If you ever want to feel like you’re completely wrecking your own finances, try this little tactic on for size.
At the end of the month, pull out your most recent bank statements and credit card statements and go through each of them line by line. See if you can name what purchase each one of those line items represents and what you can remember about those purchases.
Do you remember anything at all? For some purchases, you won’t even be able to hit that threshold.
Do you remember anything significantly positive about that purchase? This will cut away even more of those purchases.
Do you think that the positives you got from that purchase were worthwhile, that you couldn’t have obtained the same positives elsewhere for less money or for free? This question right here will cut out even more of those purchases.
Ideally, I want my purchases to clear all of these questions. I want to live a spontaneous life like anyone else does, but when I spend my hard-earned money, I want those purchases to be meaningful ones. Throwing money away on something I won’t even remember? Burning that money on things that didn’t have any sort of lasting positive impact on me?
That’s just a complete waste.
The truth is that this is all about the battle between instant gratification versus lasting fulfillment.
Instant gratification is a decision designed to maximize pleasure in the moment, but often that pleasure fades, and when it wasn’t all that great of a decision to begin with, that pleasure fades to nothing at all. It’s forgotten.
Lasting fulfillment, on the other hand, is a decision designed to maximize benefit over the long term. It might not be the most enjoyable option in the moment, but I won’t forget it or regret it in a month. Often, those fulfilling choices continue to provide some benefit over time.
In the moment, each one of those purchases I described earlier made sense to me on some level – if it didn’t, I wouldn’t have made the purchase, right? Yet, when I looked back on those purchases from the vantage point of a month or two, a lot of them were completely forgettable – or completely forgotten.
In my eyes, a completely forgettable purchase is usually a mistake. It’s not a mistake if it fulfills an urgent need of some kind, but outside of that, if you spent money on something and you don’t remember it a few weeks later, you likely made a spending mistake. The reason’s obvious: Having that money in the bank right now is better than that forgotten purchase from a month ago. It represents the interest earned during the time you didn’t spend it, and it also represents opportunity going forward, both of which vanish if you spend the money on something forgettable.
So, ideally, my goal is to minimize instant gratification and maximize lasting fulfillment.
Again, this goal does not mean avoiding spontaneity. It just means avoiding bad spontaneity. Being spontaneous for a truly memorable moment with someone I really care about can be a great thing. Being spontaneous to buy a completely forgettable food product? Not so much.
My litmus test for all of this is really straightforward: Do I remember it clearly in a month or when your credit card bill comes in? Does it still seem worthwhile? If a purchase passes that test, then it provided lasting fulfillment and was worthwhile. If it didn’t, then it was a mistake.
Of course, the challenge with this is that you don’t know how you’ll feel about a particular purchase a month from now. You’re considering buying something in the moment. Will it still seem worthwhile a month from now? It’s often hard to tell.
This is something I’ve worked on for years, and over those years I’ve come up with a number of strategies that really help me to have a strong sense as to whether a purchase in the moment is really just feeding my desire for instant gratification or whether it’s going to provide lasting fulfillment.
First of all, I constantly rethink purchases in order to train my mind to make better snap decisions. When I’m driving somewhere – taking my children to soccer practice or going to the grocery store or whatever – I use that time to think about the decisions I’ve made recently and decide outside of the heat of the moment whether those decisions are actually good ones.
In the heat of the moment, your mind might be telling you that a particular purchase is a good idea, but if you think about that purchase in a different situation, it might seem foolish.
Because of that, I like to rethink my purchases later on. Was it a good move? Why? If it wasn’t a good move, why did I make that mistake?
The goal here isn’t to browbeat myself and feel like a failure because I made spending mistakes. I’m not perfect. I’m not going to be perfect. The goal is not perfection. Rather, the goal is to be better today than I was yesterday. If I made a dumb spending choice yesterday, I want to be less likely to make that dumb spending choice today, and reflecting on my missteps and looking for ways to not repeat them is the surest way to be better today than I was yesterday.
Another useful strategy I like to use is something I’ve long referred to as the “ten second rule.” To put it simply, the “10-second rule” is an utterly simple method in the moment to keep me from making poor spontaneous decisions. It’s easy: Any time I am about to spend money, I stop for 10 seconds and ask myself whether or not this decision is really worth it.
I’m about to buy a burrito at this food truck. Is that decision really worth it? Do I need that burrito? Could I get a good meal cheaper elsewhere? Maybe I could just get tortilla chips and eat something when I get home.
I’m about to buy a book at the bookstore. Do I really need to own this book? Couldn’t I just get the book at the library instead? Does my friend who seems to have every fantasy novel known to mankind have this book and could I just borrow it from him?
I’m about to add something to my shopping cart at the grocery store. Do I really need that item? Is it playing a part in a meal I’m going to make this week? Could I get a less expensive store brand instead?
I can have those thoughts – and many more – in a 10-second timeframe while I’m standing there in the store, or while I have items in my shopping cart on a website. Often, those thoughts are very effective at pointing out when I’m being foolish with a spontaneous decision to buy something.
A third strategy I like to use is to intentionally over-weight lasting fulfillment in my decision making processes. In other words, if a decision between two options that represent instant gratification and lasting fulfillment presents itself and the two options seem somewhat equal, I’m going to throw extra weight on the lasting fulfillment side.
What this does is simply require me to be very confident about instant gratification when I’m giving a purchase my ten seconds of reflection that I mentioned earlier. If it’s not obviously clear that this expense won’t bring me a huge amount of instant gratification, a joyful moment that will last in some way, I won’t jump in. What I’m really looking for is lasting fulfillment, and that’s the criteria I use to make that decision.
Now, let’s take a look at lasting fulfillment. How do I have any idea that a particular purchase will bring me lasting fulfillment? In general, I don’t make a purchase intended to bring lasting fulfillment without doing a lot of homework. I want to know quite well what the item is, what I can expect it to do that I can’t already do, and whether that’s something that really fills a need in my life. That not only requires learning about the product in mind, but it also requires some reflection.
In short, I don’t spontaneously make purchases or choices intended to bring lasting fulfillment. I give those purchases some time, to make sure I really know what I’m doing.
In the end, it’s all about applying a real critical eye to my purchases. I consider purchases that just give a burst of pleasure in the moment, a burst that fades away and is forgotten before very long at all, to be akin to throwing money out the window. However, my human nature is to be attracted to those bursts of pleasure, and it takes being aware of that in order to avoid spending more than I like on instant gratification.
The rewards, however, are great. By choosing lasting fulfillment consistently, I’m building a better and better life for myself, one built on the back of many, many choices intended for lasting fulfillment, both in terms of my money and in terms of my time and energy.
Instant gratification creates a better moment. Lasting fulfillment creates a better life.