Procrastination Effects on Your Budget

Posted by Mike Smith :: May 16, 2008 @ 9:45 am

Waiting until the last possible minute to make a necessary purchase will usually end up costing you more. Discretionary spending often sees quite the opposite effect. Planning appropriately in both cases will have the highest likelihood of success.

When you procrastinate in making a necessary purchase, you slowly lose control of the price you are going to pay. Early on, you may have the luxury of being able to comparison shop and wait a little while until a better deal comes along. As time progresses, your options become more and more limited. When you get to the point that you have to make a purchase, you likely have to pay whatever price is asked of you just to satisfy your need. How often have we spent more than we intended just to have a gift in time for a birthday or similar timed event?

Discretionary spending offers more flexibility because you rarely have a hard deadline for the purchase. Even if you delay the purchase, you could always wait even longer if the price wasn’t favorable. You may even decide not to make the purchase at all. For many products, particularly new technology, prices come down over time.

Let’s consider an example for an upcoming trip. In one case, you need an airline ticket to get to your sister’s wedding. In the other, you’d like to go on vacation soon. If you book your trip to the wedding a day or two before you need to be there, you could be in for a big surprise. While it is possible that you’ll get a good deal if the flight you want isn’t very full, the much more likely scenario is that you’ll end up paying whatever fare you can get because you have to be at the wedding. If the price was more than you could afford, you may even borrow money or charge it just to be sure that you were able to attend. In the second case, you could choose whatever destination had flights that weren’t very full or whichever deal looked best. If no deals looked good, you might simply wait and try again next week.

Many other types of purchases follow a similar pattern. The more specific the item and necessity to obtain it, the more you are probably going to spend. Of particular importance is to avoid overspending for discretionary items because you confuse them with a necessity. If you can live with an alternative, have no pressing need for the specific item, or can skip the purchase altogether, you’ll probably end up paying less. If none of those situations apply, then purchasing early is likely the best way to go.