Money Wise Mom

My husband and I are a little too good at the marshmallow test. By which I mean, we can take our natural skills in delayed gratification a bit too far.

The marshmallow test, in case you’re not familiar, is a psychology experiment from the 70s that studied delayed gratification in 6 year old kids. If kids were able to restrain themselves from eating treats while unsupervised for a period of time, they would earn double their rewards. Or “fail” the test and eat their treat early and get no extra treats, screwing over their future selves.

If you think about this in terms of personal finance, it’s basically the power to wait until you can afford something before you buy it. In today’s world of credit cards, pay day loans, lines of credit, and online buy-now-pay-later services, there are so many ways to buy things before you can afford. Lenders want to make your buying experience as frictionless as possible to allow them to make money while you to treat yourself to x, y, and z product.

But like those eager kids who ate the treat early, paying for stuff with credit that you cannot afford is screwing over your future self. Debt is an anchor that drags you down. It slows down the rate at which you can reach your financial goals. In the worst scenario, it can take goals completely off the table for you. Interest payments on debt are a bill that you are handing over to your future self, who will have to work harder and longer to pay more for the treat that you get to enjoy today. Buying stuff feels good in the moment. Since the interest bill comes later, most people don’t quantify the true cost of stuff that they put on a credit card. When they don’t pay their balance in full before the grace period, interest is the hidden tax on everything you buy. Canadians know that you always have to round up the price tag to include sales taxes. However, with sales tax you know the exact percentage you need to factor in. With credit card interest, how much you pay depends on how long until the debt is paid off. At an average credit card interest rate of 20%–25%, a purchase will cost double in approximately 3 to 4 years if you only make minimum payments. Oof! Was that $8 sub that you bought today really worth making your future self pay $16 for? And do you really still want to be paying for it years from now?

Nature vs Nurture

So how does delayed gratification show up in my life and when did it start? As a teenager I remember choosing to walk halfway across the city to save $0.50 on bus fare. As I became a young adult, I remember comparison shopping for the cheapest shoes I could find and frequenting thrift stores. My ability to budget and save was strong as a kid.

It wasn’t until I moved out at the tender age of 18 that I started to flirt with debt. By that time I was already a mom, having had my daughter at 17. Originally I moved out on my own, but it was only a matter of months until my daughter’s father (now my husband) joined me and we became an instant family of three, living below the poverty line.

A lot of new adult expenses (rent, transportation, food, etc.) coupled with access to new forms of credit (credit cards, store cards, and student loans) was a dangerous cocktail. We often lived in overdraft, for which I could tell myself that “we had no choice”. Perhaps, perhaps not. We lived simply, but we did buy stuff on credit instead of waiting. We bought a stereo before we could purchase it out right (no one needs a stereo). We didn’t eat out often, but we did sometimes. We bought each other birthday and Christmas presents. We had pets, which made life more expensive than it needed to be. Nothing too extreme, but when you’re poor, even small stuff can drive you into a cycle of debt. When you don’t have a lot and can’t see a brighter future, buying things that you just want is seductive. Especially things that you can’t afford and, deep down, you know you shouldn’t buy. It’s like eating cookies when you’re on a diet. When willpower cracks, you can tell yourself all sorts of things to justify that sweet treat. But you always have to deal with the sugar hang over the next day.

It’s a Money Muscle

It was 5 or 6 years later when we finally got serious with our money. At our “rock bottom” we had a mortgage, a HeLoc, a student loan, and over $10k in consumer debt.

We were in our mid twenties when we finally decided we were done with debt. We wanted it gone and we needed a plan. We needed to bulk up our money muscles. To do that, we built our household budget based on our goal to become debt free. We allocated every extra penny to paying off our debts asap. Our early budget was pretty extreme. At one point (maybe early 2000s?) our monthly household budget was $20 for entertainment. Woohoo. Yes, that’s household (with two kids), not per person. We didn’t have any budget allocated for alcohol (that was a need, not a want); I remember buying my husband a case of beer for his Christmas present as a big treat. We didn’t have money to buy xbox games, so we would rent them for a fraction of the cost. We spent many hours at the library and would all read for entertainment. It definitely wasn’t glamorous, but we had a good life and we were putting our future selves first. And, as the debt balances came down, it actually felt good to live without. We stopped using all credit cards. We prioritized doing things for free. We loved our local libraries. We went to the park. We were finally winning the marshmallow test.

How that showed up in our children

My kids were between 2 and 7 when we started our debt free journey. For them, I think watching us be intentional with our money is all that they’ve ever known. And today, both my kids are extremely proficient budgeters. Like, extremely proficient – to the point that, sometimes I wonder if we broke them a little bit.

Of course, I say that tongue in cheek! I see them flexing money budgeting muscles all the time and it brings me joy. As MoneyWiseMom, I’m extremely proud of my kids and how they make the most of their money. They budget for big expenses. They don’t overspend at the holidays. They second hand shop. When they take on debt, like student loans, they pay it off aggressively. They live below their means and save for their futures.

What could be wrong with be intentional with money?

The Dark Side of Extreme Frugality

As life went on, our financial lives naturally improved. We stuck to our budget, crushed the debt, and started investing. Along the way, we advanced in our careers and started to earn raises and bonuses. When our income went up, we would revisit our household budget and allocate money intentionally, based on our current life goal, to up our budget. We would ask ourselves, how should we up our budget so that we feel “rich”. Our lux categories were entertainment, alcohol, and vacations (no surprise as these are the categories that were heavily constrained early on in our marriage!). And because we lived so constrained for so long, even a small bump in these line items felt amazing! What do you mean we can just go to the movies? How rich are we, lol?

Fast Forward to Today

Over the past year, we’ve done a major life reset. Just over a year ago, I left my high paying tech job and intentionally left the workforce to live a life of financial independence (what can I say, all that saving and investing really worked!). As part of our big life reset, we choose to go back to basics with a pretty frugal budget. In 2024, we didn’t think twice about eating out or how much we spent at the grocery store. Today, we thoughtfully plan our meals and shop based on sales. We choose to go back to feeling a wee bit constrained so that we would focus on people and experiences over money and things.

And we may be a little too good at it. We currently have a pretty humble budget for miscellaneous expenses. We draw on that money for extras, like when buying a new cell phone or kitchen gadget. We’ve keep a list of things we want to buy next. It has about ten items on it right now. At the current rate, it will take years to build up the money to go out and buy all that stuff.

Our tendency to “just wait” to buy things may be bit out of wack. Two weeks ago, we decided that only having one cutting board was not working for us. This week, I finally convinced my husband to just get a second one, even though we’re overspent on our misc exp budget right now. And even though we were “going wild” just buying it, he still flexed his frugal money muscles and found one for half off in the Ikea “As Is” section. Which I fully support, by the way. It was the right purchase for the right amount and we shopped to our values by choosing a bamboo cutting board that was the right size for what we wanted and I know that it will be used every week for years to come! And of course, we’re still going to pay off our full credit card balance this month. We haven’t paid credit card interest in decades, and we won’t be going back to that old life.

Final Thoughts

In our mid forties, we discovered that we still had our money muscles that we developed up in our twenties. But the dark side is, we might over built those muscles at the expense of flexibility. I know that today sometimes we stress ourselves out sticking exactly within budget. In truth, our budget is an arbitrary rule we’ve created for ourselves. We value a stress free life and we’re still working on finding the right balance that works for us. But it’s a pretty great life and I wouldn’t really want it any other way.