Handling Finances

I’m a big fan of expensive luxuries. I own an expensive digital camera (with expensive lenses), two computers, a keyboard, and a rather long list of other things I don’t really need. I use most of them extensively and I feel they’re worth the thousands of dollars I put into my hobbies.

Unfortunately, small habits can eat away at earnings and pull money away from the large purchases I strongly value. For example, spending just $5 a day at work for lunch is 3% of your salary at $20 an hour or 2% at $30 an hour. And that’s before taxes! Drinking coffee instead of water can eat up hundreds of dollars a year even if you brew your own — I promise you’ll wake up again once your body gets used to non-caffeinated life again. Drinking alcohol is even more expensive, and I won’t even get into more addictive habits like smoking!

Kick the habit?

If money were the only goal, we’d all be riding bicycles to work and eating Ramen for each meal. In truth, money isn’t important except as far as it enables you to accomplish the things you really value. Because of that, I’m not interested in condemning expensive habits, but it is important to be aware of them. When you are conscious of what your spending on morning coffee, you can choose whether or not the cost is worth the benefits. The one thing I would advise is to ignore withdrawal symptoms (unless you’re on hard drugs — then get professional help!) If you enjoy your morning coffee, by all means continue to pay for the caffeine jolt, but I can guarantee that years of spending money on coffee will heavily outweigh the month-long battle to stay awake as you wean yourself from the drug.

Once you’ve recognized the habits, you can also choose to simply cut costs rather than cutting the habits. If you think spending thousands of dollars a year on high-end, prepared coffee is too much, you can always learn to make it for a fraction of the cost at home. If it’s the caramel lattes you really enjoy, you can do that at home too, for the price of a little more time each morning.

Take control.

I don’t care if you do value your morning mocha enough to spend $10 a day on coffee — the key is that you need to be aware of the cost and make an active choice to spend on coffee. After all, I don’t know how much you make, how much you spend (or save) in other areas or what you value in your life. All I know is that if you allow habits to continue without carefully considering what they cost, you’ll lose money like water through a fire hose. Even worse, if you don’t know where your money is going, when it dribbles out through your habits, you won’t feel like you got your money’s worth when it’s gone at the end of each month — even if you’re spending on stuff you value highly!

This entry was posted on Thursday, April 17th, 2008 at 10:57 am and is filed under Spending. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.