OMG! I'm Wasting Money!
Everyone wants money. That’s why when people spend their hard-earned cash, they regret it. This may seem like a contradiction; people make money to spend it, but regret spending it. That’s because we all want to wait, and find a better opportunity to spend our money – and then we get to it, and we don’t want to spend it. It’s a harsh cycle, my friend.
Cost Vs. Value
One of the most important lessons in the business world is evaluating the cost of the product, versus the value it may hold. People who have money strive for better; more money, with more security in their investment. Whenever you examine buying a product, examine this comparison. Ask yourself: How much is this worth to me? and How much am I willing to pay for it? Because, a product is ONLY worth how much a person’s willing to pay for it. Whenever I walk into any store, I ask myself this. Whenever I look at a product online, I do this. Whenever I come into a situation where it means spending money I do this. And I base my decision two factors:
- How long will this product last me? Always evaluate for the future. If it’s something that will last a relatively short time, it gets a “low score” for me. If it’s something like a chocolate bar, I tend not to buy it; I know that it will last a few minutes (it’s important to indulge yourself every now and again, but that’s a whole different story). This factor also poses me with two new deciding factors: is the product material, or is it intellectual? A material product has to do with something that is physically there, and an intellectual product has to do something that you can think about. I place a higher value on an intellectual product, because of it’s (almost) infinite length.
- How useful is it? Usefulness has to do with your willingness to use the product. Youth (including me) are buying “whim” items that are just that: “whim” items. Items that have little length and little use. Usefulness also brings up the point of whether or not the item can be substituted or will substitute another. Will it be effective in substituting another thing? Do I have another similar item? Is it unique? A mere replacement is ineffective. Having two items with overlapping niches is ineffective.
To make the best use of an item using factor #1, I would buy, for example, a subscription to a magazine (not tabloids, bleh) or newspaper, or a language-learning program. Bringing up the point of cost, these have relatively low prices. And bringing up the point of value, these have relatively high worth. I like to think of it sometimes as a formula: Value / Cost = Ratio. If it’s a high ratio, it’s worth it. If it’s not high, it’s not.
In point #2, what I would buy depends on what I already have, right? It may be a stretch of a comparison, but a 40-year-old mid-life crisis, which involves buying a Harley Davidson, a leather jacket and some chaps (true story – but he didn’t buy the chaps, we did), is a whim purchase. Unless I really needed a Harley (who doesn’t?), I don’t think it would be useful.
Anyways, to conclude, everyone wants what’s best for their money. A specific example today where it’s VERY cost ineffective is home remodeling… so many people are losing the value of their house (reminds me of the show “TV Made Me Do It”, where a woman ended up totally ruining her home). Make sure that it’s a) a good use of time, and b) unique and useful.
Cheers!
Logan
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June 25th, 2009
I’m absolutely terrible with this. I’m always buying things without considering the value of them. You would think that kind of knowledge would be common sense…I’m less responsible online when buying products than offline, though. What would you suggest for managing your money online, when things are much, much easier to buy and good deals seem to be offered at every turn?
Your blog has some great content and is really shaping up. I would suggest using h3 title tags, and making questions bold as opposed to italic. Stands out more.
June 25th, 2009
I understand the online dilemma. It seems as though the computer can give you a mask of confidence, but pretty soon, all your purchases line up. There are a couple pieces of advice I can give you:
a) WAIT – This may be hard, but if you think about something over a couple days, you are able to examine the value. Don’t worry, the deal will be there; if it’s not, there’s always a better deal. It’s a better lesson if the deal is not there; if you can wait for it long enough, it’s worth it.
b) Budget – Maybe writing things down, with each cost related to them, will give you a more visual sense of it. Then sequentially list them in most to least value to you (don’t confuse this with how much you want them). Then, create a budget for yourself over a specific time; then buy the things you need most. At the top of the sheet, be sure to write a little note explaining to be careful with your purchases, because it’ll remind you of the purpose of the sheet
Hope That Helps!
Logan
June 27th, 2009
Those are really useful tips! Recently I’ve been trying to find/make free solutions to major problems instead of looking for paid solutions. I’m really trying to budgetize (don’t spend anything on web services + don’t buy so many books) so we’ll see how that goes.
June 25th, 2009
Great a good post for a good start. Great to another teenager who is going to be successful. All the best Logan :>
June 25th, 2009
Thanks Harish!
I’ve been looking at your blog too (even before my blog started), and it’s nice to have a community of teen bloggers! “Great to another teenager who is going to be successful”… Thanks! Those words are very encouraging.
June 27th, 2009
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June 27th, 2009
I am quite poor at judging the value vs cost effectiveness of any product, be it online or offline. More expensive is better, that is what I always conclude! But after reading this post, it got me thinking whether those hard earned cash is really being invested properly? In my case, I guess not!
June 27th, 2009
It really is a major problem today – horrible spending habits. I’m glad that this post provoked some interest. I’ll probably expand on this topic, as It has got a lot of inquiry.
November 18th, 2009
[...] Here are some of mine: Cost vs. Value Investments [...]