I remember when my daughter was in the single digits, and she came home one day wanting Cavellrecchi Jeans (excuse me if I spelled it wrong, and it's not in my spell check!)- at $40 or so a pop. Maybe I was the only sane parent, the poorest or most rational, but she never got those jeans. It was tenuous for a while, but after another 30 years or so, we realized it didn't damage her beyond repair- she survived. She grew up to be a wonderful woman, fantastic Mom, professional, business owner, teacher, dedicated spouse and the all-around picture of a well-rounded American woman. A daughter to be very proud of... all the while living without the very must needed jeans all the kids were wearing. It got me to wondering... of the many things do you think at this moment you really, really, really must have or will die without, will it matter two years from now, and how will it affect your life going forward?
We all have our wish list, the dream list of things that may go from a new pair of shoes, or jeans to a yacht. Have you ever gone to clean out a closet or draw, found something and looked at like it was bought by someone else, as you couldn't in your right mind have bought and spent good money on THIS! Have you ever thought about all the money that went into all those souvenirs, "trendy clothes (do you still have your white suit, guys?) and impulse buys? Are you on a first name basis with your UPS delivery man due to your fascination with QVC? When you think about the hundreds and yes, thousands of dollars spend on an impulse or a meaningless purchase and you had another shot at it, think about how those funds could have been reallocated. As I get older (and have all the junk I need) there comes a time that you begin to rethink how you spend money, what you need, and what is truly important. A second home, retirement, Sunday car, or whatever has crossed your mind- it may be different for us all, but essentially its all the same- our priorities shift from the small insignificant things to things that seem to be much more important. So I pose to you- if you had that revelation much earlier in life, would you have spent differently? Saved differently? Lived differently?
As I meet with folks who may be within 5 years of their goal, usually retirement is the focus but it can be any goal, and it seems their way of life changes with regards to how they handle their money. At some time in most people's life, they have a shift in thinking of what is truly important, what they really want, and what they really need. You see, want and need are two very different things. The things you need are basic necessities: housing, food, safety for you and your family, transportation, basic clothing, etc. On the want side of the page is... well anything you want. The costs are usually more than you can afford, and many times outlandishly ridiculous to reality. Savings accounts go down, and monthly payments go up. Sometimes, the payments last longer than the purchase. Did it make sense; you ask yourself- I'm sure you could rationalize it into a very real convincing argument. The question all this leads up to is how will it affect you in the future if you didn't do the dirty deeds? They say the power of compounding is a wonderful thing, the 8th wonder of the world. Although there is no guarantee of return in general, the chances are over the years it may just turn out the principal you put away may grow in time- and at a time you really need it.
There are many reasons for impulse buying, and since I'm not a trained psychoanalyst, I won't pretend to know why you bought that widget that you regret now, but made perfect sense then. People shop for want items for various reason, other than the simple "I just wanted it." I can't tell you why you bought it, but I can tell you if you put away the funds that you were going to spend on the want item, you'll see quite a savings account grow. Before you spend, do you have an emergency fund set aside, the equivalent to 3-6 months' expenses? Did you fund your IRA, 401(k), TSA or other retirement vehicle this year, at least up to the amount your employer is kind enough to match? Although your kids are now knee high to a grasshopper, the fact is that sometime in the future chances are you're going to need hundreds of thousands of dollars for college- have you started putting away yet? Trust me, it comes fast and it comes hard- and don't count on your parents to bail you out- they're having too much fun because they saw the light long before you were around. So, the next time you think about spending money, just think about if you've got your basics covered, and can sleep at night knowing what you owe or don't owe... and chances are, you'll sleep much better.