1 00:00:03,440 --> 00:00:06,680 Speaker 1: Welcome to Before Breakfast, a production of I Heart Radio. 2 00:00:09,119 --> 00:00:14,080 Speaker 1: Good Morning, This is Laura. Welcome to the Before Breakfast podcast. 3 00:00:14,800 --> 00:00:18,320 Speaker 1: Today's tip is to remember that every dollar, or whatever 4 00:00:18,440 --> 00:00:21,959 Speaker 1: unit of currency your country uses, is worth the same. 5 00:00:23,079 --> 00:00:27,000 Speaker 1: Sometimes it's easy to ignore small amounts in large transactions, 6 00:00:27,520 --> 00:00:30,920 Speaker 1: but use strategically small amounts of money can make a 7 00:00:30,920 --> 00:00:35,840 Speaker 1: big difference. If you ever study how humans behave around money, 8 00:00:36,360 --> 00:00:40,120 Speaker 1: you will learn that we are not entirely rational. We 9 00:00:40,240 --> 00:00:43,680 Speaker 1: tend to view things in terms of proportion rather than 10 00:00:43,760 --> 00:00:47,280 Speaker 1: absolute numbers. So, for instance, if you are buying a 11 00:00:47,360 --> 00:00:50,320 Speaker 1: computer and the first store you visit has it for 12 00:00:50,520 --> 00:00:54,360 Speaker 1: nine dollars, and you learn that a nearby second store 13 00:00:54,400 --> 00:00:57,600 Speaker 1: has it for nine hundred seventy five dollars, you're highly 14 00:00:57,640 --> 00:01:00,240 Speaker 1: likely to view that as no big deal and just 15 00:01:00,320 --> 00:01:03,480 Speaker 1: purchase it where you are. But if you were shopping 16 00:01:03,480 --> 00:01:07,479 Speaker 1: for pencils and visited a store that charged twenty seven 17 00:01:07,520 --> 00:01:10,480 Speaker 1: dollars for a set of pencils that were three dollars 18 00:01:10,520 --> 00:01:14,160 Speaker 1: somewhere else, you would probably be furious. You'd talk about 19 00:01:14,240 --> 00:01:17,080 Speaker 1: highway robbery, and you'd be running over to the cheaper 20 00:01:17,160 --> 00:01:20,039 Speaker 1: store as fast as you could. And this is true 21 00:01:20,520 --> 00:01:24,920 Speaker 1: even though that two difference is worth exactly the same 22 00:01:25,360 --> 00:01:29,360 Speaker 1: no matter what you're buying. We often shunt money into 23 00:01:29,440 --> 00:01:34,120 Speaker 1: categories in our brains, but every dollar is worth the 24 00:01:34,240 --> 00:01:39,160 Speaker 1: same no matter where it is. That's important because moving 25 00:01:39,200 --> 00:01:42,960 Speaker 1: money into certain categories can make a huge difference in 26 00:01:43,000 --> 00:01:47,080 Speaker 1: life satisfaction. An extra fifty dollars a month as part 27 00:01:47,080 --> 00:01:50,280 Speaker 1: of your rent or mortgage payment may not seem like 28 00:01:50,320 --> 00:01:53,440 Speaker 1: a whole lot, but adding that extra fifty dollars to 29 00:01:53,520 --> 00:01:56,560 Speaker 1: your fun budget each month means that you could go 30 00:01:56,680 --> 00:01:58,960 Speaker 1: get a pedicure two more times, or go out to 31 00:01:59,000 --> 00:02:01,600 Speaker 1: eat two more times, or hire a sitter for another 32 00:02:01,640 --> 00:02:04,840 Speaker 1: three hours or so. All of these repeated bits of 33 00:02:04,960 --> 00:02:09,840 Speaker 1: entertainment might boost life satisfaction a lot more over time 34 00:02:10,240 --> 00:02:13,320 Speaker 1: than whatever you're getting for the extra fifty dollars spent 35 00:02:13,360 --> 00:02:17,200 Speaker 1: on your housing. One reason mortgage fees are what they 36 00:02:17,200 --> 00:02:20,640 Speaker 1: are is that banks assume people are spending so much 37 00:02:20,720 --> 00:02:23,919 Speaker 1: money on their home purchase that they won't fight about 38 00:02:23,919 --> 00:02:27,280 Speaker 1: a little bit of extra money in the process. But 39 00:02:27,880 --> 00:02:30,640 Speaker 1: a five dollar fee that gets tacked on at the 40 00:02:30,760 --> 00:02:34,160 Speaker 1: end of a negotiation could have paid for a long 41 00:02:34,200 --> 00:02:38,680 Speaker 1: weekend trip that is a real source of pleasure. Paying 42 00:02:38,680 --> 00:02:41,480 Speaker 1: a bank more than you need to, not so much, 43 00:02:42,120 --> 00:02:45,799 Speaker 1: it might be worth fighting back. In general, I find 44 00:02:45,840 --> 00:02:49,520 Speaker 1: it's better not to automatically adopt the normal proportions of 45 00:02:49,560 --> 00:02:54,359 Speaker 1: income for spending in various categories. By making slightly unorthodox 46 00:02:54,480 --> 00:02:57,520 Speaker 1: choices in terms of proportions, you could do things that 47 00:02:57,639 --> 00:03:03,000 Speaker 1: might seem indulgent. For instance, spending your income on housing 48 00:03:03,360 --> 00:03:07,600 Speaker 1: instead of would allow for a lot of childcare or 49 00:03:07,680 --> 00:03:11,280 Speaker 1: travel or dinners out or entertainment. In my book All 50 00:03:11,320 --> 00:03:13,560 Speaker 1: the Money in the World, I look at weddings spending 51 00:03:13,680 --> 00:03:17,720 Speaker 1: in particular. Something like floral arrangements are fun, and they 52 00:03:17,720 --> 00:03:21,920 Speaker 1: are indeed pretty, but spending thousands of dollars on flowers 53 00:03:21,919 --> 00:03:26,600 Speaker 1: for one day might do less for marital happiness then 54 00:03:26,639 --> 00:03:29,880 Speaker 1: spending that same quantity of money on date nights or 55 00:03:30,080 --> 00:03:34,200 Speaker 1: outsourcing during the busy years of young kids. Spending a 56 00:03:34,240 --> 00:03:38,960 Speaker 1: lot on wedding flowers is considered normal, but not doing 57 00:03:39,000 --> 00:03:43,600 Speaker 1: it opens up a lot of future possibilities. In any case, 58 00:03:43,720 --> 00:03:46,720 Speaker 1: as you think about how you spend your money, it 59 00:03:46,840 --> 00:03:49,920 Speaker 1: might help to consider if moving some cash out of 60 00:03:49,920 --> 00:03:53,360 Speaker 1: the big categories could open up a lot of flexibility 61 00:03:53,480 --> 00:03:57,640 Speaker 1: in the smaller ones. Every dollar is worth the same 62 00:03:58,720 --> 00:04:03,200 Speaker 1: just because some dget proportions are normal doesn't mean they're 63 00:04:03,280 --> 00:04:07,120 Speaker 1: right for you. Ask what else that money can buy 64 00:04:07,800 --> 00:04:11,640 Speaker 1: and see if doing that might make you happier. In 65 00:04:11,680 --> 00:04:16,000 Speaker 1: the meantime, this is Laura. Thanks for listening, and here's 66 00:04:16,040 --> 00:04:25,280 Speaker 1: to making the most of our time. Hey, everybody, I'd 67 00:04:25,279 --> 00:04:27,640 Speaker 1: love to hear from you. 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