Money advice: A millennial tracking his net worth to early retirement

Albert Einstein is mistakenly attributed to calling compound interest “the most powerful force in the universe,” and if that doesn’t prove the cult-like love for the effect, I don’t know what will.

And yes, as we’ve just discussed, compound interest can make you incredibly rich. But there’s another, far less mentioned, effect of compounding that might be just as powerful.

I call it compound spending. And if I hadn’t tracked my spending every month like a crazy person, I’d have never realized its power.

I first noticed it when I spotted an almost cyclical, wave-like trend in my monthly spending reports. Some months I spent almost nothing, and other months, a little bit of spending inevitably compounded into a whole lot of spending.

The peaks and troughs were impossible to ignore, and I realized a fascinating trend. My most successfully frugal months were not the months where I displayed some amazing amount of willpower, or found some incredibly creative way to save.

Instead, the common trend in the months where I spent the least amount of money: I simply avoided tipping that first domino. I avoided that first purchase which would have started a chain of future purchases.

You certainly know this effect, even if you’ve never given it a name:

• “Just one drink” with friend cascades into four or five. Followed by a midnight taco trip, an expensive Uber home, and a pricey brunch to eat off last night’s hangover.

• A “50% off one item” coupon turns into a shopping spree, complete with four new outfits and a lengthy receipt.

• I know I’ve fallen victim to an AMAZING deal on plane tickets, which compounds into pricey hotels, rental cars, and vacation spending.

So, what’s the best way to control your spending?

Realize the sticker price is a lie. The sticker price of any purchase is just the first domino in a chain of spending.

So, stop that spending before it starts. Rip that weed out by the root, before it has a chance to grow out of control.

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