New job: How to avoid buyer's remorse
Sep 14, 2023
Celebrate after you cross the finish line.
Remember those viral videos where someone celebrates the WIN too soon?
If you don’t, here’s a video with 5.5+ million views:
Embarrassing?
I mean, c’mon.
He didn’t know any better because if he did…
…he would have come in first place.
This is the #1 thing that I try to avoid when making my financial decisions.
Avoid celebrating too soon.
One of my friends was graduated from law school last year.
Exciting times.
Especially since his offer was $210k+. š¤©
To celebrate?
Bought a $75,000 BMW.
He earned it.
Only thing was…
…his offer was rescinded. šµ
He went from celebration to panic.
Month after month…
…draining his savings.
In the moment it felt like buying the car was the right thing to do.
But it’s not THAT different than the runner celebrating too soon.
What should I do when I receive an offer?
Make a budget.
You don’t even have to be super complex.
How much do you make vs. how much do you spend.
Take an honest look and compare to the two.
You’ll be surprised how many people can go MONTHS before taking 5 minutes to see where they are at.
My personal approach isn’t fancy.
I follow the 50-30-20 budgeting method.
I’ve basically automated it at this point.
What should I do when I receive a raise or a bonus?
First, wait until it’s actually in the bank.
Second, determine how much you want to enjoy!
After working so hard, it’s good to have some fun. š
I typically keep my process simple for a bonus.
50% spent guilt-free.
50% savings or investments.
I try my hardest to avoid lifestyle expense creep.
Lifestyle expense creep refers to the phenomenon where discretionary consumption increases on non-essential items as the standard of living improves. With lifestyle creep, luxury goods and discretionary spending become perceived as a right to have and not a choice—as a necessity versus a want. - Investopedia
So what happened to my friend?
Unlike most other purchases,
Returning a car is a little more difficult.
He focused on finding another position at another firm…
…and was able to a few months later.
He was lucky. š
But holding off that car purchase just a little longer could have avoided the situation altogether.
š Other Notable Resources
- Last Week’s Post: Equity Compensation 101: What are RSUs, ISOs, and NSOs?
- Making Your First Budget: Getting Out of Student Loan Debt From -$18,000 to $75,000+ in Five Years
