Before Breakfast - Every dollar is worth the same

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Welcome to before breakfast a production of iHeartRadio.

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 or country uses is the same. Sometimes it's easy to ignore small amounts in large transactions, but you 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 or you visit has it for $999 and you learned that a nearby second store has it for $975. You're highly likely to view that is no big deal and just purchase it where you are. But if you were shopping for pencils and visited a store that charged $27 for a set of pencils that were $3 somewhere else. You would probably be furious you talk about highway robbery and you'd be running over to the cheaper store as fast as you could and this is true, even though that $24 difference is worth exactly the same no matter what you're buying.

We often sent money into categories in our brains, but every dollar is worth the same no matter where it is.

That's important because moving money into certain categories can make a huge difference in life satisfaction an extra $50 a month as part of your rent or mortgage payment may not seem like a whole lot but adding that extra $50 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 three hours or so, all of these repeated bits of entertainment might boost life satisfaction a lot more overtime than whatever you're getting for the extra $50 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 a little bit of extra money in the process but a $500 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.

General I find 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 can do things that might seem indulgent for instance spending 20% of your income on housing instead of 30% would allow for a lot of child care or travel or dinners out there entertainment in my book all the money in the world. I look at wedding 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 night Sir 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 he think about how you spend your money. It might help to consider. If moving some cash out of the big categories to open up a lot of flexibility in the smaller ones. Every dollar is worth the same just because some budget 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 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 be the number for then breakfast pod. You can also shoot me an email at before breakfast podcast at 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 iHeartRadio from war podcast from iHeartRadio visit the iHeartRadio app Apple podcasts or wherever you listen to your favorite shows.

Welcome to teach me something new a podcast from iHeartRadio in Brighton Co I'm your host Brent Morin. I'm an entrepreneur a CEO mom and I'm curious about a lot of things. We've already learned so much together, and I can't wait for WhatsApp. My co-host and Dusty and I are back with brand new episodes every Wednesday. Listen to teach me something new on the iHeartRadio app Apple podcasts or wherever you get your podcast.
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