“I deserve this.”
Three simple yet expensive words in the realm of personal finance.
Financial mistakes can happen for a wide variety of reasons, but one of the most common, and expensive is due to those three words.
It’s okay to reward yourself and pat yourself on the back. However, blowing a bunch of money to celebrate your accomplishments can actually pull you backward financially.
In fact, buying something simply because you “deserve” it has potentially cost people more than inflation, interest, or losses from a bad investment.
Here’s why.
The Problem With “Deserve”
The word itself, and the feeling that we deserve something, isn’t bad. It becomes a problem when it allows us to sidestep the financial discipline we’ve worked so hard to build.
Think about these thoughts or statements that you’ve most likely heard or even said yourself:
- “I worked hard this week, so I deserve that new toy.”
- “Work was brutal today, so I deserve takeout.”
- “I just graduated from college, so I’ve earned a fancy new car.”
- “I make good money, so I deserve this big new house.”
As you can see, the purchase has already been justified before any financial thought has taken place.
And that justification comes from emotion, not logic. Worse yet, we don’t even give logic a chance to catch up and make us think twice.
Why We Love to Fall for This Trap
We associate spending with rewards, and that has been ingrained in most of our brains since childhood.
Think about when you were a kid. When you got good grades, did you get a new toy? Or if you read enough books during the school year, would your parents take you on a trip to Disneyland?
What about in adulthood?
When you get that promotion, how do you celebrate?
Most people head to a fancy restaurant, buy an expensive bottle of wine or whiskey, or purchase something they’ve been wanting for a while.
Over time, this conditions us to connect accomplishments and achievements with spending money.
As a result, every accomplishment becomes an excuse to buy something, no matter how big or small the achievement.
The Hidden Cost of “Deserve”
Treating yourself every now and then isn’t a big deal.
The problem is the compounding effect of hundreds of justified “deserve” purchases over time.
Example
Imagine you spend $100 every weekend eating out because you made it through another work week.
That becomes $5,200 per year.
If that money were invested in the stock market for 30 years and earned an average annual return of 8%, it could grow to more than $640,000.
Pretty financially harmful, right?
While it’s obviously expensive to spend that money, the biggest cost comes from the missed opportunity to invest it.
Money compounded year after year can turn into a surprisingly large amount of wealth.
How Lifestyle Inflation Sneaks In
As your income rises, the word “deserve” and the spending that follows tend to rise as well.
Get a pay raise, and one of the first thoughts is often, “How much bigger of a house can I get?”
Graduate from college and land your first professional job, and many people immediately start shopping for a new car.
Get a higher-paying job, and somehow the vacations find a way to become more expensive too.
The person earning $50,000 and the person earning $250,000 often say the exact same thing:
“I deserve this.”
And they both experience the same negative consequences.
What You Actually Deserve
Instead of thinking you deserve that new toy, consider this perspective.
You deserve:
- Financial security
- A fully funded emergency fund
- Retirement accounts that allow you to retire comfortably
- Flexibility
- Financial freedom
While these things don’t necessarily create excitement in the moment, they offer a far better life in the future.
What to Think Instead
Instead of saying:
“I deserve this.”
Ask yourself:
“Does buying this move me closer to the life I want?”
That’s a much harder question, one where emotions have less influence over the decision-making process.
Sometimes the answer is “yes,” and if that’s the case, go buy it and enjoy it.
But if the answer is no, then it’s time to go back to the drawing board and find a better use for that money.
Conclusion
“Deserve” is by far the most expensive word in personal finance, not “mortgage,” “interest,” or “taxes.”
Because “deserve” has a funny way of causing us to spend far more money than we ever intended.
So the next time you find yourself saying, “I deserve this,” ask yourself:
“Does this purchase move me closer to the life I want?”
You may be surprised by how often that simple question changes your decision.
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