea what it meant. I had only heard about planned obsolescence because it’s how technology companies have kept me coming back for a newer model of their product.
So what I want to do is explain what planned vs perceived obsolescence is, how it can keep you from reaching financial independence (FI), and help you avoid this pitfall.
What Is Perceived Obsolescence? (Definition)
Perceived Obsolescence is when a person is persuaded into replacing an item before the old one has lost its functionality. It can be as simple as the old item becoming unfashionable or less desirable.
The old item is perceived to be obsolete when in reality it is not. The perceived obsolescence is usually due to the aesthetics of the item, instead of the functionality.
Perceived obsolescence is prevalent in industries like fashion and technology. Companies aim to convince you into thinking about their products as status symbols. Therefore, to keep up with appearances you have to consistently upgrade to the latest trend or model much sooner than what is necessary.
Planned vs Perceived Obsolescence (With Examples)
The main difference between planned and perceived obsolescence is that with planned obsolescence the product is functionally obsolete. This decrease in functionality is by design, therefore “planned” by the manufacturer to get you to buy a new product.
Planned Obsolescence is when a manufacturer designs their product to have limited use or not function at all after a certain amount of time. Planned obsolescence leads to a frustrated consumer.
Perceived Obsolescence is when a person is persuaded into replacing a product before the old one has lost its functionality. This is done by changing the way items look so it becomes obvious to society you’re not keeping up with the latest trends. Perceived obsolescence leads to an embarrassed consumer.
Planned obsolescence has received much more attention but perceived obsolescence can be just as harmful to your wallet. So let’s go over some examples of both so that you can avoid them altogether.
Examples Of Planned Obsolescence
There are several examples around the world of planned obsolescence however, there are two major ones that stand out.
Lightbulb Lifespan Reduction
The first one is a reduction in the lifespan of lightbulbs by the Phoebus Cartel. In summary, this is when international businessmen gathered to agree upon a shorter lifespan lightbulb to increase sales. They engineered the lightbulb to burn out after 1,000 hours. This was a significant reduction from 2,000 hours, which was common at the time.
They did this by not just making an inferior product but purposefully making a product that wouldn’t last. Actively researching how to make a lightbulb burn out at exactly 1,000 hours.
The details of this planned obsolescence were discovered years later.
The second example of planned obsolescence might be more familiar.
It came to light when France investigated Apple for planned obsolescence, which is a crime under French law.
So no, you weren’t crazy when you thought your iPhone was acting up whenever the new iPhones came out.
The prosecutors alleged:
“the slowing down of older devices seems to have the deliberate aim of pushing Apple customers towards purchasing the new model”
Apple finally admitted to the allegations and said they deliberately slowed down older iPhones through software updates.
Read The Full Article Of Apple’s Planned Obsolescence
Other Examples Include
- Low-Quality Clothing
- Textbook New Editions
- Protected Ink Cartridges
- Irreplaceable Batteries
Examples Of Perceived Obsolescence
Perceived Obsolescence won’t typically end in a court battle. This type of obsolescence exists within our societal norms and is similar to peer pressure. Companies again work hard to drive perceived obsolescence. They create the illusion that their latest product is necessary to fit in with the cool crowd.
Where we see this most is in fashion and technology. However, I’ve also experienced it with the car that I own. I’ve been asked by family and friends “You’re still driving that old 2009 Toyota Corolla?”. I usually politely answer “yes” and continue my journey to Financial Independence (FI).
Feeling embarrassment or shame is common with perceived obsolescence, that’s what it’s supposed to make you feel.
In the fashion world, the embarrassment would be wearing clothing that is out of style. The fashion industry has capitalized on this by creating more seasons. Instead of the typical four seasons (spring, summer, fall, winter), there is now a new trend every month or even every week.
This keeps the consumer constantly looking for what is “in” and replacing the old with the new.
As for technology, an example would be using an iPhone that is 3 years behind the latest version. We’ve already discussed how Apple used planned obsolescence to sell more phones but they’ve also used perceived obsolescence. By changing the color or style of the newer version, it becomes more obvious who has the latest iPhone.
By having the new iPhone you are signaling to the world that you have a certain “status”. You can afford to upgrade and therefore, you save yourself the embarrassment of having the oldest phone amongst your friends.
In both cases, there is nothing functionally wrong with the clothes or phone. You would be comfortable using the current product you have if not for the pressure to replace/upgrade.
Other Examples Include
- New Car Models
- Flat Screen TVs
That is perceived obsolescence and the pressure to upgrade can hold you back from reaching financial independence (FI). Next, I will show you why that is and how you can beat it!
Perceived Obsolescence Is Making You Broke
My mission here is to help everyone achieve financial independence. So when I see an issue like perceived obsolescence keeping people broke I feel obligated to step in. If you feel like you are struggling financially, then it’s time to look around and assess if perceived obsolescence is the reason.
As an example, let’s say you’ve upgraded your phone every year for the last 10 years. With the average cost of an iPhone being $758. That is a total cost of $7,580.
If instead of upgrading every year, you upgrade every 3 years. Your total cost for a phone would be $2,274. A difference of $5,306!
If you had invested that difference over 10 years with an average return of 8% you would have… $8,232!!!
That is $8,232 that will only compound to an even higher amount over the years. That is only one example. Now imagine applying that to all aspects of your life such as clothes, technology, cars, appliances, etc…
If you take all that extra money and invest it, you would be well on your way to financial independence.
I recommend investing with M1 Finance. You can purchase fractional shares with no commission.
Buying fractional shares allows you to maximize your investment. You no longer have to keep your money sitting idle until you have enough to purchase a full share. This is especially beneficial when it comes to stocks with high prices like Amazon, Google, and Tesla.
I see too many people buying the latest iPhone regularly when instead they should be investing regularly.
Avoiding The Trap
Avoiding the financial trap of planned and perceived obsolescence comes down to being content. Being content with what you currently own will help you fight the temptation to buy something new before it’s necessary. If acceptance into a social group requires you to buy the latest and greatest item, then maybe it’s time to reassess if that group is really for you. Once you are content with what you currently have you no longer have to replace an item before it loses its functionality.
Here are some more tips for avoiding planned and perceived obsolescence.
- Repair Before Buying New: Always look for ways to fix an item at a cheaper cost. This has the dual benefit of saving money and learning something new.
- Stop Buying Just To Buy: Sometimes we put ourselves in bad situations. If you are trying to avoid perceived obsolescence, the mall is the last place you want to be hanging out. Avoid situations that trigger impulse buys.
- Buy Used: If you have to replace your current item because it’s beyond repair, try buying used first. Many times you can find a deal on used items. You would also be doing a favor to our environment by reducing the demand for new shiny objects.
I hope this has helped you identify and avoid planned and perceived obsolescence on your way toward financial success!
If you still find yourself struggling, try to remind yourself how much better financial independence will feel over the latest shiny product that will lose it’s attractiveness in a year if not sooner. If that doesn’t work you can leave a comment below and I’ll try to talk you off the cliff.
Let Me Know What You Think In The Comments Below ⇓
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This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.