When I look out in the driveway at my car, what I honestly see is nothing more than something that will reliably get me from point A to point B. To me, that’s the purpose of a car. When I buy a car, that’s what I’m looking for – the best deal on something that will get me reliably from point A to point B, ideally with the least use of gasoline to save on fuel costs.
When others look out onto their driveways, they see other things. I should know, because I once did, too. Perhaps they see an environment that they spend a lot of time in while they’re commuting, so they want it to be “nice.” Perhaps they see something that they view as a statement about the kind of person that they are. Perhaps they see a beautiful object that they covet. Or maybe they see something else entirely.
Whatever it is that you see when you look out in the driveway is going to shape what kind of car you end up purchasing. For me, I buy a late model used car from a reliable manufacturer, drive it and properly maintain it until problems begin to crop up, and then trade it in for a similar replacement. Others might buy cars from different manufacturers as a personal statement, or they might buy a car for purely aesthetic reasons.
The thing is, those different perspectives on why a person would own a car lead to different expenses. Someone who buys a car from a less reliable manufacturer is going to, over time, spend more on repairs. Someone who buys a brand new car and cycles it out frequently is going to lose lots of money to depreciation. Someone who insists on a luxury driving experience is going to pay a premium price.
So what’s important here? It’s not just about cars, for one.
The key thing to notice is that when you let other values beyond maximum functionality for the dollar lead your buying choices, you’re going to spend more for that functionality than others do.
For example, my cousin, who I love dearly, is almost always driving a new-ish Lexus. She wants a fairly luxurious experience when she drives along with the fairly high reliability that a Lexus brings. I don’t even want to guess what she spends on automobiles per year, but I know it’s a lot more than what I do.
The problem comes in when you allow those other values beyond functional “bang for the buck” to steer a lot of your spending. Do you insist on the premium version of different household products when you buy them? Do you always have to have the latest smartphone, both for the cachet and for the technical features? Do you always have to be dressed in expensive clothing?
If you bring those additional values and desires to the table in more and more of your spending choices, it becomes harder and harder and harder to make ends meet. It becomes harder to save for retirement. It becomes harder to have money left over at the end of the month. It becomes harder to have the financial freedom to take a career risk or to go back to school.
In short, when you use other values beyond functional bang for the buck when making purchases, you’re taking away from other aspects of your life. Your desire to have a luxury car experience instead of a purely functional and reliable car, for example, takes money directly away from your retirement savings, for instance.
It might seem like I’m making a call for everyone to adopt a purely functional “bang for the buck” attitude in regards to every dollar that they spend, but that’s actually not the case at all.
The problem isn’t with buying some things for other reasons. The problem is with buying lots of things for reasons beyond functional “bang for the buck” reasons.
Here’s why.
In everyone’s life, there are simply some things we care about more than others. We only have so much “emotional bandwidth” for things that we truly care about.
Beyond that, there’s a set of things that we really don’t worry about much at all in life. Those are the things that we have no problem buying in generic form if it turns out that we actually need it for something, but for the most part, we don’t really care about at all.
In the middle, though, there’s a tricky place. It’s full of things that we think we’re supposed to care about, but really don’t.
Maybe it’s something that we trick ourselves into caring about as a proxy for really caring about something else, like how a guy will try to get into particular things in order to impress a girl, or perhaps a cause that on some level we feel should be important to us but really isn’t.
Maybe it’s simply marketing, where a well-placed ad convinces us that we need something in order to live out a life that we really want.
Maybe it’s the influence of our friends who hype us up about something that we otherwise wouldn’t care about.
Maybe it’s something as simple as the familiarity of a name brand, that slight sense of identification we might get from buying something with a familiar label on it.
Those things feel like they matter… but they really don’t matter. The truth is that there are really only a few things that truly matter to us in life. Everything else is just window dressing and insignificant details.
My financial philosophy is simple. Figure out what things truly matter to you in life and don’t skimp on them, but go quite cheap on everything else.
To jump back to that car analogy, a car is just not something that truly matters to me. It’s something I need to get from point A to point B, thus I buy the most cost-efficient version of a car that I can find.
For others, their car might be something that truly matters to them, in which case it actually can make sense in their lives to buy a different car.
The trick is to figure out what handful of things actually matter to you and distinguish them clearly from the huge number of things in life that really do not.
For me, things that matter include my family and my closest friends and my community. They include being intellectually challenged (particularly in certain areas that fascinate me) and being able to get in a “flow” zone where I’m working on things and solving problems in such a pure state that I lose track of time. They include having interesting books to read and board games to play. They include having access to parks and recreational areas. I value having access to the news and information about the world around me.
Once you get past those things, everything else is far less important. When I’m being truly honest with myself, almost everything else I could care deeply about recedes far into the background by comparison.
So why spend money on those other things?
There’s no reason for me to have anything more than a functional car. There’s really no reason for me to have anything more than a functional home, aside from perhaps a bit of extra space because I value my family. There’s no reason for me to buy most name brand products at the store, so I buy almost everything store brand. There’s no reason for me to have fancy clothes, though having decent shoes is pretty important when I’m exploring.
Those are simply things that, when I’m honest with myself, aren’t really priorities at all in my life. So I choose not to spend money on them.
So, let’s turn that question on you. What is it that you really care about?
What things make you feel genuinely good during the day? What things do you look forward to most when you’re thinking about the days and weeks and months ahead? What causes you to jump out of bed in the morning? What occupies your thoughts, even when you’re far away from the things in question?
Those are the things that are most important to you, and if you think about those things a little bit, I’m willing to bet that the vast, vast majority of your time and energy and thoughts are devoted to a pretty small handful of things in your life.
Honestly, the rest doesn’t matter too much. Spend your money and time and energy only on the minimal function necessary for those unimportant things, and instead devote your time and energy and, yes, adequate money to those few things that you really truly do care about.
Suddenly, you’ll have plenty of money for the things you care about. You’ll also have plenty of money to take care of the foundational things, like saving for retirement and getting rid of debt.
It’s all about figuring out what matters to you and dialing back on everything else.
The post What We Really Value – and What We Don’t appeared first on The Simple Dollar.
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