Value, not cost (Part 1)
In my post about cheap vs. frugal people a few days ago, I mentioned value vs. cost. I want to dig into this a little bit more.
Remember when I went to the grocery store and was outraged at how much it cost to buy the basics for new apartment? That sucked.
Anyway, my reaction was based on the cost ($186.00!!!) instead of the value. The value of buying food at the grocery store becomes obvious when you compare it to eating out.
The easiest way to see this is to do a quick break-even analysis.
(Remember, I live in Palo Alto and the food around here is for old white rich people.)
(Try playing with the values of the spreadsheet–they’re editable. If you’re reading this in RSS, the spreadsheet won’t show up, so click through to see this actual page.)
A break-even analysis works for more than food. Try thinking of examples of your own where you want to see when the money you’ve spent (invested?) will pay off. Some ideas:
- Lifetime vs. monthly subscription for something like Tivo
- Premium gas vs. regular (calculate the mileage you get)
- How many products someone needs to buy vs. your marketing spend (shocking how few marketers actually do this)
The big takeaway for me is that, hey, $186.00 isn’t really that much for a first grocery run. That much food gave me MUCH more than 12 meals. So it was clearly worth it.
Next time you’re thinking about buying something, evaluate the value, not the cost!
Also, don’t live in Palo Alto if you like dirty cheap food.
If it were up to personal-finance “experts,” we’d never spend a penny on ourselves. We’d save 80% of ...Read More