The Short Term vs. The Long Term

In one way or another almost every decision you make can have both short-term and long-term consequences. It’s a constant tradeoff that is going on, whether you are fully aware of it or not. Buy coffee outside instead of making coffee at home? You’re trading short term satisfaction for money you could’ve spent elsewhere in the long term. We all want to make better financial decisions but that’s very difficult to do if you don’t fully understand opportunity cost and the tradeoff that is constantly going on between the short term and long term. There’s usually a happy middle ground and if you can find it you’ll be all the better off for it.

Short Term Satisfaction vs. Long Term Growth

Sacrificing and giving up short term satisfaction is one of the ways many consumers get ahead in today’s world. If you are able to save a lot of money in the short term and invest that money for example, your sacrifice will have produced a nest egg that grows. That growth could lead to bigger and better things and could be a catapult for your own financial growth. This is a tradeoff that many choose to make each and every day.

The Financially Savvy

The financial savvy are typically those consumers that are well-prepared for the long term. They don’t need to worry about sacrificing too much in the short term to achieve their goals because they’ve already established a plan (they’ve likely already made certain sacrifices) and are consistent in building for the future. Everyone’s journey is different but more often than not, consumers that have a long-term plan are typically better at managing money in the short term and understand that in many cases giving up short term comfort can lead to success in the future.

The Time Trade Off

Time is money and the idea of working for a salary or monetary gain is a trade that billions of people make each and every day. You exchange your time and your labor for money so that you can spend it on what you need and want. With regards to wages, some people’s time is more valuable than others (although this is only true according to the jobs and careers they choose) and so if they want they can work more in order to earn more or work less to enjoy more leisure time. Due to this, somethings simply don’t have the same trade off as for someone who has a lower income or less wealth. In this scenario, many consumers choose to “buy back their time” so that they can enjoy the fruits of the labor, like for example, purchasing a coffee outside the home.

Finding the Middle Ground

Finding the middle ground can sometimes be a difficult thing to do. The best way for you to judge what you should and shouldn’t give up for in the long term or the short term should be dependent on your goals and your value system. Everyone has a different value system, some value leisure and experiences more while others value products and money more. It all depends on your current financial standing and where your currently situated in life. If you want to be a homeowner and are looking towards saving, it’s likely going to be more to your benefit that you save money by making coffee at home, as opposed to a consumer that is nearing the age of retirement and has already retired comfortably. Everyone has different goals at different stages of life and each goal is a factor of past decisions we’ve made, whether good or bad.