I went from $100,000 of debt to building my wealth by asking myself a simple question
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- Early in my career, I racked up over $100,000 of debt by spending money I didn't have.
- I finally changed my money mindset by asking myself: Would I remember why I purchased this item five years from now?
- Today, my family is thriving, I'm debt-free, and I'm building my wealth.
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In my early 20s, I had a not-so-great mindset about money: I believed that I deserved to spend whatever money I made because I worked hard at my job.
This mindset had me over-spending on non-essential, arguably frivolous purchases that only brought temporary joy, and once that feeling subsided, the item became just as ordinary as all my other possessions.
My mindset definitely needed some reconditioning at that point.
The way you think about spending your money can make a huge impact on your financial status and growth. Obviously, my previous mindset was a problem and it resulted in my family and I living paycheck to paycheck for years.
As I got better with managing my spending and understanding how to control impulse buys, I started asking myself a question before every purchase.
Would I remember why I purchased this item in 5 years?
This question changed the way I think about money. It made me analyze every purchase for its long-term value. It made me think about the price I was willing to pay and if that item was going to be worth my investment.
So often, we purchase items without much thought. And a lot of times we don't even think of a small purchase as an investment. As a result, many of the items we purchase end up losing their value to us down the road.
Want vs. need
The question of whether I'd remember why I purchased an item five years later is effective because it encourages me to perform a want vs. need analysis.
When I want something, I typically don't have a justification for buying it other than how much I want it. That's a sign I shouldn't be purchasing the item.
But when I need something, I can argue its value in my life. I start to think about its functionality, its time-saving abilities, its ease of use that saves me effort, and so on.
It takes much more thinking on my part to argue the "need" of an item whereas the thought process is minimal on my "wants."
Why asking "why" matters
If you've ever talked with a small child, you've probably heard them ask the relentless question of "why?". They genuinely want to know why we do things the way we do so they can learn more about the world they're living in.
The question of remembering "why" I made a purchase speaks to the same impulse. Remembering why I bought something years later means that it has served an important function in my life, and I can learn from the purchase.
For example, the garlic press I bought from Ikea three years ago that can mince garlic in seconds and makes my life super easy with clean up? It was well worth the $5 I spent.
On the other hand, that $2 colander that drains the pasta just the same as the other two I already have may not have been such a great purchase after all. Even if it was just $2, it's still considered a waste in my book.
Being mindful of how I spend my money not only helps me save more, but it also helps me eliminate leaks in my spending plan.
My money - then vs. now
My spending has changed drastically in the last 10 years. I went from being in more than $100,000 of debt to now being debt-free and growing my wealth.
This vast change is a direct result of the question I constantly ask myself: Would I remember why I purchased this item five years down the road?
It's changed the way I choose to use my financial resources. It's changed the way I think about investing. And it's definitely made me more mindful of how I choose to spend and save my money.