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The Financial Power of Patience

Have you ever noticed that the cost of things are higher if you go out and buy them right away? If you buy the latest model of a TV or laptop it will be more expensive than if you buy the outgoing model, though the difference may be so minor you won’t notice the difference. Buying the latest iPhone? Well, other than no headphone jack you likely won’t see much of a difference from what I’ve been told.

Patience Means Lower Cost

Still feel like these minor improvements are worth it? Well, think about movies. When they initially come out at the movie theater, they often cost $10 dollars + to watch. By the time they make it to TV a few years later you’re paying $7 dollars for a Netflix membership for a bunch of movies or sitting through a few commercials for payment. Heck, you even see the price differential in the theater itself. If you’ve ever had one of their gift cards for a free ticket you’ll see that going on opening week will cost you an extra fee after the gift card expenditure.
One more for good measure, look at the latest game console or hot Christmas gift. The first year the item is available everyone wants it and thus the value is higher then even retail. Remember Beanie Babies for the older members of the crowd? How much is that toy worth now? That’s right, many of them dropped like a stone had you waited.  So, we’ve established that most things you might purchase drop in cost over time. This has a secondary meaning though.

Rarity or the Perception of Rarity Drives Price

The sheer aspect of an item’s rarity or availability drives an individual’s desire to obtain it. This is why retailers label things as limited edition, or limited time. This is also why a car dealer will tell you someone else is interested in the car so you need to buy it now if you want it. They play to your psychological need for instant gratification, buying something that might be scarce, and a desire to stick with the crowd to drive you to purchase things you don’t need for inflated prices.

What this means is if you want to lower your expenditures on items you don’t need, then you need to build in a waiting period into your large buying purchases. If you wait for a few months from initial desire to act on a purchase, you may determine that you don’t actually need that item. You might also decide that the less expensive older model is sufficient. Finally, based on the rest of the market interest you might find the price has decreased. Give it a try.

Have you ever purposely waited for something to lower in price?

7 Comments

  1. Mustard Seed Money
    Mustard Seed Money September 28, 2016

    I almost always wait for things to go on sale. I never buy the latest running shoe, electronic equipment or car. I figure the difference in technology is so small that I won’t be able to tell the difference so why bother. I have yet to be wow’d (besides when the iphone came to the market but I still waited 5 years) to buy a new product.

    • fulltimefinance@fulltimefinance.com
      [email protected] October 2, 2016

      I think it’s probably the natural human condition these days. I feel like I was brought up from a young age that the world is ever changing and I’d like to have a part of that change. Once I looked at the costs though I realized having it first was not worth it.

  2. Finance Solver
    Finance Solver September 28, 2016

    It’s exactly like the newest iPhones. I never buy it when it comes out and I can’t understand people who pre-orders it THE DAY that it comes out. It’s bound to get cheaper (guaranteed) as time passes and I feel that people understand that, but they pay a premium for “NOW”. It’s always astonished me.

  3. Untemplater
    Untemplater October 2, 2016

    I’m big on delaying big purchases. I’ve wanted a new camera for years, but I still haven’t pulled the trigger to buy one even though I could afford it. Sometimes it’s fun just to want something without actually buying it.

    • fulltimefinance@fulltimefinance.com
      [email protected] October 2, 2016

      Here I thought I was the only one. Sometime I find the shopping portion of the experience better then the purchase and ownership. When that happens I realize I should have waited longer.

  4. Aparna @ Elementum Money
    Aparna @ Elementum Money November 2, 2017

    Very valid point. In some ways, this also proves yet again the maxim about “Time is money”. If you spend some time being patient, you might end up saving on a lot of money :).

    • FullTimeFinance
      FullTimeFinance November 2, 2017

      Very true, it works both ways. You can trade time for money or money for time.

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