We often say we can’t afford certain things when it’s totally possible, it just means giving up other spending preferences. Money blog Pretend to Be Boor reminds us to consider the opportunity cost of those preferences so we can prioritise our financial decisions.
Photo by Ken Teegardin.
/”I can’t afford” is a statement a lot of us toss around when we actually can afford things, we just want to buy other things.
For example, I once complained about the small size of my apartment, and a friend suggested I rent a bigger place. “I can’t afford that,” I said, and he replied, “Sure you can. You just have to stop going out so much.” Maybe it was a harsh thing to say, but it was true: I could very well afford a bigger place, but I had other preferences. I preferred to go out a lot. I preferred to splurge on groceries. My opportunity cost, the thing I gave up for those preferences, was a bigger apartment.
Pretend to Be Poor puts it like this:
It’s ok to have preferences, and it’s ok to spend money on some of those preferences. But when you have a reason why you can’t save money in ten different ways because you don’t like this or that, maybe it’s time to think about the big picture. Do you prefer to shop at the Big Store more than you want to get out of debt? Do you prefer to drive a new car more than you prefer to save for retirement and kids’ college?…Maybe the opportunity cost of your preferences is something as big as retiring 5-10 years sooner, pursuing your dream career, or being really generous. People tend to think these “little” expenses don’t make a difference on their overall financial situation. But money cut from “little” costs, if invested, will grow exponentially, and that’s a power we underestimate while our money is enslaved to our preferences.
It all goes back to prioritising your spending and using money as a tool to use on the things that are most important to you. For more insight, head to the full article at the link below.
Life is Not About Your Preferences [Pretend to Be Poor]
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