Don’t Think About What You Want, Think About What It Takes
One of the simplest personal finance tips is to just stop wanting more. It’s simple, but true – if you had an easy way to get rid of the urge to acquire something new, other than things to meet your most basic needs, it would be incredibly easy if you had an easy way. Unfortunately, people don’t work that way.
This post was originally published on The Simple Dollar .
Our desires get out of hand for many reasons. We want things for personal enjoyment. We want them because they will fill the emotional hole in our lives. We want them to impress others or keep up with the Jones. We want to feel rewarded for the hard work we put into our lives.
All of these things – and more – end up justifying the unnecessary things we spend our money on.
I myself am to blame for the same. I can name a lot of things that I want for various reasons. There are a couple of board games that are out of print long ago that I would like to have (for example, if you have a copy from 1862 , let me know). I would like to have a few more Baron Fig Vanguard dotted grid notebooks – they are great for taking notes, but they are more expensive than I can justify. I’m going to want an electric car as soon as it becomes truly viable and comes close to anything close to cost-effective.
I also want immaterial things. I want this largely completed novel, which looks at me from a desktop screen, to be completed, edited, and published. I really want to start another project that I have been working on for most of the year. I want to be in my best physical shape (I’m working on it). I want to be read better. I want my office to be better organized.
I could spend money or time – and in some cases both – on any of these things and turn that “desire” into reality.
But here’s the problem: everything has an alternative price.
When you spend money on something, you take away everything that you could do with that money .
When you waste time on something, you take away everything that you could have done in that time.
The reality of life is that you may have some things, but not all . When you have something, it means that you prefer not to have something else. I could have all the material items listed above, but I would quickly ruin all our plans for the future. I could take care of all the projects listed above, but I would have to eat up the time I spend on other things, like spending time with my kids.
In fact, I want to spend every dollar and every moment of my life on the most valuable thing I can spend it on. I think this is a goal that most of us share. (This is also a call for frugality, but it is neither here nor there.)
My solution to all this is simple: whenever I want something, I try not to think about how much I want it and how great it is; instead, I think about what I have to give up in order to get it.
This is how I do it.
I think about how many hours I will have to work to buy this item and what they might mean. I do this by first calculating my true hourly wage – the amount of money I have in my pocket for an hour of my life devoted to work. Let’s say it’s $ 10 per hour for convenience.
If I’m in a coffee shop and am thinking of having a latte and a bagel, the total could be $ 7.50. This means that I have to devote 45 minutes of my life to work tasks in order to earn coffee and a bagel. Is it worth 45 minutes of my life, especially if I can get pretty much the same thing at home for less money?
Let’s say I want a new board game (if you’re new here, board games are one of my main hobbies) and it costs, say, $ 50. Is it really worth losing five hours of my life to own this game, especially if I have a similar game or if someone else I regularly play with also owns this game?
I try to think of other things that I might be doing during this time. I believe that eight hours of work is the equivalent of retiring a day earlier or an extra day of work when I’m doing something interesting. Will this $ 80 thing give me more joy than a full-time job doing what I want to do?
Likewise, 2,000 hours of silly shopping ($ 10 an hour) is basically the equivalent of a whole year when I don’t have to work, and instead I can live off the money I saved from those purchases.
Determine your true hourly wages and use them to compare when shopping. If you have a retirement budget, imagine that for this money you “work” 40 hours a week.
I am thinking of other things that I could get with the same amount of money. I’m queuing up for this $ 7.50 bagel and coffee at a cafe when I realize I could have the same bagel and about the same coffee for about $ 2 at home, leaving me $ 5.50 extra. Instead, I could spend it on some of something else I want, or I could put it off half an hour closer to early retirement (using my true hourly wage).
When I buy this $ 7.50 bagel and coffee, I give up those things. Basically, I’m willing to give up some of the progress towards early retirement just to get coffee in a coffee shop, not at home. I’m willing to give up some of the cost of the book I want (probably about half the cost) or the board game I want (probably about an eighth of the cost).
Is this bagel and coffee worth it?
This idea is called opportunity cost, and I use it all the time to show myself that I’m not spending money optimally in terms of what I want out of life.
All you have to do to use it yourself is to think about other things you could do with the money you are about to spend on this nonessential purchase. Is it really worth it? Is it worth spending $ 7 on a branded version of a product when you can spend $ 5 on a store’s brand name and have $ 2 in your pocket for other stuff? Keep making these comparisons until they feel natural, and eventually you find yourself naturally targeting the best purchases and discarding the least worthwhile.
When I try to justify my time on a project, I think about the least efficient ways to use it right now. For example, I think of the most useless websites I’ve visited in the last week. I think about the time I spent leafing through a magazine and not reading anything of value. I recall the time I spent in the car, looking out into space, listening to a radio program that I can’t even remember in detail.
I spend a lot of time in my life. I also use my time ineffectively. When I think about wasting time on a new project, I try to think about the less rewarding things I do with my time and ask myself if I can give up that time to support this new project.
If I don’t have time, I don’t even start. If I have time, I uncommit the rest of the stuff first.
This may seem like a bit of a negative approach, but the truth is, if you don’t devote serious time to a serious project, it will fail . You will not achieve this, and no matter how much time you do, it will be wasted. If you can’t take the time to get the project to work, don’t worry. Instead, focus on achieving your other priorities.
Something has to be worth what you give it up for, otherwise it won’t be worth it. When you spend money, you are giving up something else to buy; when you waste time, focus and energy, you give up something else to do. If you are giving up on something that is actually of great value to you, then this is just a bad deal.
It seems obvious, but people overlook it all the time because they work too much on projects and spend too much money. They make deals in which they put their money, time and energy into what they think they want at the moment, but if they back down, they will later realize that this is a pretty bad deal.
Think about what you are giving up before giving up money, time, or energy. Make sure you are getting the best value compared to what else you could do with that money.
Good luck!
Don’t think about what you want. Think about what is needed for this. | Simple dollar