Today I want to suggest a New Year’s resolution that is guaranteed to improve your bottom line. It’s a simple concept really… Do not purchase a good or service until you have saved the money to pay for it. Period.
So why is this so hard for us to grasp, adopt, and live by? It’s not complicated, it’s not unreasonable, and it makes perfect sense. So what’s the deal? Why do most Americans spend money that they don’t have?
Well, I don’t have the answer for that, so… Rather than opening that can of worms, I will present sound information that will help us grasp the Save Then Buy concept, adopt this commonsense philosophy, and live by the wisdom of it’s simplicity.
Save money, then buy – grasp the concept
If people would simply take a step back and rationally analyze the Save Then Buy mindset, there’s little chance that they could come up with a valid argument against it. Moreover, if one were to make an equitable comparison between the Save Then Buy mindset and the modern American cultural norm of Buy Now Pay Later, there’s little doubt that they would deem the former as the best financial choice.
If we can see the wisdom of the concept, but have not yet adopted it… What is holding us back?
Let’s take a look at a simple example of Save Then Buy versus Buy Now Pay Later in the context of a college education…
Save Then Buy: A prospective college student might seek a low level job in an industry of interest, then either attend classes while earning enough to fund them, or save for a few years and begin schooling once they have enough saved, gathering no debt along the way.
Buy Now Pay Later: With this mindset, a prospective student would first seek financial aid (most often in the form of loans), amass a mountain of debt throughout their college years, and graduate with tens of thousands of dollars of student loan debt.
While some might argue about the value of getting that college education as quickly as possible, my view is that the Save Then Buy student will come out on top across the board. They will have gained work experience prior to and during their education which will help them refine their field of study, and will provide them with necessary experience for launching their new career.
In fact, they will often already have a job with a company in their field of expertise, and can start climbing up the ladder with their new degree. They’ll also start their professional life with no student loan debt, and can begin saving and investing out of the gate.
The Buy Now Pay Later student will graduate with no relevant job experience, no job, and a mountain of debt. They will have to go into the world and compete against better equipped Save Then Buy candidates.
Save money, then buy – adopt the philosophy
I’m guessing that many people reading this article currently have a Buy Now Pay Later mindset. That’s okay… I used to be hold that view myself.
The good news is that you can change your behavior today. You no longer have to be a slave to a poor economic mindset just because “everybody else is doing it.” Break free from a culture of temptation and start living by a new personal economic mindset that is based on wisdom and sound financial principles.
Will it be hard?
Sure… It might be. Was it hard for me? Not really. All I had to do was calculate how much our debt was costing us. Once I had the numbers in front of me, the reality of $1, 300+ of my hard earned money going toward interest on my debt was all the motivation I needed.
Get mad at your debt
You should sit down and take a long hard look at how much your debt costs. I can virtually guarantee that you will wind up with some good healthy anger toward your debt, which should help motivate you to adopt the Save Then Buy philosophy.
Save money, then buy – live by simple wisdom
Now that we’ve fully explored the concept, analyzed the numbers, and gotten mad about our current situation, all that remains to be done is to adopt the concept. Don’t buy stuff you can’t afford. Instead, save your money money until you can comfortably afford the expenditure.
From laborer to capitalist
In making this transition, you should also stop thinking like someone who trades their time for money, and instead start thinking like someone whose goal is to live off the proceeds of their money. If we want to win with money, we have to start considering our future every time we open our wallets. With each decision we make, we should be moving ourselves closer to the wise goal of living off the proceeds of our assets.