Throughout the last year, my eight-year-old daughter has been watching the YouTube channel called “Sis vs. Bro”. Sis vs Bro stars eleven-year-old Karina and her nine-year-old brother Ronald. Each clip features Karina and Ronald engaged in various "challenges" like who could draw the best picture using only 3 crayons, who could win at Minecraft, and who could make the best slime.

(As an aside, any parent who has a child under the age of twelve would likely agree that slime is one of the worst toys ever invented. The back seat of our car can attest to that!)

Most of the time, the challenges and dialogue from this channel is fairly innocent and playful; my daughter seems pretty amused by Karina and Ronald's antics. Compared to some other shows I’ve seen on Disney and Nickelodeon, where most programs show adolescent and pre-adolescents acting cruel and superficial to each other, Sis vs Bro is a relatively harmless influence - until recently, that is.

Children and Consumerism

One episode of Sis vs. Bro featured a map of the United States, and various parts of the map were covered in well-known brands: Taco Bell, Gucci, Best Buy, Amazon, Starbucks, etc. Karina and Ronald would each take turns throwing darts at the map and then they would be forced to buy whatever each landed on. Yes, that meant throwing a dart at a map & BUYING whatever it landed on!!!.

In a similar episode it showed Karina shopping at a Gucci store and purchasing a $1000 purse and bragging about how awesome it was. Like clockwork, my daughter was asking if I could buy her a $1000 Gucci purse the very next day.

How does Karina afford a $1000 purse? Sis vs Bro has approximately 11 million viewers and their videos average about 5.5 million views a day. Due to the popularity of Sis Vs Bro, estimates have their net worth close to $16 million.

I'm ashamed to admit it, but there are times I don't monitor my daughter's television viewing as vigilantly as I should. Like most parents, my wife and I are quite busy attending to various parental tasks and television or YouTube can be an able, but not ideal, babysitter. But after my daughter made this request and other ones very similar to it, my wife and I vowed to be more mindful of what my daughter watches going forward.

We haven't had cable for at least four years now, because we don't generally watch a lot of television. When we cut our cable subscription, I was naïve to think that my daughter wouldn't be exposed to ads influencing her to buy stuff she doesn't really need.

Wrong again.

Debt and Consumerism

Debt permeates every part of our society.

Governments, corporations, and consumers face debt challenges every day, and it's not getting any better. With ultra-low interest rates over the last 25 years, all of the above parties have taken on more debt and, at some point, each may face a reckoning.

In Canada, the average Canadian owes $1.70 for every $1 they earn after taxes. This is up about 100% from 20 years ago according to our current Bank of Canada governor, Stephen Poloz (Canada’s Economy and Household Debt: How Big Is the Problem?). Rising house prices and the strong desire of Canadians to own a home are a huge factor behind this but, in my experience, I’ve also noticed that many consumers carry other forms of debt (credit cards, line of credits, car loans, etc.).

Although I'm hesitant to mention averages (because they can be very misleading), the $1.70 figure is an average that includes Canadians with no debt, as well as those individuals with significant amounts of debt. This figure also obscures the fact that many Canadians continue to be marginalized and left out of a growing (albeit slowly) economy.

How did we get here? What do we need to do to avoid calamity over the next 20 years?

There’s no question that credit, or taking on some debt, is a necessity if an economy is to continue to grow. For consumers, borrowing money to get a post-secondary education and earn a higher income is a good use of debt. Governments ensuring their citizens have equal access to great education is a solid long term investment. Lastly, corporations that borrow money to build a new factory to produce more of their product and grow is another example of useful debt. However, excessive levels of debt can create vulnerabilities for our economy when interest rates rise and they need to be monitored carefully.

The Devil is in the (Debt) Details

Much has been written about government and corporate debt, but I thought I would touch on what I think has added to consumer debt and how to fix it.

The cohort of consumers that I'm referring to here are those individuals with one or more of the following characteristics:

1. typically have some post-secondary education and total household gross income would be over $150 000/year,
2. have a mortgage,

• have one or more credit cards and may have several lines of credit.

