Investments vs. Expenses 🚧
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Investments vs. Expenses 🚧

I think a lot of people are in scarcity mindset - i.e. there's only so much money in the world so I should try to get as much as possible (this honestly always reminds me of a squirrel or chipmunk trying to get nuts to store away 🐿 lol) (I somewhat see how people can come by this honestly, especially older folks who ended up raising you or your parents and thus the mindset was passed along to you. Reason I see this is because they grew up during the Great Depression or during WW2 so they know what it's like to not have much).

Usually, I find this mindset comes along with the following: I have to keep expenses down to a minimum because I only have so much money saved up. I know because I used to live this; I would literally try to see how low I could keep my monthly expenses.

I bring this up because it's interesting to see how different people view the same purchase.

For example: 🚧

  • Having a great office set up. You spend X amount of hours per day at your desk / in your office. It's probably a good idea to have a decently ergonomic and efficient office set up. Yet there are people I know who have still held out buying home office equipment since the beginning of Covid because they don't want to spend extra money.
  • Getting a massage. It could make your body feel more relieved and relaxed. But it costs sooooo much. (not really though when you think about it)
  • Seeing a therapist. There's a lot of shit in the world that bugs you. Or you're struggling to deal with something that happened in your life. The return on investment (ROI) for doing therapy is clearer and calmer mental health, maybe more adaptive (vs. maladaptive) strategies for dealing with what life throws at you, etc. In the long-run, it will probably bring you more peace of mind and serenity. BUT "my work benefits only provide me with 5 sessions a year and it's expensive above and beyond that".
  • Getting a personal trainer.
  • Eating healthy. It's expensive to buy organic + also timely to cook all the foods. So Imma just go to McDonald's.

With all of these examples, I've started to view what I would have previously called an expense β€”> now it's an investment. Yes, it's probably going to cost more now. But I'm striving to play the long-game and I am hopeful that, in the long-run, it will pay dividends to me (mentally, financially, physically, etc.)

Further, I know that there are some people in deep financial straights. However, if you're reading this, 1) I doubt you are. If you were you'd probably have bigger fish to fry than read an article from a nobody aka me. 2) I read somewhere 2 years ago that something like 80-90% of people SPEND more than they make. 😳And we aren't talking about spending money on food and housing. Do you really need that third truck with the lift kit?

I think it can be useful to view purchases from a business sense.

In accounting, the difference between an operating expense (i.e. expense) and an asset (i.e. investment) is that: Assets generate future earnings. Operating expenses won't really generate more earnings.

So what's the ROI for me spending more money now (and probably more time now too)?

#CompoundInterest

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Written: October 28, 2020

Additional:

  • What I find ironic about people who say "I don't have money to see a therapist or get a massage". BRO lol literally, I bet you spend the same amount of money per month on stupid shit that are actually expenses that don't actually improve your life. For example, clothes, coffee, etc. How about you reallocate those funds to some higher ROI activities.