The struggle of instant gratification vs. delayed gratification is something I face from time to time. I have relatively good self-control and am not on socials so I have already eliminated unnecessary spending that stems from FOMO/peer comparison. So really this struggle is a matter of reconciling my own brain (needs) and heart (wants).
The rational side of me recognises the value of making present day sacrifices for future rewards. The amount I spend on a pair of shoes today can be invested for higher returns to own 2 pairs of shoes in future. Therefore, don’t buy the shoes now. It’s that easy to justify but just so incredibly hard to accept.
What good is money if I can’t spend it?
Isn’t that the point of having money anyway? To do whatever we want with it which sometimes includes indulging in luxury purchases or vacations. It sucks that paper gains are just that – gains on paper. They aren’t real gains until you realise them. It would be nice to be able to have and hold that cold hard cash in my bare hands instead of just seeing numbers on a screen.
So how do I keep my inner demons in check whenever I am tempted to click check out on that shopping cart? Here are three things I do:
1. I review my finances (again).
I take a hard look at my finances and ask myself: Can I afford to buy two of it? If I can’t afford two comfortably, then I can’t afford one. This is especially useful advice that I swear by which has prevented me from living above my means. If you are barely getting by or getting into debt for that one expense, then it’s probably not a good move for your financial (and mental) health.
2. I work out the opportunity cost of the purchase.
The value of most goods drop the moment you walk out of the shop with it. Instead of purchasing a depreciating asset (or worse, a liability), where can I put my money for better returns?
Instances when I feel the strong urge to buy something, I would quickly transfer the equivalent amount of that purchase into some holding that I already own so that I don’t have the free cash flow to make the purchase. This might not work for everyone, but it works for me. Doing so has the added benefit of allowing me to see the real returns of investing my money instead of spending it on frivolous things in the heat of a moment.
3. I go back to the start and re-examine my goals.
What do I want to achieve and how will this purchase hinder me from my long-term goals? Will making this purchase really value add my life? It has to “spark joy” not just temporarily but for a long time for it it to be worth it.
For example, would it be wiser to spend $x on a new iPhone now or save the money for my future home reno instead? If it is going to make a dent in my net worth for no good reason then perhaps I should forgo it for the bigger picture.
Does that mean I can’t treat myself at all?
I am a strong believer that the journey to personal freedom does not have to be miserable. It’s ok to reward myself mindfully along the way. In fact, doing so keeps me motivated and pushes me harder to grow my wealth when I have had a small taste of the fruits of my labour.
So rather than not spending at all, my advice is simply to spend mindfully. Frankly this isn’t too difficult, and it’s definitely easier and more practicable advice than to resist all spending. It could simply be spending on experiences, working out cost per use of a purchase, buying quality items over quantity, and not making impulsive purchases.
With Christmas soon approaching (and along with it many ongoing end of seasons sales), it is no doubt tempting for me to shop unnecessarily. Doesn’t help that many merchants are so easily accessible via a mobile app. Looking at you Zalora. But instead of striking items off my wishlist, perhaps I will be spending more on gifts and gatherings with loved ones instead of on myself so that it is more meaningful.
Be honest and be practical
Regardless of the occasion, it is important to be honest with ourselves and recognise when it is okay to spend and when it is necessary to delay gratification. We can tell ourselves otherwise but the numbers (in the bank) don’t lie. If you really can’t afford it, accept that fact and work hard on ways to make sure that you can eventually.
Sidenote: this is why it’s essential to track our net worth. You can use a simple template like this one.
That being said, I do I feel that I am a little easier on myself after reaching a financial milestone earlier this year. But I definitely still have to practise self-control and not be negligent with my finances in order to stay grounded and stay the course towards a financially-free life!