Money Well Spent Part I

There's an oft cited example of personal finance that revolves around the issue of a $4 latte. The typical theory is that if one was to stop buying a daily latte, and instead invest the money, they would be rich. The math and the logic behind that argument is generally hard to refute, but as it is so often with life, the "right" choice is not always the best choice.

While I am in pursuit of financial freedom, I am attempting to rearrange how I think and view money. I have already begun to prioritize, address my ignorance and my fears, and determine for myself what kind of money I want. Along that path I have begun to realize one of the purposes that money serves. For me, money opens up the possibility of experiences.

This issue arose just yesterday as some friends and I went on a cafe crawl across Vancouver. We started at my apartment, where I made breakfast for six people. From there, we went to six different cafes around Vancouver and the North Shore, tasting espresso, taking pictures, and driving around in the drizzling rain. This type of experience is not a cheap one, but I feel as though it is worth the money. Breakfast for six people is not the most efficient way of saving money for a wedding, but it was worth it. It created an experience that I will likely remember and cherish for years to come.

Money in and of itself is worthless. It's only value is the value that we place on it, in exchange for other things. We give up our time and energy for money. We give up our money for food, a place to sleep, and sometimes, for good experiences. Sometimes an experience is worth the money. Sometimes, a latte is worth four dollars. So sure, if I choose to not buy a $4 latte, I'm four dollars closer to financial freedom, or retirement, or getting out of debt. But when I get there, will I be rich?

A Priority Shakedown

I often have the chance to go into schools while I'm reading meters. A couple weeks ago I was in a high school where Caucasian was the clear minority. On Tuesday I upset some preschool kids as they had to move their desks so I could access a closet. Today I was in an elementary school, and while I was waiting for the engineer to let me into their electrical room, I read some of the work the students had posted on the hallway walls.

With St. Patrick's day coming up, the kids had all drawn four leaf clovers on a big sheet of paper. In the middle, they were clearly instructed to fill in the sentence, "I'm lucky because..." I read about a dozen of these one sentence insights into the human soul, and it was easy to recognize a clear pattern as there were only two responses. I am lucky because I am in relationship with a person, or I am lucky because I have this cool toy. Now, they weren't exactly in those words. They were more like, "I am lucky because I have a PS3/Nintendo DS/lots of Wii games", or "I am lucky because Nicky is my friend/I have a cool teacher/I have a nice family". Of those dozen responses, only one was different. They were lucky because they had a sweet teddy bear.

It shocked me, because at such an early age kids are already prioritizing what is most important to them. When they think of their life, and what makes them lucky, it is either a person or a thing. It makes me wonder what I prioritize in my life, whether that's my PlayStation 3, my fiance, or my teddy bear. What makes me lucky? Sure, I am lucky to have a video game console, a nice TV, and a bottle of scotch. But even if I didn't have those things, I would still be lucky because I have a number of good friends, and my girlfriend said yes when I asked her to marry me.

So if people and relationships are my priority (and I think that it should be), then how does my money reflect that? As I mentioned in my last post, I think we would agree that it would be great if our lives were a little less complicated, and a little less stressful. So how do I go about making my financial life work for me, towards my priorities? If my priority is a financially stress free life, with a focus on my relationships, how do I make my money work for me? How does my spending reflect my priorities?

I want to be clear though. The purchase and acquisition of things is not wrong, it is not bad, it is not sinful. Buying a television or a new pair of really nice jeans is something that should be enjoyed, and treasured, and cherished. For me, however, that joy should not supplant relationships, and it should not put me in a financially precarious situation. Each of us is going to have to figure out that balance in our own lives.

So what about you? What are your priorities? How does your lifestyle and spending habits reflect that? Want something to change? What makes you feel lucky?

Have you opened an online savings account yet? Don't think you need one? On Monday I'll show you how I put $30 in my account for just a few minutes of work.

What's Your Time Worth?

Lately I've been trying to put a price on my time. It's not that I'm charging my fiance a couple bucks an hour to spend time with me, or that I'm racking up huge debt with my television, it's that I've been attempting to wire my brain to think differently about time and money. There's the classic saying that "time is money". Well, great. But how much time, and for how much money?

Most of us are familiar with an hourly wage. We go to work for a certain number of hours, and get paid a certain dollar amount for each of those hours that we work. The price that we are paid is dependent on the job that we are required to do. For example, a highly skilled specialist would be paid a greater salary than a common labour position that did not require previous experience. In addition, a job that requires more effort would result in a higher wage than a career that simply necessitated showing up. But what happens at the end of the day, when we clock our final hours and return home? How much is that time outside of your employment worth to you?

I ask because I find myself having very conflicting ideas about time and money. On one hand, when I was unemployed and looking at minimum wage jobs, I scoffed at the amount of money that I would earn. I think of my time as being worth more than 8 dollars an hour. On the other hand, something within me is constantly striving for the best deal possible. That means that I feel the need to call six different locations looking for the best price on a DVD. All in all, I might save about $1.50. That work might have taken me about an hour. Yet for some reason that seems more "worth it" to me. Over the past few months as I've read different personal finance blogs, I've noticed some strange frugality tips out there for saving money. I could save money by learning how to brew my own beer, make my own laundry detergent, or wash and reuse my ziploc bags. Yet honestly, I just don't think that is worth my time. I would rather spend two dollars on new ziploc bags than go through the hassle of cleaning them.

I believe that there are two major dynamics going on here. The first is the availability of these finite resources. If a person has a lot of time on their hands, but little money, they may be more willing to spend time saving and earning what money they can. If a person has a lot of money, but little time, they don't mind paying more money, or paying other people to do the things they don't want to do. Neither of these are right or wrong, they are simply the facts of life. Each of us must decide what we have, and we would like to have, and reconcile the two.

The second major dynamic, and the point of this post, is the attitude that we have towards our money and our time. Again, there are many possibilities here. Some see time as a limited and precious resource; something to be treasured without regard for other materialistic annoyances. Therefore, they are more than willing to give up financial security or safety, as long as it doesn't continue to waste their time. Others see money as something that we must be responsible with, and therefore must not waste a penny more than we ought. I believe that the only wrong answer here would be ignorance. We ought to realize and accept where and how we are spending our time and our money. If we are not okay with where our money is going, or how we are spending our time, then of what point is life if you are upset with your own fundamentals?

What is your time worth? Is reading a few blog posts each week worth $100? As you wrestle with your own inner decision, take a few minutes to think about what you've spent your time and your money on over the last week. Are you happy with that? Do you wish your time was worth more? If you continue to read this blog, and do the things that I suggest you to do, I can promise you that I can save you around a hundred dollars by the end of this month. Some of them will take a bit more time, and a bit more effort, but by the end of the month, I will help you put $100 into a savings account for you. Now how about that. Is that worth it?

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