Yes, procrastination can be a bad habit. An investment calculator shows that if you wait from 20 years old until 30 to start putting $200 per month in your IRA, at 65 you’ll have $367,315 less for retirement ($344,218 versus $711,533, assuming a 7% return). Ouch!
On the other hand, procrastinating is just a choice to wait before doing something, and waiting can be a good thing. For example, if you’re angry and you wait a little while instead of acting on your first impulses, you’re much less likely to do something stupid, right?
But let’s get back to financial matters. The good news if you’re a frugalist is that procrastination saves you money, at least if you use it correctly. Here are six ways to do that.
1. Wait to Find a Lower Price
Sure, prices tend to go up over time, so procrastination could cost you money. On the other hand, waiting can be the best strategy in several circumstances.
First, if you’re considering buying something that’s new to the market, just wait for a lower price. You’ve seen the price trend with enough new products over the years to know many things get cheaper before they get more expensive. In fact, almost every type of tech product has gone down in price over the last twenty years (and up in quality).
Another time when it’s best to wait is if you haven’t done enough research yet. Have you checked local stores, Amazon, and your options for buying used? Waiting until you’ve had the opportunity to look around can save you a lot of money.
Finally, if you know there’s a sale coming, just put off buying for now. For example, why pay full price for any electronic device in October, when you know Black Friday sales are coming the next month?
True story: My favorite jeans regularly go on sale for $10 during Black Friday sales, so I wait. It’s the only time I’ve bought jeans in years.
What if prices do go up while you wait? That’s a risk you take, but one that’s probably more than offset by the savings from purchase-procrastination as a general policy. You might also be able to check price trends online, depending on the product or service. For example, you can use Kayak’s price forecast tool to decide whether you should buy your plane tickets now or wait.
2. Wait and Change Your Mind
Here is one of the simplest formulas for spending less money: Wait a day or a week before buying anything. Specifically, when you’re shopping and pick up something you want (which isn’t an absolute necessity), set it back on the shelf, leave, and wait until the next time you’re in that store to buy it.
How does that save you money? By letting you change your mind. If you had waited on every non-essential purchase in the past you probably wouldn’t have half of what you own.
You know from your experience that it’s true, but let’s not leave it at that. What does science say? A study of consumer procrastination, done by Denis Darpy, of Paris Dauphine University, found, “Procrastination predicts if a consumer will effectively buy or not.”
That’s right, serious research has been done to prove the obvious; you’ll buy less stuff if you procrastinate.
True story: I took three things out of my basket at Walmart yesterday and put them back on the shelves. The next time I’m back there I’ll probably buy one of them. But, because I waited, I see now that I don’t need the other two items.
And what if you really should buy something? Well, it will probably still be there later, plus you can take advantage of our first procrastination benefit (finding a lower price), and maybe our next…
3. Wait to Find Something Better
I bought a cheap fan and discovered — too late to return it — that I needed a bigger one. You’ve probably had something like this happen to you. But if you wait a little when making purchases, and you use that time to consider how you’ll actually use the item, it’s less likely that you’ll waste money buying two things to get the one you need.
You also might find something that costs more but saves you money. For example…
True story: When I looked for a printer, it was tempting to buy the cheapest one, but I hesitated. Then I realized that ink cartridge replacement was the biggest ongoing cost factor. I paid a little more for a printer that saved me a lot of money on ink over the years.
In other words, if you take your time you might make wiser decisions. In fact, University of San Diego professor Frank Partnoy says procrastination is the key to making good decisions.
4. Wait and Be Happier
You may have heard of the famous “Marshmallow Experiment,” in which kids were given a marshmallow right away or could wait and get two. A lot has been written about this research into delayed gratification (otherwise known as willpower). Researchers followed up years later and discovered that those who developed the ability to wait to have their desires fulfilled were happier and more productive.
So when you want to buy something and it isn’t absolutely necessary to have it right now, see it as an opportunity to develop your willpower by waiting. It just might make you happier.
5. Wait to Decrease Purchase-Frequency
The National Bureau of Economic Research has a working paper titled, “Consumer Durables and the Optimality of Usually Doing Nothing.” It sure sounds like a joke. But the 52 pages of charts, evidence and quadratic equations makes it clear that this is serious science. I dug through the paper and found this summary:
“It is quite possible that the best policy for a rational, optimizing agent is to do nothing for long periods of time.”
Yeah, thanks for that. Now let me explain it my way: Even if we’re talking about things you really need to buy, if you wait longer you save money by decreasing the frequency of purchases.
For example, a toaster might be a necessity, but if you wait a year longer before replacing it (assuming it works well enough to keep using it), and you do that again with the next, and so on, you’ll buy fewer tasters in your lifetime. If you make your socks last a bit longer you’ll save a few bucks each year.
True story: We need a new hot water heater. We’ve needed it for five months. But as long as it’s safe I’ll put up with relighting the pilot once in awhile. I figure I’ve already bought at least one or two fewer major appliances and home systems than the average for a person my age, probably saving me thousands of dollars.
This strategy of procrastinating-to-decrease-purchase-frequency (and therefore total lifetime purchases) doesn’t work with everything. You probably shouldn’t try it with toilet paper or soap, for example. But with many things you’ll suffer few if any negative effects from waiting.
6. Wait to Pay Cash and Save on Interest
If you’re considering putting anything on a credit card, and you don’t pay off your card balances every month, it’s time to procrastinate. Start putting aside a little money every week until you have enough to buy the item for cash. You’ll save on interest charges and possibly gain all or some of the benefits listed above.
In the end you’ll almost always save money by waiting and paying cash for things. A house may be an exception because buying with a mortgage payment may be cheaper than renting, and prices might rise faster than you can save. But other exceptions are rare.
Consider a car purchase. Many people buy new because it’s easier to get financing. That’s an expensive way to go. For example, let’s assume you have $3,000 and you buy a $27,000 car. A loan calculator shows that a $24,000 six-year, 6% loan has payments of $398 per month, and interest charges total $4,638.
Now consider this alternative: If you can actually afford $400 monthly, put it in the bank for 41 months. Then buy a one-year-old car for $19,600 cash; Edmonds says the average price of a midsize sedan drops $7,419 in the first year.
You save about $12,000 between the lower price and the lack of interest expense. That’s the power of procrastination.
If procrastination has saved you money, tell us about it below. Happy frugaling!