Stepping Over Quarters

During a recent conversation with a friend, he began sharing about how prudent and wise he is with his money. I didn't solicit this information, but these types of conversations tend to come my way. Anyway, he shared several examples of how he saves money through his various day-to-day decisions. Like this one: "I save $3 in tolls every day by taking the non-toll roads to work." $3 per day works out to roughly $60 saved per month. On the surface, that would appear to indeed be a prudent move. 

Then, I asked a follow-up question: "How much longer is your commute this way than if you just pay the tolls?" His response: 20 minutes per day.

My next question: "How much do you make at your job?" His response: I bill at $65/hour. 

I explained that he is effectively making $9/hour by not taking toll roads, but giving up $65/hour of billable work time in exchange. In other words, for every day he saves $3 by taking the longer commute, he costs himself $21.67 of revenue. That $18.67/day difference equates to a $373 worse outcome over a four-week stretch! That's more than $4,800/year he's losing out on!!!!!

"Yeah, but I save $3 every single day!"

This is a perfect example of how a scarcity mindset can cost us. In an effort to save a few bucks, we inadvertently cost ourselves far more than we were trying to save in the first place. Or as the expression goes, stepping over quarters to pick up nickels. 

Whenever we make financial or life decisions, we have to weigh both sides of the equation. For every benefit there's a cost, and for every cost there's a benefit. When we focus on just one side, we'll make poor decisions. I guarantee you're doing it right now. Heck, I guarantee I'm doing it right now. 

As I've discussed at length on this blog and the podcast, cost isn't the metric we should dwell on. Rather, we should aim to understand the value we're getting for the cost. Some cheap things are expensive, and some expensive things are cheap. It's our job to assess it through our own unique lens, and make whatever decision is best for us. 

I texted my friend yesterday morning. He took the toll road.