A quick glance at the 2019 Debt Survey by Manulife Bank shows that many Canadians with the above characteristics live well beyond their means, and it is a significant problem. High levels of debt invariably lead to stress/depression, and subsequent coping mechanisms that make the problem worse – like impulse buying, use of drugs/alcohol, and absenteeism from work.

To ensure our children become financially literate, we need to go beyond teaching them about the magic of compound interest and Pay Yourself First.

Although I'm not discounting the importance of teaching kids the difference between TFSAs and RRSPs, the importance of having a plan, and proper insurance coverage, I think there’s more to be done. We need to teach our children how much of an influence advertising, consumerism, and our own emotions can have on our buying decisions. Recent advancements in neuroscience have provided invaluable insights into understanding the buying process, and in many ways this is a revival of ancient wisdom rooted in mindfulness.

Despite overwhelming evidence to the contrary, most consumers don’t believe advertising has any influence on their buying decisions. Advertisers spend billions of dollars every year to grab our attention and to sway us towards buying their product or service.

It’s unlikely they would do this if they thought advertising had no effect.

The Power of Advertising

Consider the example of Joe Camel cigarettes, as cited in the research paper, “Slipping Under the Radar: Advertising and the Mind” by David Walsh and Douglas Gentile.

In 1988, R.R Reynolds Tobacco Company executives were concerned that their cigarette brand was losing market share to rival Marlboro. Determined to reverse the trend, an extensive marketing and advertising campaign was started. Consider for a moment the challenges that these advertisers faced:

• They had to sell an unattractive product that stained teeth, caused bad breath and killed people.
• They could not use radio or television advertising since it was illegal to advertise cigarettes via those methods in the US in 1971.
• They had to replace the 400,000 customers their product killed every year in the US just to maintain their current level of sales.
• They had to sell to children since they knew from their research that if people don’t begin to smoke by age 18, there is only a one in five chance of ever taking up smoking.
• It was illegal to sell to young people, their identified target market.

Despite these challenges, the executives launched an extensive campaign.

Their campaign revolved around a cartoon character named Joe Camel. Joe showed up on billboards, shirts, posters, and the sides of buses and trains. It was impossible to miss him. Prior to Joe Camel’s arrival, sales of Camel cigarettes to youths aged 18 and under generated $6 million in revenue per year. Within 24 months, revenue increased to $476 million/year.

Research showed that six-year-old children were able to identify Joe Camel as easily as they could identify Disney’s Mickey Mouse.

In their article, Walsh and Gentile note how important emotions are in influencing our buying decisions. Emotion focuses attention; it determines what is committed to memory; it shapes attitudes, and ultimately motivates one to act.

Wow – But Why?

Advertisers have known the importance of making an emotional connection for decades, but only recent advances in neuroscience have provided a partial context as to why.

Scientists have determined that advertising aimed at the limbic brain can stimulate emotional reactions, which in turn are linked to the perception of the product. An emotional response affects the attitude about the product being sold before the cortical brain even knows what is being sold.

Because emotional responses don’t engage reason and logic, they can easily slip in undetected under the radar of critical judgment. The message subtly exerts a powerful influence about the product without a conscious awareness of the process. Armed with this knowledge, advertisers will naturally want to direct their campaigns at eliciting an emotional response, where decisions are made outside of critical judgement.

Put another way, the best influence happens outside of conscious processing,inside our unconscious processing (anyone who has seen the movie “Inception” knows what I mean).

This is a partial explanation of why so few people believe that advertising impacts their buying decisions.

Walsh and Gentile suggest that the most effective influence occurs when the person doesn’t realize it is happening.

Researchers, psychologists, and philosophers have discussed the nature of consciousness for thousands of years. Despite many advances in neurology, one of the best explanations can be understood through an understanding of mindfulness.

Mindfulness – Or Not?

Have you ever:

• read several pages of a book and not retained any of it?
• driven from one city to another and found that you could recall hardly any part of your drive?
• What about having a conversation with a good friend but at the end, you couldn't recall what you discussed?
• What about over-indulging in some food or sugary treat without fully experiencing it? (I do this all the time!).

If you said yes to any of the above, then you're not alone.

Most of our focused attention is rarely in the actual moment you are experiencing. Rather, the inner voice or monologue inside our heads is trapped in what has already happened or what might happen.

