Stupid Purchases, Wasted Life (Literally)
The average American household wastes $10,000-$18,000 per year annually on non-essential items. Things like takeout, coffee, entertainment, impulse buys, and forgotten subscriptions.
Last night I was having a budget conversation with our 12-year-old. Like most kids he suffers from shiny object syndrome. If he has $10 in his pocket and goes into a store, he automatically "needs" the shiny object. 2 days later it is normally found in the corner of his bedroom going unused. Luckily, he has improved dramatically over the last few years which has resulted in him contributing over $2,000 to his Vanguard retirement account.
One basic lesson in economics and budgeting that I repeat frequently not just to my son but anyone that wants to listen is this:
You give your employer your time, in exchange for money.
Example: 1 hour of work and you get paid $25
In essence money is time and time is money. When you spend money on useless items you are giving away your time, which is the only non-renewable resource on the planet. If you make $25 per hour and spend $100 at the bar with friends, you gave the bar 4 hours of your life (time spent at work to earn the $100 and even worse, negatively affected your health). It's much easier to spend money when you do not relate it to the time it took to earn the money. Is that new $10,000 boat worth 400 hours of work? When it is broken down like this, in most cases the answer is no, it is not worth it.
Giving away your time for money that is then invested into your Asset Army, over the long term creates freedom. This sacrifice is generally worth it. Money invested into your Asset Army works while you sleep. The $100 worth of beer and wings does not work while you sleep unless you factor in the weight gain and the hangover.
Lastly, I recommend you watch Luke Nichols from the Outdoor Boys recent commencement speech. My son and I are huge Outdoor Boys fans. This speech is worth listening to.
Suggested Reading:
Dear Johnny Q&A: I'm Tired of Being Broke, Where Do I Start?
Financial Advice to My 20-Year-Old Self
Asset Army: Wealth that Earns While You Sleep