Recently, my wife called me. Our son mentioned recently that he wants a pair of Under Armour shoes. We had told him that at some point down the road we can probably make that happen. On the phone call with my wife, she was asking for my blessing to get him a pair of shoes she had found on sale for $40 as a reward for a test we just found out my son had aced. The conversation basically went like this:
Wife: “What do you think about getting him the $40 shoes?”
Me: “You already told him we’d take him to Dave and Busters as his test reward. Are the shoes replacing Dave and Busters?”
Wife: “No, they are only $40."
Me. “I don’t think that’s a good idea.”
Wife: “Okay, you’re right.”
We planned for Dave and Busters. It’s in the budget for this month. The shoes were not in the budget.
Now, look. We can afford the darn shoes. Not bragging because I know we live in uncertain times, but our household income exceeds six figures, and we have no debt except for our home which is on track to be paid-off before we turn 50. It’s not about whether we can pay the $40, it’s about accomplishing our long-term goals, and not deviating from the game plan. For those who are calling me Scrooge, the kid also just got a new pair of shoes a few weeks ago; he doesn’t need another new pair. He still loves me.
My wife and I used to not budget. We also used to be over $50,000 in consumer debt. Now that we budget and don’t yolo our way through life, we have wiped that debt out and are winning.
As I was cleaning up that $50,000 mess, I learned concepts such as this: If we could avoid some impulse purchases such as unnecessary shoes and instead invested just $40 each week until my 9-year old son graduates high school, earning just 5% interest (the historical return for the S&P 500 Index Fund is about 10%, so this is conservative), that $40 a week would grow into over $23,500 in nine years. If you don’t believe me, plug the numbers in using an investment calculator such as this: Investment Calculator
Looks like Ashton Jr. is going to college!
What are your impulse purchases? Shopping? Restaurants? Vacations? Cars? Some impulses are small, and some are enormous. They all set us back in some way.
A challenge for you: The next time you’re about to make an impulse purchase, take the amount of money that you would have spent on the item and throw it into your savings or investment account. Repeat once per week.
You won’t regret it.
My son won’t regret not having the shoes.
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