Every dollar is worth the same

Spend less on the big stuff so there’s more for fun

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Episode Transcript

Speaker 1 (00:03):
Welcome to Before Breakfast, a production of I Heart Radio.
Good Morning, This is Laura. Welcome to the Before Breakfast podcast.
Today's tip is to remember that every dollar, or whatever
unit of currency your country uses, is worth the same.
Sometimes it's easy to ignore small amounts in large transactions,

(00:27):
but use strategically small amounts of money can make a
big difference. If you ever study how humans behave around money,
you will learn that we are not entirely rational. We
tend to view things in terms of proportion rather than
absolute numbers. So, for instance, if you are buying a
computer and the first store you visit has it for

(00:50):
nine dollars, and you learn that a nearby second store
has it for nine hundred seventy five dollars, you're highly
likely to view that as no big deal and just
purchase it where you are. But if you were shopping
for pencils and visited a store that charged twenty seven
dollars for a set of pencils that were three dollars
somewhere else, you would probably be furious. You'd talk about

(01:14):
highway robbery, and you'd be running over to the cheaper
store as fast as you could. And this is true
even though that two difference is worth exactly the same
no matter what you're buying. We often shunt money into
categories in our brains, but every dollar is worth the
same no matter where it is. That's important because moving

(01:39):
money into certain categories can make a huge difference in
life satisfaction. An extra fifty dollars a month as part
of your rent or mortgage payment may not seem like
a whole lot, but adding that extra fifty dollars to
your fun budget each month means that you could go
get a pedicure two more times, or go out to
eat two more times, or hire a sitter for another

(02:01):
three hours or so. All of these repeated bits of
entertainment might boost life satisfaction a lot more over time
than whatever you're getting for the extra fifty dollars spent
on your housing. One reason mortgage fees are what they
are is that banks assume people are spending so much
money on their home purchase that they won't fight about

(02:23):
a little bit of extra money in the process. But
a five dollar fee that gets tacked on at the
end of a negotiation could have paid for a long
weekend trip that is a real source of pleasure. Paying
a bank more than you need to, not so much,
it might be worth fighting back. In general, I find

(02:45):
it's better not to automatically adopt the normal proportions of
income for spending in various categories. By making slightly unorthodox
choices in terms of proportions, you could do things that
might seem indulgent. For instance, spending your income on housing
instead of would allow for a lot of childcare or

(03:07):
travel or dinners out or entertainment. In my book All
the Money in the World, I look at weddings spending
in particular. Something like floral arrangements are fun, and they
are indeed pretty, but spending thousands of dollars on flowers
for one day might do less for marital happiness then
spending that same quantity of money on date nights or

(03:30):
outsourcing during the busy years of young kids. Spending a
lot on wedding flowers is considered normal, but not doing
it opens up a lot of future possibilities. In any case,
as you think about how you spend your money, it
might help to consider if moving some cash out of
the big categories could open up a lot of flexibility

(03:53):
in the smaller ones. Every dollar is worth the same
just because some dget proportions are normal doesn't mean they're
right for you. Ask what else that money can buy
and see if doing that might make you happier. In
the meantime, this is Laura. Thanks for listening, and here's

(04:16):
to making the most of our time. Hey, everybody, I'd
love to hear from you. You can send me your tips,
your questions, or anything else. Just connect with me on Twitter,
Facebook and Instagram at Before Breakfast pod that's B the

(04:37):
number four, then breakfast p o D. You can also
shoot me an email at Before Breakfast podcast at i
heeart media dot com that Before Breakfast is spelled out
with all the letters. Thanks so much, I look forward
to staying in touch. Before Breakfast is a production of

(04:59):
I heart Radio. For more podcasts from I heart Radio,
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