The Daily Meaning
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Value and Context, Context and Value
Whenever we spend money, we shouldn't ask ourselves if we can afford it. We shouldn't ask ourselves if the price is low or high. We shouldn't ask ourselves if it's a need or a want. Those are fine questions to ask. The primary question we need to ask ourselves is how much value we are getting for the cost. If we're getting more value than the cost, it's probably worth the investment. If we're getting less value, probably not.
I'm particularly fond of one specific budgeting app. Well, let me clarify. They have two versions: one free and one paid. I'm fond of the paid version and severely dislike the free version. The paid version costs $80/year.
Whenever I meet with a new client interested in using an app or software for their budgeting, I highly recommend the paid version. Considering they are already paying me to coach them, the last thing they want to do is spend another $80/year on an app. I totally get it! However, I always add, "it will be the best $80 you ever spend."
It's not that I'm trying to get my client to spend money. Rather, I know how much value there is for their $80 investment. Going the premium version route will easily save them 18 hours per year (1.5 hours per month). More importantly, however, going the free route will likely end up with them giving up and quitting......which is a far worse outcome.
This brings me to the idea of value. If this $80 investment will save 18 hours per year, that works out to $4.44/hour. Is your time worth less than $5/hour? I didn't think so! Further, if this $80 investment could possibly be the make or break between you thriving financially and quitting in disgust, is it worth the investment? Ab-so-freaking-lutely! Put that way, it truly may be the best $80 you ever spend.
Whenever we spend money, we shouldn't ask ourselves if we can afford it. We shouldn't ask ourselves if the price is low or high. We shouldn't ask ourselves if it's a need or a want. Those are fine questions to ask. The primary question we need to ask ourselves is how much value we are getting for the cost. If we're getting more value than the cost, it's probably worth the investment. If we're getting less value, probably not.
But value is in the eyes of the beholder. We all perceive value differently, and value can also be contextual. Here's an example. You walk into a convenience store and see an array of bottled water products on the shelf. Some cost $.99, but another costs $5. The perceived value of that $5 water probably doesn't feel so great.
Later that day, you're watching your favorite baseball team at the ballpark. The sun is shining, it's 90 degrees out, and you're parched. That same $5 bottle of water suddenly becomes the best $5 you'll spend all day. The value changes when the context changes.
Back to the budgeting example. If someone is casually interested in budgeting but isn't really committed to making changes in their life, that $80 investment is like throwing money in the trash. On the other hand, if they are focused, determined, and ready to kick butt, that $80 investment may be the gateway to life change.
Context matters. Seek value.
It Depends On How You Look at It
A few years ago, I was having a casual conversation with a fellow husband/father. We were talking about marriage and parenting, when we went down an interesting rabbit trail. He commented on how he and his wife hadn't been on an actual date in more than five years. Five years!?!? In short, he said they couldn't justify spending money on a babysitter. Between the babysitter, drinks, and dinner, a date night "is just too expensive to justify." So they don’t.
A few years ago, I was having a casual conversation with a fellow husband/father. We were talking about marriage and parenting, when we went down an interesting rabbit trail. He commented on how he and his wife hadn't been on an actual date in more than five years. Five years!?!? In short, he said they couldn't justify spending money on a babysitter. Between the babysitter, drinks, and dinner, a date night "is just too expensive to justify." So they don’t.
He quickly turned the tables on me by asking about our babysitter rhythm. I told him we spend about $200-$300/month on babysitting, which usually includes a few date nights. He looked at me as though I just went to the casino and threw my life savings on red. How irresponsible of me!!! He busted my chops a bit and couldn't believe someone "financially responsible" would throw away money like that.
He looked at babysitters as a needless cash drain. My perspective was a bit (ok, a lot) different. When we hire a babysitter, we aren't paying a young adult money to watch our kids. We are investing in our marriage. We are providing ourselves the opportunity to spend time together, one-on-one or with friends, and create memories aside from our children. It also allows us to recharge and get on the same page to be better spouses and parents. In other words, that babysitting money has an incredible return on investment!
Much of personal finance is a variation of this concept. It depends on how you look at it. Me walking into a Starbucks to order myself a burnt coffee = wasteful spending. Me meeting a youth group kid at Starbucks, their favorite coffee shop = an investment into my relationship with them. Me spending $60 on a monthly massage that I don't need = throwing away money. Me spending $60 on a monthly massage that helps recharge and eliminate aches = priceless. Me hiring an assistant isn’t cheap, and it takes money out of my pocket. Me hiring an assistant allows me more time and mental/emotional capacity to serve people better and unlock greater potential in our business.
Money is NEVER about money.....it's always about something bigger. If we can move past the dollars and cents and understand the real reason we do the things we do, we make better choices. It all depends on how you look at it.