Busting Financial Myths - A Penny Saved Is A Penny Earned!

Today, many people find themselves trying to save on every penny because of the financial sacred cow that a penny saved means a penny earned. While this can be right in certain occasions, I find this notion fallacious because being cheap can cause people to lose more than the small amount of money saved. To find out why this is the case and seek better solutions, please read on!

When we spend time finding cheap stuff (by focusing only or primarily on price), we lose many hours of productivity which could have been better used to create value for the world. Though many people can live cheaply and save the pennies using such methods, they also forsake the big bucks and comfortable lifestyles awaiting them. This is because to be rich, they must think big. This involves the need to place more emphasis on value than price as value is the only tool that saves you money in the long run, not price.

In addition, the mindset of being frugal causes people to buy things they don't really need only because they are cheap. As a result, they spend more money and receive less value when other factors like satisfaction get considered. Here, they could have been much better off in the aspect of receiving value if they had placed more focus on non-quantifiable factors in their buying decisions.

Moreover, focusing on price can limit our ability to dream, envision, create and find solutions. This is because whenever we try to find cheap solutions, we think less about value which is in fact the quintessential element determining effectiveness. After all, a cheap price is sometimes a shortcut to being cheated.

Given the ramifications of such a fallacious belief, 2 classes of people will emerge. One of them would be the spenders who are wasters of productivity as they buy too much of low quality merchandise. Here, their excessive consumption of goods with little value usually do not bring satisfaction and it is sometimes almost certain that the same amount of money used to buy all these wholesale items can be exchanged for much great value.

The second class bred from this myth would be the savers who are too busy conserving productivity. This is also a waste of productivity because unused productivity will never be regained. Thus, instead of scrimping because you cannot afford something, ask yourself how you can afford what you want. This will help you turn inward and take responsibility when you know solutions do exist.

Furthermore, besides all the shortcomings this fallacy can bring, it also makes people prey to the 'Costco' mentality where they buy things they don't use in bulk. For example, 1 pound of nuts cost $3.50 but 5 pounds cost $10.

To save money, people buy the 5 pounds of nuts but it remains in freezer for months because there is too much to eat. At the end, these nuts are unconsumed and expire. Here, the lost opportunity cost incurred is rather large as the $6.50 could have been used elsewhere to provide more satisfaction.

Hence, in conclusion, after pointing the inherent flaws of this modern financial dogma, I believe readers have gained some wisdom by knowing that they ought to place greater emphasis on value instead of price. This is because value can save you money in the long run but price doesn't.

About The Author:

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