If you want to help yourself make wise purchases, one of the best rules of thumb is to delay everything. Delay every purchase, but especially delay buying those things you want to buy that are beyond your basic needs. Another big FIREHack is to be able to differentiate between your real needs and those things that are actually just things you want. I will get into that in another post. For now, just take this challenge. Delay every purchase you possibly can.
Want a candy bar from the check out line. Wait until next time. Want an extra pair of slingbacks? You can get those next time you go shoe shopping. Want to go shoe shopping next week to get those shiny new shoes you didn’t get last week? Maybe next week. Want to upgrade you cable package? You’ll do that next month.
It’s a simple little trick that helps you make wise purchases.
Build Muscle that Helps You Make Wise Purchases
You see, there is a two-year-old crybaby inside you that wants what it wants and wants it now. It does not care whether or not you make wise purchases. Before you tackle the “want,” start with tackling the “now.” As a result, the pain you may feel will at least be diminished. It will be more like a prick of disappointment, but your inner crybaby will be appeased somewhat because it will think that it will at least get that frivolous trinket “next time.” The more you exercise this delay muscle, the stronger it will become. The stronger it becomes, the more often you will flex it. The more often you flex it, the fewer bad purchasing decisions you will make.
Consequently when you delay a purchase that isn’t a need, you often lose interest in the purchase at all. You even avoid that terrible thing called “buyer’s remorse.” Had you bought something that you really didn’t need, you would have eventually lost interest anyway. Think about it. How much stuff is gathering dust on the top shelf of your closet? What’s in your garage that is preventing you from actually using it for your car? What’s stacked in the corner, crammed into the cabinets, or hidden under the bed? All of it represents stuff you thought you wanted, but shortly lost interest in. It happens over and over and over, and it chews away at your saving and investing power.
Choose to Make Wise Purchases
The fact remains that if you determine that this purchase will actually make a real difference in your life, you can buy it. Remember, you can have almost anything, you just can’t have everything. Just give yourself time to make sure. In fact it’s not that you cannot have things you want, it’s that have the power to choose. You can choose to pay $9 for that beer, or you can choose to do something else with that money. You have the power. You get to choose. You are only delaying a purchase in order to make sure it’s a choice you’d really make based on the other things you really want.
Benefits of Getting Rich when You Delay Everything
Let’s say you make one less purchase per week when you delay everything. Maybe it was a meal you would have eaten out or a drink at the bar when you hung out with your friends or a snack at the convenience store when you filled your tank with gas. Let’s say the average savings was $10 per week.
I think that’s ultra conservative based on most people’s spending habits, but I like to under-promise especially when the principle will definitely over-deliver. Ten bucks a week for 52 weeks a year will net you $520 a year. One delay is small price to pay for an extra $520! If you invest that savings at a conservative 7% annual rate, you will have over $7,400 in ten years. You will have over $22,000 in twenty years! As an added benefit you also decrease your spending rate and increase your savings rate, which may prove to be even more powerful!
“What happens if it’s $20 a week?”
I’m glad you asked! If you save $20 per week by delaying purchases, you net $1,040 a year. In ten years you will have over $13,000. In twenty, you will have almost $41,000!
Over time, you will learn to quickly and easily make wise purchases. In many cases you will find that you don’t even want some of the things that you used to think were critical for your happiness. The more you can weed through all the choices and make the choices that are best for you, the shorter your path to FI* or FIRE** will become.
*FI = Financial Independence
**FIRE = Financial Independence / Retire Early