Researchers have determined that your brain is constantly telling you stories about who you are, what your relationships are to the people you're with, where you're going, what you're doing this week, what you should think, how you should act, etc. Everything we do is motivated by conscious or unconscious thought, so naturally it makes sense to be aware of the thoughts or story that we are telling ourselves.

Advances in neuroscience over the last 30 years have shown that are brain is wired into habitual patterns. The saying “neurons that fire together wire together” has been proven conclusively. Every time you think a particular thought or carry out a particular action, you slightly increase the chance of having the same thought or doing the same action again.

Consider professional musicians or athletes, whose actions are almost done automatically without any conscious thought. For many people, the buying process follows a very similar process.

Doing vs Being

Today, people are more distracted than ever.

With the explosion of smartphones over the last 10 years, this has made focusing on one task even more difficult. Many people (including myself) will still be scrolling through their phone while they are watching television - giving only partial attention to the program they are paying to watch.

Most of the time we are in the "doing" mode. We think and conceptualize about how things should be and then work methodically, some more than others, on what is needed to achieve it.

“Doing mode” isn't necessarily a bad thing; it has allowed us to achieve great things throughout history and without it, modern life would be quite difficult to thrive in. If you had to relearn how to operate your car each time you went for a drive, it would be overwhelming to say the least.

The trouble occurs when we are constantly in “doing mode” and we don't carefully reflect on our emotional state, why we do the things we do, and why we spend our hard-earned money on one item and not another.

People are most familiar with and comforted by the “doing mode” of the mind. To stop doing so much, physically or mentally, isn't easy.

If you don't believe me, try sitting quietly in a room with no tv, phone, or radio on for 10 minutes. The opposite of the “doing mode” is the "being mode”. “Being mode” can be summed up as living in the moment. You are mindful of sight, sound, smell, taste, or touch. You are consciously aware of your thoughts, emotions and not overwhelmed by them. You also have a greater understanding and context of your actions and the corresponding impact they have.

Advertising Works – And Not For You

As noted above, advertisements are most effective when they appeal to the doing side of human consciousness. Gucci doesn't want you to consciously think about why you "need" a $1000 purse. Or why advertising executives at Ferrari focus on how great you will feel if you own a $250 000 car. Gucci and Ferrari marketing executives understand that if consumers thought about how a $100 purse or $20,000 vehicle would work just as well as the more expensive items, very few people would buy their products.

Unfortunately, in our society, these expensive items have become the benchmark of success and happiness, and with the overwhelming influence of social media, this trend is only getting worse.

Encouraging individuals to become more mindful of not only where they spend their money, but why they spend their money on some items and not others will be key if we are to avoid debt.

When I do retirement planning with my clients, I encourage them to develop a vision board. By doing so, it allows them to focus on what is truly important now and in the future. If a $1000 purse is what they feel they need after some serious self-reflection and thought, then we come up with a plan to achieve that goal.

However, after carefully thinking about how many work hours they have to commit to obtain an expensive item, many decide that it's not worth it. In fact, the most precious commodity I find most individuals value is their time - far more than any one item.

Although this exercise is mainly targeted for adults, my colleague Kalee Boisvert with Raymond James encourages the same exercise for children (https://www.raymondjames.ca/kaleeboisvert/) and I couldn't agree more.

Going forward I plan to continue to monitor what my daughter watches and educate her on how advertisers are appealing to her "doing" mode of thinking.

Above all else, I plan to have her watch less of Karina and Ronald and sing more songs like, "I'm in a Box."

Brent Misener is a Financial Advisor with Raymond James Ltd. The views of the author do not necessarily reflect those of Raymond James. Statistics and factual data and other information are from source Raymond James Ltd. (RJL) believes to be reliable but their accuracy cannot be guaranteed. Information is furnished on the basis and understanding that RJL is to be under no liability whatsoever in respect thereof. It is provided as a general source of information and should not be construed as an offer or solicitation for the sale or purchase of any product and should not be considered tax advice. Raymond James advisors are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. Securities-related products and services are offered through Raymond James Ltd., Member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a Member - Canadian Investor Protection Fund.