Little things are different than big things… or are they?
How excited would you feel to save $30 on dinner for your family? That’s a pretty ridiculous discount, and a pretty ridiculously good deal.
How excited would you feel to save $30 on a new car? Or on a house?
People are geared to think about saving money in terms of percentage, not in terms of the actual amount. But the $30 you save on the car or the house is just as thirty as the $30 you save on dinner. It’s worth just as much: exactly thirty dollars. You can spend it on exactly the same amount of things, or save it for exactly the same raininess of day.
Earning is different than saving… or is it?
How much effort would you put into earning $500 by the sweat of your brow, or by the tapping of your fingertips?
How much effort would you put into saving $500 on a large purchase, like a new car or a house?
Most people wouldn’t even put in a tiny bit of effort. Either they’re intimidated by the large-thing-buying process, or it just doesn’t seem worth it, because it’s less than 1% of the total cost. But remember: that $500 you could save is just as five hundred as the $500 you worked those many hours to earn.
Wouldn’t it be worth putting in at least one hour to try to save that much?
Isn’t your time worth $500/hr?
The next time you make a big purchase, remember that every dollar you can save is just as dollar as a dollar you save on pretzels, and just as dollar as a dollar you earned from your own hard work.
The next time you buy something big, think about what you would charge for an hour of your time. If you think you could save that much or more by negotiating, shopping around, or looking for opportunities to save, do it. Money saved is just as money as money earned.
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I’ve actually heard it argued that saving money costs less than earning it all over again, since you have to take taxes into consideration when you’re earning money. In other words, to earn back that thirty bucks, you’d have to do, say, thirty-five dollars worth of work. (These numbers are not calculated according to current tax rates. I’m just throwing these out as an example.) Even setting aside taxes, there’s also the time and energy and whatever expenses that go into earning them there bucks. You may find that NOT spending is a lot less effort, especially if it’s something you don’t really need that badly in the first place.
(Incidentally, I’m not arguing that taxes are horrible evil impositions. I rather like civilization and I’m willing to pay my dues to maintain it. But the point is that the best way to have money handy for what you need is to stop blowing it on useless crap so you won’t need to hop on the hamster wheel to earn enough to maintain your luxe lifestyle.)
Pace, I used to think of this concept most when I was negotiating salary, or a raise.
Sure, it felt uncomfortable to ask for more money, but I’d think, I could have $1,000/year more that I wouldn’t otherwise have if I didn’t ask this question.
After 5 years, even if I never got another raise, I’d still have $5,000 more than if I hadn’t asked that uncomfortable question (leaving out the issue of taxes, of course).
It might seem like nickel-and-dime-ing in context of your overall salary, but $1,000 is a $1,000.
@Sheila: Good point! I love the freedom that comes with becoming unattached to expensive things, too. It’s easier to travel, or to change your lifestyle and do new things.
@Maryann: Right! If someone came up to you and offered you $5000 to be uncomfortable, would you take it?
When I read this, I was deeply chagrined…I owe my husband an apology. We recently refinanced our house, and he spent many hours shopping around for the best offers and talking on the phone to different lenders. One of them offered us a savings of $280 a month on our house payment, but my husband wasn’t satisfied and was positive he could get an even better offer. He was determined to make a savings of at least $300 each month. I was irritated that he wouldn’t just settle for “good enough” and told him just to take the bloody offer already as $280 was an enormous and in the greater scheme of things, $20 a month wasn’t a vast change. He finally negotiated a deal in which our house payment was reduced by $330 a month.
I did EXACTLY what you just described. I looked at the percentage of savings on the payment, and I didn’t even remotely consider that $20 IS $20. Dinner for our family at a modest restaurant. Cinema tickets. Petrol in the car.
Thank you for reminding me of the real value of money and for reminding me that my husband is a wonderfully clever man.
.-= Kit G´s last blog ..Faeries Circle – Ruby Quartz- Pearl- and Sterling Silver Anklet =-.
@Kit: Thank you! Your comment makes me ridiculously happy! (:
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