How the power of patience can make you money

If you were paid $2000 would you wait a year to buy a new car or go on a holiday?

While “Have it now,” is the mantra of the new “buy-now, pay-later” companies, larger purchases don’t always come with that luxury.

It also teaches us to spend faster than we can really afford things.

The famous marshmallow test proved that benefits come with delayed gratification. This test put children in a room with a marshmallow who were told if they didn’t eat the marshmallow over a certain period, they’d be given another one.

Passing the test is supposed to be a signal for future success.

But in the “real world” delayed gratification can also hold the secret to saving some fairly large chunks of cash.

Clothing

Let’s start small.

Unless you’ve followed Mari Kondo to the letter or keep a hyper minimal wardrobe, it’s unlikely you “need” any item of clothing immediately.

That’s why you can always wait for a sale. Most major brands have regular sales anyway, meaning you never have to wait too long for a handy 20% off.

Buying a car

Firstly, it’s generally considered a poor idea buy or lease a new car.

We’ll use the example of Pete. He was looking to borrow $25,000 to buy a Holden Commodore at an interest rate of 12% over 5 years, paying off $556 a month.

While he looked for his car started putting aside that money, saving $6672 in a year.

He borrowed just $18238, knocking his repayments down to $408 a month and saving a huge $2233 in interest payments over the life of the loan!

The other way to save on any loan, is to reduce your interest rate repayments. That could be through consolidating debt or finding a loan provider with a cheaper rate.

But there’s always an exception…

If you’re paying interest on a credit card or payday loan then patience is the wrong virtue to be chasing. Instead, you should consider debt consolidation, or putting in place a plan to pay it off.

In the reverse of our car example, six months of having your head in the sand here could cost you thousands of dollars in interest.

MoneyPlace saves its customers on average $5,600 compared to credit cards and loans from the major banks.