When it comes to managing money and financing, I can’t stand holding back on buying something I really want. Everyone’s wants are different. I think you really have to identify whats important to you and spend lavishly on those items. Once you identify whats truly important, you can identify whats not important and cut back mercilessly on that. The top three categories of what’s most important to me can be distilled into 3 areas:
- Health (any and all things that contribute to you being healthy)
- Convenience/Time (things that save you time even though they cost $)
- Experiences
Health
The biggest asset we all have is our own body and you gotta take care of it. Whatever your means is to the ends of being healthy- I generally say its worth it. As an example, I love my gym time. My gym has all the weights, machines and facilities I could ever want. The monthly fee is $30- totally worth every penny. And they offer child care too. The child care for my two kids in another $25 a month- totally worth it. That extra $25 allows me to workout my kids aren’t in school. It gives me a break from parenting and them a chance to play with other kids- worth every penny.
For some, although not me, a high price membership to a crossfit box is worth the cost. Again, if it keeps your body healthy, invest lavishly. Other things I categorize in the health category are a good set of headphones, decent gym/running shoes, and high quality foods. If my headphones break, I get a new pair ASAP because I consider that vital to me being healthy because I get better workouts when I hear high quality sound (I love being yelled and cursed at by my musicians at loud volumes when I workout).
Other things in this category could be supplements, clothes you feel confident in, the occasional chiro appointment, yoga classes, massage, etc. Whatever contributes to keeping your body operating at full capacity.
Convenience/Time
I love convenience and I always choose to spend money on convenience over hard work. That may sound lazy to you, but you’ll see this logic actually helps you to be more productive and manage your time more wisely.
Here is my most recent example. This past week I decided to do a lot of backyard clean up. I had a bunch of scrap wood, construction debris, and just random shit that had been accumulating in my backyard over the past few years. I want to have my son’s birthday party at my house so I decided it was high time to start cleaning up. I decided to consolidate all the garbage and start taking trips to the dump to get rid of it all. Before I committed to the first trip, I noticed my neighbor had a construction debris box delivered to his house. I approached him about dumping some of my trash and he said it would be ok, but if the box weighed more than 1 ton, he would be charged $65 and he was concerned about this. I told him I would happily pay the $65 up front if I could unload. He agreed. I spent a few hours going back and forth with my wheel barrow dumping my debris until my backyard was clean as a whistle. That $65 investment saved me numerous trips to the dump, fuel to get there and back and the inconvenience of dragging my kids along to a place where they didn’t really want to go; which means bitching and moaning, working around nap time, etc. It would also take valuable time out of my day where I could be working out, working on my business, etc. To me, this $65 investment was well worth it. This is what is known in business as opportunity cost. Opportunity cost is what you lose in terms of opportunity while you’re engaged in another activity. The opportunity cost of all those trips to the dump is gym time, working overtime, fixing up the house, chilling with the family, etc.
I always try to think situations where I can pay to do something easy or do it myself for free in terms of what my time is worth per hour. I have this debate with my dad all the time. He hates hiring contractors and prefers to do the work himself. I am all about that approach as long as I know what the hell I am doing. If I am going to be undertaking a major home renovation project that I know little about, its going to take me three times as long to complete it (if I ever do) and its probably ain’t going to be as pretty as if a professional did it. That not only presents opportunity cost for the time you wasted doing that project, but could negatively affect the value of your home if you did a half ass job. In a lot of situations I’d rather pay the money and save the time.
Loading my trailer with shit, packing up the kids, driving to the dump, unloading the trash and driving back is easily 1.5 hours per trip. Multiply that times 6-7 trips and were talking 10+ hours of work and opportunity cost. And at a cost of $65, I consider my time way more valuable than a little more than $6 bucks an hour.
Bottom line: convenience saves you time and thats not something we have a lot of. If the math works out in your favor, go the convenience route and bank that time for something more productive.
Experiences
As you already know, I am careful with my money. I usually don’t travel more than 1 or 2 times per year. However, when I am given the choice, especially on vacation, I spend lavishly on experiences. Looking back I don’t necessarily remember in close details the trips I took when I was younger and just sat on the beach all day and got hammered at the all bars all night. Thats not really an “experience” in terms of my definition. Things I do remember about trips Ive taken: going on a jet ski tour of the Florida Keys, renting an electric scooter and seeing an island from a different perspective, over indulging on edibles before going to the Las Vegas airport (bad idea, very bad idea), taking a gondola to the top of a mountain in Lake Tahoe, climbing the Cape Hatteras light tower. You get the picture.
Bottom line: if you’re faced with the opportunity to have a truly unique or once in a life time experience, just spend the money and keep the memories.
