NO Man!

by Ivan Barona from The Compounding

Back in 2008, Jim Carrey starred in Yes Man, an entertaining romantic comedy based on Dany Wallace’s book. 

The movie portrays a man, which went through a rough patch due to his pessimistic and apathetic attitude towards life. After attending to a self-help seminar, where he agreed to unleash the power of yes, he began to experience the sweet side of life once again. However, every excess comes with a flip side, and that’s where life becomes tricky. But I would not want to reveal more details of the films, so I’ll just recommend it if you are fancy of Carrey’s overacted comedy.

Some people believe, as the movie suggests, that in order to experience life at its fullest you should become a “Yes man”. However, sometimes the power of “no” is quite underrated.

In corporate life, there are people who are not comfortable saying no, and while opportunities may arise from being the go-to-guy, his work priorities might get sidelined.

Don’t get me wrong, a team player that is able to deliver will always be considered as a valuable asset. I am speaking of the over stressed guy that gets his desk swamped because he doesn’t know how to say no.

Decision making is not easy, there is no default answer, each one should ponder on what will get done, and what will be set aside.

Finance is another area where learning how to say no will pay nicely.

By frequently saying yes to indiscriminate spending, or shopping sprees, we are actually laying a wall of no’s to our future selves. We are reducing our future options.

Once again, I am not suggesting an ascetic life. You work hard for your money, you should indulge yourself once in a while, just keep in mind that your future self might find it harder to bring that buck home once you’re in your golden years.

Bear in mind that, due to the power of compounding over time, a moderate no today (restrain of current spending) can become a sizable yes down the road.

Let’s do some numbers: 

The US market, measured by the S&P performance, has yielded roughly a 7.8% annual return throughout the last 90 years. As such, by avoiding to spend $100 and investing it in the market when you are 25, could amount to over $2,000 by the time you reach your retirement age. Some 20x return, without considering any dividend or reinvestment sounds nice.

A timely no, opens a hell of a lot more yeses in your future finances.

Which kind of current expenses should face a wall of no’s?

What future “yes” will you cherish the most?