Dearest readers, summer seems to be quite a spending season right after winter with all the holidays and what not. True, not as much is spent on gifts, but tons of money is certainly being spent on experiences. Long weekend getaways, trips with the kids and paying for their summer activities, all those patio beers and wings...the list goes on. Oh, and as most of us are painfully aware of, this list stands opposite from the list of the big ticket items we want- cars, homes and so on. Getting things from both of these lists sure feels amazing. Nevertheless, the number of people I know who live in our fair city keep getting older, some advance their careers and businesses, yet the lists of expenses that are supposed to bring them happiness actually own them and run their lives. I started to wonder why that is, as I am fortunate enough to plan things well enough that this doesn't happen to me. Then, I started thinking about what the difference is between me and them. After a while, I narrowed it down and want to share this so you can use it as a refresher or new words of wisdom: I plan my life based around the true cost of things. Let's examine what that means and why it's one of the best things you can do for yourself.
The first thing to do is to always remember that the cost of something (plus sales tax) can often come with ongoing upkeep/maintenance/support expenses (either money or your time and effort or both). A smartphone (still) needs a case and a screen protector. A car needs two sets of tires, oil changes, wheel balancing, cleaning and so on. A new DSLR needs a speedy SD card, an extra lens and a nice flash to go with it or else what's the point (roughly speaking). Same goes with services. A restaurant requires travel to and from, food delivery has a fee and a tip, a back problem may require 10 chiropractor sessions but then one session per month for maintenance etc. Yes, I am talking about hidden costs and most of us know this term- or do we? The worrisome thing is that most people I know from different walks of life and different levels of financial literacy all fail to account for these hidden costs when budgeting on a weekly, monthly and annual basis (if at all). It creates a false sense of financial well-being, an inaccurate sense of what's affordable, and it pushes people to live outside of their means and run up unnecessary debt. A lot of these same people dream about owning a Lamborghini; little do they know that a Murcielago will run you about$2000 for an oil change, $4000 for plugs and the best part $12000 for an E-Gear Clutch. It is only when you start looking at things this way that you realize where you really stand financially and what it really takes to not just acquire but also maintain your dream lifestyle and still have enough money to eventually retire.
The second thing to do is to identify and control your addictions to shortcut and convenience services. The service industry is the pinnacle of a First World society- all of us know that (or ought to know that). However, I believe one of the reasons for that is our tendency to get addicted to being serviced, to having others make things more convenient for us, and to outsource as much work as possible- all for feeling more "upper class" and "royal", and all for a price. I have seen over the last while some mind-boggling things in this department. Uber eats delivering McDonald's and people actually going for it! PC Express grocery pickup at GO stations! People with one bedroom condos and mountains of consumer debt still hiring cleaners for such a small space! Oh, and don't even get me started on meal kits and Skip the Dishes' war on home cooked meals! To me (and I'm not the only one), this is insanity. The rise of such unnecessary convenience services would never happen if enough people were aware of what addiction to increasing levels of convenience is doing to their budgets. One would do well to remember that convenience costs, and the costs add up. And yes, you could make the case that all these services save us time, and time is so much more important. After all, you don't want to spend your precious moments doing menial things that you can outsource to someone else. Well, that's an entirely erroneous approach. If you're paying money for services to free you up and then use that time to party more or just sit in front of TV or play video games, thus failing to use that time to enrich your existence, you're making a horrible miscalculation. Also, most people I know cannot afford to have convenience in every aspect of their life. For example, you could pick meal prep kits but cut back on takeout and dining out, or do more delivery but then clean your own place etc. Being careful, sensible and value-sensitive in this respect literally pays off.
Third, I try to be aware that a lack of honesty with myself as to what I want carries significant hidden costs, and that this is something I can control. For example, I know people who want to start a low-carb diet and typically go through this. They throw out every food item that doesn't fit the diet, be it in the fridge or the cupboards. Then, they go and buy all the right foods for the diet, and often pick organic and free range options. These, by the way, are expensive food items not just because they are organic and free range, but also because they are more nutritionally rich and have a greater caloric density than many high carb foods. Sounds good so far, right? Well, not so much- because they haven't been honest with themselves. They're not ready for the diet, they don't really want to start losing weight, so they're completely mentally unprepared and completely dishonest with themselves. The real cost of this dishonesty includes throwing out good food just because it was high-carb, buying low carb groceries and letting most of them go to waste in the fridge, and then spending the whole week eating out or ordering in unhealthy food because you don't want your diet-geared groceries and you're frustrated over the whole outcome and wasted money so Chinese food, shawarma and so on help not only feed you, but soothe you as well (a 1,500 calorie pacifier). Repeat this enough times and you end up diverting thousands of dollars away from the things you dream about and goals you have in life.
