If only I'd passed up those 15,000 chai tea lattes...

Filed in archive Buying Stuff on June 30, 2006

At Motley Fool, Selena Maranjian (who cranks out so many articles she must be writing in her sleep) is discussing the age-old hypothetical, which goes something like "If you could just (quit smoking) (quit Starbucks) (quit Amazon) (quit Oreo Double Stufs), you could save X dollars, which if invested, would be worth $720,000 in 25 years."

That's fine, and, yes, it makes sense to take a look at where your money is going, especially if money's tight, you're not funding your retirement accounts, etc. It doesn't take a genius to see that spending less today means more money tomorrow. If you can cut out some habit that is undermining your financial future, you should absolutely try to cut it out. And if you know it might net you $300K in the future, there's your motivation to do so.

The problem for me, and I think many other people, is finding the dividing line between cutting out unnecessary expense and living like a monk. (Well, I'm in no danger of living like a monk, but it paints a picture.) You can cut out probably a dozen things in your life that you don't need and make the case that you'll be a millionaire in 40 years because of it, but do you want 40 years of misery to become a millionaire?

Let's say you dig Starbucks coffee and every day you get a thrill out of getting your morning cup on the way into work. It starts your day off right--maybe it peps you up, maybe it's the little trigger that says to your mind "time to get going", maybe you just like a little treat to reward yourself for having gotten out of bed and left your home for work instead of fleeing to South America without a trace.

You could cut out this ritual and save a lot of cash. Ten or 15 bucks a weeks, $600 more or less per year--all that cash that could be going instead into an IRA or CD or whatever, compounding year after year, guaranteeing you won't spend your retirement years in front of a vat of french fries among 16-year-old kids who are discussing their latest body ornamentation.

But that's only one way to look at it. I would submit that you can also look at your Starbucks habit as its own type of investment. An investment in yourself.

Think of you as a business. When running a business, you try to be lean, but you also realize you sometimes have to spend money to make money. And some things you do for your business will show no tangible money benefit. Maybe you bought a nice chair for your office when sitting on three stacked-up cinder blocks might have done the job. Perhaps you rented space in a nicer part of town, when you could have gotten a cheaper office if you'd rented the building next to the adult bookstore. In essence, you've chosen to make life a little more pleasant instead of scrimping on every last item.

Your life is the same way. You can live incredibly cheaply in this country if your only dictate is money. You can find a one-bedroom apartment for $400 bucks a month, live off ramen noodles, macaroni & cheese, etc., forgo a television, buy your clothes at thrift shops, etc., etc., etc. And all that money you save could be invested for the rich life you'll be living thirty years from now when the other losers are lamenting that their career earnings were spent on overpriced, overroasted coffee bean water. And some people do this--you hear about them in the news when they siddenly drop $3 million into the unsuspecting lap of their local state university after living like frugal nobodies their whole lives.

But, if you are your business, I believe you can justify some of your little habits as investments in yourself and your profit potential. Is a cup of Starbucks going to pay immediate dividends? No. But if you feel more alert and more interested in work because you've had your morning pick-me-up, maybe you're a better worker and maybe that's a small piece to the puzzle in moving up the corporate charts. You can't quantify it, but not everything in life has a number attached to it.

I just used a lot of words to offer a simple piece of advice. Indulge yourself in some small way and don't think of it only as money down the drain. Think of it as an investment in your productivity, in your profitability, in your sanity. And maybe even in your future.