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Save for the Future By Making A Deal With Future You

“Dad! Can we go downstairs?”

It was early. She wasn’t supposed to be up yet.

“Why are you awake, sweetie?”

“I had a bad dream and can’t sleep. Can you come downstairs with me?”

“What do you want to do down there?”

“Read a book.”

Hard to argue with that one. And it wasn’t too early. But I knew: if we went downstairs and she wasn’t dressed for the day, we’d have a battle in about an hour as we rushed about getting ready to go to school. So I made a deal with her:

“Okay. We can go downstairs and read, but you have to get all dressed for school before we go. I’ll meet you in the hallway in … two minutes. Go!”

She ran off to her room and got dressed, looking forward to getting downstairs and reading by the fire.

We recently talked about how to avoid nickel-and-dime purchases, when we said to match your buying volume to your usage patterns. There’s another good way to balance your spending between “wants” and “needs” … make a compromise with your future self.

Let’s say I want to buy a waffle cone maker. (Maybe my old one broke from overuse? Stop judging.)

It’s $50. I don’t really have $50 to spend on it right now. And anyway, let’s say I know I need to save up money for something else — we’re behind on our retirement saving, and I really want to be better about that. “Retirement” is a big, far-off goal, but I can certainly break it down into smaller goals. I can make a compromise with myself: The waffle cone maker costs $50. So the agreement I make with myself: once I’ve saved $500 towards the need (retirement), I can buy the want (the waffle cone maker).

In this case, I set the goal for the need as 10x the cost of the want, but, obviously, that’s flexible.

What we’ve done here is just like what I did with Frances this morning: I set up a compromise, where I agreed to the “fun” thing, as long as the “not as fun, but really important” thing has been taken care of.

And, by the way, Frances loved her time reading by the fire.

Do you have any tips for ways to balance your needs with your wants? We’d love to hear them in the comments!

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