Why do delusional people think their spending will be different than other people’s?
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It is an indisputable fact that anyone who drives a BMW 2-door coupe is an asshole. They talk on their phone loudly, drive recklessly, and wear extremely large sunglasses. In fact, an even better litmus test is observing how these drivers park: If they back into a parking spot instead of parking nose-first like normal people do, you can be 100% certain that you have an asshole on your hands.
Photo by puyo
To find supporting evidence for my theory, I Googled “bmw asshole” and got 1,500+ responses, including this one. I rest my case.
There has only been one exception (he was a startup CTO…who by definition cannot be an asshole). Also, Asians don’t count because they don’t drive BMWs.
The point is this: There are patterns you can recognize. We like to believe we’re individual and different, but the entire field of social psychology illustrates how we mistakenly believe we’re in control of our own lives while systematically underestimating situational and social influence.
As we get older, the vast majority of us fall into predictable patterns: We become more conservative with our investments. We have kids. We spend on things we never imagined we would (like window treatments, homeowners’ insurance, and childcare).
Recently, I wrote a post about the 10 Year Savings Strategy, where I recommended that people who are already saving and investing and maxing out their retirement accounts do one simple thing: Find some people who are 10 years older and ask them what they wish they’d saved for. Then start saving for those things.
This isn’t as sexy as alternative investments or currency arbitrage, but it works. It also forces us to confront the fact that most of us will live very similar lives as everyone else. We’ll start really paying attention to our money around age 40. Our wedding cost will be far higher than we planned. We’ll buy a house.
Sure, there are exceptions. But chances are you’re not going to be one of them. None of us is.
The comments that people submitted to the post were some of the most interesting and infuriating I can remember, prompting me to write a 456-word comment in response. Here are a few selected comments from the original post:
“First of all, I’m not getting married. No, this isn’t just the talk of someone who can’t see far enough into the future. We all know the only benefit of getting married is in avoiding divorce. If you get divorced, you’re screwed. For anyone who would ever put themselves into that situation, I have no sympathy because it is completely avoidable. Marriage is a contract and (especially for guys) if you enter into it, you will be on the losing end from the get go. You recommend getting advice from your elders. What do they tell me? Don’t get married. That’s some advice I’ll be taking because I care too much about my assets.
Actually I see kids as a complete waste of money, time, and freedom. There are many people out there who live child free (and loving it) and I will be one of them. Don’t believe it? Believe it when i get a vasectomy sometime in the near future.”
Smart Person Who Understands The Point of the Post, Not Just The Superficial Words
“Ramit, I really liked this. The take-away was still the same despite that I don’t intend to have children (and neither does my g/f). Plan for large expenses I will encounter on my path in life, whether or not it’s children or lots of travel or whatever hobby I choose. The action is not, “save for children.” The action is: ask and try to predict what your major expenses will be in 10 years and save for it. Don’t think you’re going to be above average and beat the system. Reality is sometimes harsh on us 20-somethings. Realize I am not an exception to every rule. Realize that reality will bite me sometimes and I will want to be prepared.”
Hilarious Person I Want To Marry
“Good lord….To pretend you know exactly what you want now (at say, 25) for when you are 50 is the equivalent of adamantly stating when you are 5 that you hate all boys/girls and will never like them. It’s utterly ridiculous. All you can do is acknowledge that your current self cannot predict everything that will happen in your life, or everything that you will want, but it’s probably going to cost more than you think. So instead of spending so much energy being defensive, why don’t you critically think about his point, and whether you want to apply it to your finances?”
And finally, here’s the response that I left in the comments:
“Exactly. Some phenomenal comments on this post and some very, very stupid ones.
The most absurd thing about many of the negative comments is the inability to take a strategy or tactic and apply it to the commenters’ own lives. If you’re not going to get married (which you probably are, despite what you think now), you’re still going to have many other expenses that you simply can’t predict yet. If you claim you’re determined to have a frugal wedding (which many people say, by the way), then the question to ask is this: “Under what conditions might I find significant future expenses that I didn’t predict?” Ever hear of the hedonic treadmill?
I’m willing to bet one of the commenters who complained this post is “obvious” hasn’t cut costs, automated, created a Conscious Spending Plan, earned more, optimized his spending, maxed out investments, and created sub-accounts for his future 10+ year spending. I’m not being sarcastic — if you have, please let me know and I’ll call you because I’d love to profile you for my readers.
“Obvious” doesn’t mean “easy.” But that’s the point of the post, isn’t it?
As commenter Sara said:
“To pretend you know exactly what you want now (at say, 25) for when you are 50 is the equivalent of adamantly stating when you are 5 that you hate all boys/girls and will never like them. It’s utterly ridiculous. All you can do is acknowledge that your current self cannot predict everything that will happen in your life, or everything that you will want, but it’s probably going to cost more than you think. So instead of spending so much energy being defensive, why don’t you critically think about his point, and whether you want to apply it to your finances?”
Now that I’m writing, let me go on a little bit: One key insight of writing a blog for a large audience has been how entitled people feel in getting a tip that’s exactly written for their specific situation. “I’m 60 and widowed!” people say. Or, “But I’m gonna have a vasectomy!”
A post addressing your specific situation is not going to happen here — you need to use your imagination and think about how to apply them to your life. And I’m not going to water down this blog with equivocations and qualifications (as ec213 points out).
The sad thing about this is the smart people already know this. I have to write this comment for whiners who (1) constantly complain about this site, (2) will never buy anything, and (3) repeatedly threaten to leave.
With that said, I LOVED writing this post and I love reading these comments even more. Look for MORE posts like this.”
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By planning to live an ordinary life, you give yourself the means to be extraordinary.
The original post on the 10 Year Savings Strategy is here.
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