One of the easiest personal finance tips out there is to simply stop wanting more stuff. It’s simple, but it’s true–if you had an easy way to basically eliminate your desire to acquire anything new aside from things to cover your barest needs, personal finance would become incredibly easy. Sadly, humans don’t work that way.
This post originally appeared on The Simple Dollar.
Our desires run amok for a lot of reasons. We want things for personal enjoyment. We want them because they’ll fill an emotional hole in our life. We want them to impress others or to keep up with the Joneses. We want to feel rewarded for the hard work we put into our lives.
All of those things–and many more–wind up being justifications for the non-necessities that we spend our money on.
I’m guilty of the same thing myself. I can name tons of things that I want, for various reasons. There are a couple of long-out-of-print board games that I’d love to have (if you happen to have a copy of 1862, let me know), for example. I’d love to have some more Baron Fig Vanguard dot grid notebooks–they’rewonderful for taking notes, but they’re more expensive than I can really justify. I’m going to want an electric car as soon as they’re really viable and approach anything close to cost-effective.
There are non-material things that I want, too. I want to get this mostly-finished novel that stares at me from my desktop screen completed, edited, and published. I want to actually launch a different project that I’ve been working on for most of a year. I want to be in better physical shape (I’m working on that). I want to be better read. I want my office to be better organized.
I could throw either money or time–or in some cases, both–at any of these things and transform that “want” into a reality.
But here’s the problem: everything has an opportunity cost.
When you spend money on something, you’re taking away every other thing you could have done with that money.
When you spend time on something, you’re taking away every other thing you could have done with that time.
The reality of life is that you can have some things, but you can’t have everything. Whenever you have something, that means you’re choosing not to have something else. I could have all of the material items I listed above, but I’d quickly wreck all of our plans for the future. I could take care of all of the projects I listed above, but I’d have to eat into time that I spend on other things, like spending time with my children.
The truth is this: I want to spend every dollar and every moment of my life on the most valuable thing that I can spend it on. I think that’s a goal that most of us share. (It’s also a call to frugality, but that’s neither here nor there.)
My solution to all of this is simple: whenever I want something, I try not to think about how much I want that thing and how great it is; instead, I think of what I’ll have to give up to have it.
Here’s specifically how I do that.
I think of how many hours I’ll have to work to buy this item, and what those hours might represent. I do this by first calculating my true hourly wage–the amount of money I have in my pocket per hour of my life devoted to work. Let’s say it’s $10 an hour for convenience sake…