The true cost of Consumption!
In an effort to reach [financial independence] – you must strive not to be wasteful with money or indulge significantly in depreciating assets.
What I will highlight here is how I think about many purchases – and the TRUE cost of consumption – whether it be adding on to what I have (think cool new camera gear), or replacing (new car!). Consumption is in daily lives and all around us – and a significant block when it comes to achieving and most importantly keeping [financial independence].
So what IS the actual cost of overconsuming and adding [more] to your life?
1. [Bandwidth] – you must dedicate energy somewhere from your life to research / buy / interact with the item you buy. When you are buying a weekend toy (insert any new bike/automobile) – you are including with the purchase [bandwidth] allocated in now thinking about this purchase and finding space in your life to interact (use) it
2. Cash! Yes – one of the most important is the outlay cost for the item. Are you using the cash you have (that instead can be [invested]), are you taking out a loan [indoctrinating yourself to future earnings, that keeps you working], or trading it with something else that you have? Cash outlay is important and thinking about every dollar spent in terms of the [ best use of each dollar spent ].
3. [Time]! Yes also one of the more significant items on this list, the cost of anything directly translates to time. Time spent researching. Time spent buying. Time spent using. So the financial outlay is not the end of where the material transaction occurs, It is often only the beginning. Many miscalculations occur where somebody is looking for the ‘event’ of making a purchase (how cool will I seem for owning a Harley), instead of viewing how much goes into the actual ‘process’ of using that item to acquire said coolness. Modern advertising does a great job in having you view each material transaction as you buying a ‘process’, when in turn you are buying an ‘event’, and you must turn it into a [process] – which both takes additional TIME and MONEY to make that happen.
4. Space! Yes with each purchase large and small, space allocation is a consideration. You might have enough storage space for your item now. Soon your 1-2-3 bedroom house/apartment will be overcrowded with said possessions – forcing you to move up your storage and with that in turn dragging more expenses, time and bandwidth. Some items can be small (camera) . Some are much larger (Boat / Car). We all have limited amount of space to fill up that tends to overflow quick. Using that space wisely without over clutter is often a challenge for many.
5. Maintenance! Yes – every item large and small requires upkeep no matter how regular! Cars require oil changes and other maintenance and repairs, and watches require regular tune ups as well. Depending on the cost of the item – maintenance and upkeep can easily outpace even the outlay cost of the item! Maintenance also requires time. Personal time [that can be spent elsewhere ] or dollars that can be [invested].
6. Opportunity Cost! – Once the dollars are spent, you rid them of being used on any other purchase where you could of put those dollars at work. Yes – this goes partly with the ‘Cash’ outlay – but this is just another way to think about what this purchase is actually costing you.
7. Daydreaming! And this is a big one for me. I enjoy doing research, visualizing me using a possession and potentially geeking out with friends about it. Daydreaming is a favorite past time of mine, and sometimes ‘imagining’ what this possession might bring me or feel like is worlds better then actually owning it and watching it all play out which many times turns to [disappointment].
8. Keeping things simple! The more possessions you own – the further away you are getting away from having a simple, manageable life. Yes – you can acquire possessions and items, and then have a fleet of butlers and staff tending to all of your possessions. And many do just that! To me it adds (or takes away!) – from [time], [bandwidth], [financial freedom], [mental freedom].
I err on the conservative side of materialistic possessions – keeping things simple – thus keeping my life and possessions low maintenance in cost and time – to fulfill my [quality of life] objectives. Yes – I will admit that sometimes I overanalyze things to a very smallest detail (purchase of a basketball) – but overall I’m happy with my minimalism approach to materialism and thus keeping more of my dollars saved/invested to achieve my [financial freedom] and [mental freedom] objectives!
Also – I must add there is absolutely nothing wrong with striving, enjoying, purchasing and sharing possessions with yourself and those you love around you. I have done much of that throughout the years. Just be cognizant and aware that each thought and purchase translates into a much larger cost then what might initially meet the eye. The importance of the items on my list might all have significant weight and [value] to you depending on where you are in life – but if the moving gauge and [values] are striving for [financial independence] and [mental independence], this is a great place to start moving in the right direction of thinking.