Even though I have myself on a very healthy financial track, I’m still prone to the weakness of buying material goods. I think of things that I want and over time, I tend to talk myself into buying them, spending money that I really shouldn’t be spending.
Many readers ask why I shouldn’t be spending that money. It’s my hard-earned money, and I’m currently in at least a reasonably decent financial position. Besides, you only live once, right?
Let’s use this philosophy when evaluating the purchase of a game for my Wii. Let’s say I want to buy a new game that costs $50, even though I have three Wii games at home that I enjoy playing and still am nowhere close to mastering. This is a common temptation for me, actually.
Let’s look at the scenario where I buy the game. I take the $50, go buy the game, and enjoy playing it for, let’s say, thirty hours, all told. In a few years, it winds up either being sold or in the closet. Now, there are exceptional games that I’ve played much more than thirty hours, but there are many more games that I didn’t play anywhere close to that.
Let’s also look at the scenario where I don’t buy the game and instead put that $50 into my investment portfolio. Let’s give it a hypothetical 10% return each year. I’m 29, and I plan on cracking that portfolio when I’m 45. So, $50, at 10% annual return a year, is $230.
Having that Wii game would cost me $230 towards my dream. Maybe that’s a sacrifice I might make once or twice because I will deeply enjoy the game, but on a regular basis? All I would be doing is selling my future, one game at a time.
Think about the unnecessary purchases you make and what they cost you. Here are a few to chew on from my own life recently, given the same scenario of a 10% portfolio return over 16 years.
A fast food meal at Taco John’s costs $10. Poof, there goes $46 towards my dream. Eat that meal twice a week for a month? $368 of my dream vanishes down the ol’ pie hole. How about I just go home and eat something simple instead that costs just a dollar or less?
A new game for my Nintendo DS costs $30. Poof, there goes $138 worth of my dream. How about I just play one of my older games again, especially since I haven’t mastered some of them?
A subscription to HBO costs $15 a month. Over a year, I’ll sacrifice $827 worth of my dreams. Why not just watch a good movie on another channel instead or, better yet, turn off the television and find something better to do with my time?
A single latte costs $4. Just that one latte, quickly swallowed and forgotten about, removes $18.37 from my dream.
Every time you spend money unnecessarily, you’re making an active decision to sacrifice a piece of your bigger dream. Think about that the next time you buy a DVD or a coffee or anything else. Sometimes, that thought isn’t enough to prevent me from making the purchase, but more often than not, I close my eyes and realize that, indeed, I am sacrificing a piece of that dream for this little piece of consumerism in my hand. And I put the item back on the shelf and walk away.