One Concept of Money You Must Have!
Focus on the pennies!!
Wealth is not something I grew up with, rather I grew up in a middle class family where I wasn’t poor but definitely not rich either. My dad has always taught me to be thrifty. His favourite chant is:
“Never spend on what you can do it yourself”
Naturally, I developed a thrifty character too. I used to walk two bus stops just so that I could pay a lower fare. I used to DIY school folders from used cardboards. This thrifty mindset has made me creative and resourceful which I’m forever grateful! (Thanks Dad!)
However, as I become more financially savvy, I come to realise that my dad was a little off the mark.
As a family, we were always saving on all the smaller ticket items in life such as daily meals, transport and groceries. Personally, I love the green tea latte from Starbucks but I controlled myself everyday as I walked past it to work. Resisting the temptation until I could not longer see the “green mermaid”.
Yet, my family would go on holidays that cost us thousands of dollars and buy a car that is worth more than a year’s wages.
Ahh so good
Just stop for a moment and think about it.
If we were to buy more affordable car and pay $20,000 less, how many more Starbucks could I have drunk?
If a cuppa were to cost $6, I could have a Starbucks daily for almost 9 years and still enjoy the convenience of a car!!
Now this is a simple concept of money but a very powerful one that has changed my life totally.
The next time when you are going to buy something, ask yourself:
“Do I have to think about how to afford it?”
If you pause even a little before making that purchase, it is probably not affordable for you. Now you may have realised that I didn’t set a clear mark like “less than 2% of your pay” or “more than $200”. That’s because this mental exercise is useful throughout different level of wealth.
If you are a middle income person, you will probably pause and think for a long while before buying a Rolex watch. You might compare prices with other places and even consider alternative watches of a lower price point before taking out your wallet.
However, if you are a multi-billionaire. You probably would not have thought about the affordability of it at all!
Bringing it to another extreme, have you ever pause a little before buying a single packet of tissue? Most likely, not.
That’s because the price of the tissue is so inconsequential to your wealth and has little impact on your financial well being. In the same breath, the Rolex watch would have been like a packet of tissue to the multi-billionaire.
Therefore, you should spend more effort in trying to save on the big ticket items in your life such as a home renovation, car, holiday and wedding. There are tonnes of ways to save on such items on the Internet. Saving on a big ticket item will allow you to enhance the smaller details in life such as an affordable gym membership to keep fit and premium groceries to eat healthily.
While I’m not saying that you should drink Starbucks daily, the smaller things in life does make your life better. So please enjoy them!
See you soon!
Investing Always,
Pete
