Instant Gratification, in relation to Personal Finance (and many other areas of life), can be detrimental to your Financial Health. It is the ultimate Budget Killer. Don’t let that initial feeling of “oooh ooooh I want it now” ruin your financial future. These little moments add up quickly over the course of a week, month, year, and eventually decades. Here are three areas I personally have worked on, but still require constant reminders to stay on pace with budgeting.
Eat at Home! When I first started budgeting, I realized that I spent waaay too much on eating out. At a minimum I was spending $50 a week, and on a bad week (good for my belly) over $100! If you're having a "bad week" every week, that $100 will add up to $5,200 a year! Let that sink in... With this minimum, I’m only counting what I spent for eating out at work! If you eat out multiple times per day, and go out on the weekends to eat out, you may be spending close to if not more than $1,000 a month. I hope you’re not! I thought $100 a week was ridiculous personally, so I started budgeting for $100 a month. Now there are some months where I go over, usually for special occasions, holidays, or going out of town. But creating a budget, and tracking my spending on eating out, was an eye opening experience. I would not have guessed I was spending nearly $400 a month, just on fast food and restaurants, while I had food waiting on me in the fridge (most of the time).
Do I really need that latest gadget? Ok this may be one of the hardest ones for me! Have you ever heard the saying "Their money is burning a hole in their pockets", or something to that nature... Well, whenever a new phone comes out, the flint and steel in my pocket start to get a little friendly. I really want that new phone that's going to be old in a year AT BEST! There's going to be another thinner, faster, stronger, phone with all the new software bells and whistles out YESTERDAY! So you have a few options. DON'T BUY IT, Buy a used phone, or get someone else to buy it for you! I like the third option, but that's not always reasonable. So if getting that new gadget, whether it's a phone, gaming system (PS4 Xbox, new games for that gaming system, a hover board (which doesn't actually hover), etc...think twice before purchasing! In fact, think 3 or 4 times! The average tech item is “old” within 3 years, and that’s if it even lasts that long. So why pay full price for an item most of us will not keep for 5 or more years? I don’t think I’ve ever owned the same cell phone for more than 3 years. I also have not paid full price for one in at least 5 years. Now if you must have the newest phone, as soon as it comes out, at least find a way to lower the cost of getting it. Brand new iPhone’s and Samsung Galaxy’s are now $700, or more, when they are released. If you’re a person who buys your phones at full retail, you may want to start by taking great care of your current phone. Protect it (buy a case!), and then you can sell your old phone and use that cash to subsidize your next phone. I’ve resold my old phones every year for the past 5 years, and in some cases I actually made money! Thank you Craigslist and eBay!
EVERYTHING MUST GO!!!! END OF THE YEAR SALE!!!!! BLACK FRIDAY!!!! RED TUESDAY!!!!! Ok, I don't think that last one exists, but maybe you get the point. SOMETHING is always on sale SOMEWHERE. Almost every weekend there's some type of sale, likely for a holiday you don't really celebrate anyway, and new holidays being created each year. So if there are always sales going on, at least twice a month, why not wait until an item you're interested in goes on sale? Living in Florida, unlike most other states, I have the luxury of having an Outlet Mall (and a beach!) no more than an hour away, NO MATTER where I am in the state. Also, as I've gotten older, I care a lot less about having whatever the new hotness is. You can call me #SalesRackShawty because that is the first place I'm headed to at any store. Now occasionally, something will catch my eye for full price that is a "must have". However, this does not occur often for a few main reasons:
1) I head straight to the sales racks, and by the time I leave there, I've already met my budget for that day. Oh yes, you should go to the store with a budget already in mind. This will help you stay away from spending too much once you see that "must have" item.
2) I try to only go shopping when I need or want something specific. This is usually for an event like a wedding, or other one time events. But even then, I've accumulated enough clothes to where this is not necessary unless I need a particular color item (a mustard tie...not yellow, but mustard). I don’t go to stores for leisure or fun, or to walk around. If I’m at a store, I’m buying something! So the easiest way for me to avoid buying something I don’t need, is to not go unless necessary!
3) Patience. I wait for big sales like Black Friday, Memorial Day, July 4th, etc... I wait for changes in seasons. These are some of the best times to buy clothes, as stores are attempting to get rid of their out of season items to make room for the next season.
There are very few clothing items that retain their value, or that you can even resell at a higher value down the road (new or old). There are some of course (Retro Air Jordan’s come to mind) that you can buy, then sell for higher, but there aren’t too many items out there like this. Even with Jordan’s, once you wear them the value drops significantly. So unless you plan to resell a NEW item at a higher price, it’s likely not worth it to pay full price.
These reasons can apply not only to clothes, but many other categories when shopping. To use our previous technology section as another example, most cellphones lose about half of their "street value" after a year. Did the phone get any worse? Likely not, unless you're buying it used or damaged. But even the coveted iPhone eventually goes on sale, or has a great deal! You won’t get that great deal directly from Apple, if history is our example. However, stores like Best Buy, Target, and Walmart may have a deal. Even if it’s not a discount, you may receive a gift card, or a discount on another item for buying the same product from their store instead of direct from Apple.
Delayed Gratification is the key. It’s the key to building an emergency fund, stock portfolio, becoming a millionaire, and eventually creating wealth for generations. I hear this again and again from people in great financial shape, and in pretty much every finance/budgeting related book or website you see out there. That's because it works! It’s easier to delay gratification when you have a plan for your money, so it doesn’t have time to burn holes in your pocket!
What’s your main budget killer? What steps have you taken to rein in spending in those areas? Share and comment below! Don’t forget to subscribe, and thanks for reading!
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Akeem The Dream
I enjoy discussing and learning about technology, stocks, sports, and beating my wife at Dominoes! As I learn, I love to share with family and friends so that we can share our knowledge. Thanks for being apart of the journey!