Based on numbers from the U.S. Census Bureau, the average American will make somewhere in the ballpark of $1.4 million in their lifetime. That’s based on a national average salary of $35,000/year, assuming that you work for 40 years, and it doesn’t account for inflation. There are probably a few kinks that could be worked out of that number, and perhaps you’ll make much more in your individual lifetime, but the questions still stands: If you were handed your entire life’s income right now, in one big lump sum, could you budget it out for the rest of your life?
It would certainly be tempting to make a few big purchases, but in this hypothetical scenario, you could actually make out way better than if you made your money in weekly increments. You’d be able to purchase your home and vehicle with cash. Student loans wouldn’t be necessary. Vacation on a credit card — why bother? If you were able to budget smart, you’d never have to pay a dime of interest — that’s a ton of extra money in your pocket.
Planning and understanding the big picture — that’s what we’re talking about. When it comes to finance, it’s important to always consider the long view. Putting 10% instead of 8% into your retirement savings means losing an extra $20 or $30 now, but it could make you tens of thousands of dollars in retirement. Buying a single roll of paper towels now might save $15, but if you purchase a bulk pack, you might save an extra hundred dollars by the end of the year. Do the same with all your recurring purchases — toothpaste, shampoo, laundry detergent, soap, toilet paper, dog food, etc. — and you can save upwards of $1,000 per year. How would an extra $1,000 in your pocket sound right now?
This long view can be applied to almost any and every monetary scenario in your life, from paying more than the minimum on your credit cards (or just not using credit if you don’t need it), to making a bigger down payment on a house, to taking the time to understand and price out car insurance. It’s a point of view. Always remember that it’s you who benefits in the long term when practicing financial patience. Make a plan, think it through, and never burn the you of tomorrow by cutting corners today.