Making these realizations and trying to apply them well enough in my life has been a gift that keeps on giving. It is also something I plan not to stray from any time soon, if ever. If you are already doing the same, I hope these words encourage you to keep doing the right thing. If you haven't done these things yet but are motivated to try, I wholeheartedly recommend that you do. :)
The first thing to do is to always remember that the cost of something (plus sales tax) can often come with ongoing upkeep/maintenance/support expenses (either money or your time and effort or both). A smartphone (still) needs a case and a screen protector. A car needs two sets of tires, oil changes, wheel balancing, cleaning and so on. A new DSLR needs a speedy SD card, an extra lens and a nice flash to go with it or else what's the point (roughly speaking). Same goes with services. A restaurant requires travel to and from, food delivery has a fee and a tip, a back problem may require 10 chiropractor sessions but then one session per month for maintenance etc. Yes, I am talking about hidden costs and most of us know this term- or do we? The worrisome thing is that most people I know from different walks of life and different levels of financial literacy all fail to account for these hidden costs when budgeting on a weekly, monthly and annual basis (if at all). It creates a false sense of financial well-being, an inaccurate sense of what's affordable, and it pushes people to live outside of their means and run up unnecessary debt. A lot of these same people dream about owning a Lamborghini; little do they know that a Murcielago will run you about$2000 for an oil change, $4000 for plugs and the best part $12000 for an E-Gear Clutch. It is only when you start looking at things this way that you realize where you really stand financially and what it really takes to not just acquire but also maintain your dream lifestyle and still have enough money to eventually retire.
The second thing to do is to identify and control your addictions to shortcut and convenience services. The service industry is the pinnacle of a First World society- all of us know that (or ought to know that). However, I believe one of the reasons for that is our tendency to get addicted to being serviced, to having others make things more convenient for us, and to outsource as much work as possible- all for feeling more "upper class" and "royal", and all for a price. I have seen over the last while some mind-boggling things in this department. Uber eats delivering McDonald's and people actually going for it! PC Express grocery pickup at GO stations! People with one bedroom condos and mountains of consumer debt still hiring cleaners for such a small space! Oh, and don't even get me started on meal kits and Skip the Dishes' war on home cooked meals! To me (and I'm not the only one), this is insanity. The rise of such unnecessary convenience services would never happen if enough people were aware of what addiction to increasing levels of convenience is doing to their budgets. One would do well to remember that convenience costs, and the costs add up. And yes, you could make the case that all these services save us time, and time is so much more important. After all, you don't want to spend your precious moments doing menial things that you can outsource to someone else. Well, that's an entirely erroneous approach. If you're paying money for services to free you up and then use that time to party more or just sit in front of TV or play video games, thus failing to use that time to enrich your existence, you're making a horrible miscalculation. Also, most people I know cannot afford to have convenience in every aspect of their life. For example, you could pick meal prep kits but cut back on takeout and dining out, or do more delivery but then clean your own place etc. Being careful, sensible and value-sensitive in this respect literally pays off.
Third, I try to be aware that a lack of honesty with myself as to what I want carries significant hidden costs, and that this is something I can control. For example, I know people who want to start a low-carb diet and typically go through this. They throw out every food item that doesn't fit the diet, be it in the fridge or the cupboards. Then, they go and buy all the right foods for the diet, and often pick organic and free range options. These, by the way, are expensive food items not just because they are organic and free range, but also because they are more nutritionally rich and have a greater caloric density than many high carb foods. Sounds good so far, right? Well, not so much- because they haven't been honest with themselves. They're not ready for the diet, they don't really want to start losing weight, so they're completely mentally unprepared and completely dishonest with themselves. The real cost of this dishonesty includes throwing out good food just because it was high-carb, buying low carb groceries and letting most of them go to waste in the fridge, and then spending the whole week eating out or ordering in unhealthy food because you don't want your diet-geared groceries and you're frustrated over the whole outcome and wasted money so Chinese food, shawarma and so on help not only feed you, but soothe you as well (a 1,500 calorie pacifier). Repeat this enough times and you end up diverting thousands of dollars away from the things you dream about and goals you have in life.
Making these realizations and trying to apply them well enough in my life has been a gift that keeps on giving. It is also something I plan not to stray from any time soon, if ever. If you are already doing the same, I hope these words encourage you to keep doing the right thing. If you haven't done these things yet but are motivated to try, I wholeheartedly recommend that you do. :)