Should I get McDonald’s for $4 or go to Chipotle for $8? Should I buy a nice leather pair of shoes for $200 or a cheaper pair for $75? If you’re like me, you ask yourselves things like this all the time. If you’re also like me, you’re probably more inclined for the cheaper option. But lately, after really thinking about it… I always come back to the same line: In the long run, it all evens out. What do I mean by this? Well, a couple McDonald’s burgers probably don’t fill me up for as long as Chipotle would, so my next meal will be sooner, and larger. In addition, the long-term health effects over 10 years of this behavior probably result in some medical bill that wipes out every “savings” I ever experienced on the dollar menu. Changing examples to the shoe conundrum, the $200 pair probably lasts at least twice as long as the cheaper pair. Maybe even three times as long. But what is the true cost or price of an item? It’s more than just what they ring you up for at the register. Really, that’s the cost to take the item with you today. It impacts about 1 second. What about the rest of the time you own it?
Factors to consider:
- How long will it last?
- Am I going to resell it? (car, home, bicycle, etc.)
- What are the maintenance and repair costs?
- What’s the warranty or return policy (one of the reasons I love Costco)
- How will it impact other areas of my life? Time?
We are constantly confronted with different prices, features, and options when making decisions. Obviously, there are some lavish exceptions to this rule of everything evening out. A $1 million Lamborghini is never going to financially make sense compared to a $40,000 Acura. However, that $50k Audi that doesn’t break down may be a similar purchase to a $20k Chevy. No? Ok, hear me out. Let’s say the Chevy has a modest $10k more in maintenance over 10 years due to lower quality parts. And don’t forget resale value- the Audi probably has another 10k advantage there. Ok, there’s still a 10k discrepancy: $50k vs. $40k. But what’s the one thing most people overlook? Time. Everyone values their time differently, but there is indeed a price. How much was your time worth as you took the car in for a repair? $50/hour? $100/hour? That can add up quickly. When it’s all said and done, both cars probably cost roughly the same over their life, and one was probably much more fun to drive and own.
This can be a slippery slope, as it’s easy to stop looking at price and find yourself splurging on everything. The very “top of the line” isn’t always necessary, but something (whether a car, lunch, bicycle, house, phone, etc.) that you pay a little more for up-front may actually be cheaper in the long-run. Not to mention, less of a headache. The next time you’re shopping, look past the sticker price and think about the long-term. If you can take good care of a high-quality item, it may just be worth it.
MoneyStuff 