We all have little habits that tend to drain our finances. Perhaps it’s soda, online games, cigarettes, magazine subscriptions, gambling, wine, or movies. No matter what your poison, if it costs you time or money, it should be examined closely.
Health and moral concerns aside, the wise consumer will examine his or her habits to determine if the benefits outweigh the costs, or if cutbacks are necessary to restore a healthy balance in one’s budget. One of the first steps in this process is to determine what you get (the benefits) out of your habits, and try to place a monetary value on those benefits.
For example, if you like to get a weekly massage, you can list several potential benefits from this activity, like so:
- Health benefits: Many medical professionals recommend massage to reduce stress, increase circulation, and improve lymph drainage. If your health is compromised, or if you experience a lot of stress in your personal or work life, the monetary health benefits can be extraordinary. Let’s say four massages a week replaces a prescription muscle relaxer. In this case, we could say your monthly massages are worth $80 a month in health benefits.
- Productivity benefits: In our example, we could imagine weekly massages increase your work performance by reducing stress, allowing you to complete two extra projects a month. The productivity benefits could total $400 a month.
- Happiness benefits: If your massages bring you immense joy, you are less likely to spend money on other pursuits of happiness, and you can also place a monetary value on how your habit makes you feel. What’s your habit worth to you? How much would you pay to continue it? For our massage example, we could say our happiness value for this habit is about as pleasant as mowing the lawn is unpleasant. If we pay a lawn service $30 an hour, our massages would be worth $30 an hour in happiness, or $120 a month.
That’s a total estimated monetary benefit of $600 a month.
The next step is to calculate what your habit costs you. Not only will you have to determine your out-of-pocket expense (in this case, the cost we pay for the massages), but also such things as the cost of managing negative health impacts, transportation and maintenance costs, and the effect your habit has on your relationships.
- Out-of-Pocket Expenses: For our massage example, let’s say the cost of a weekly massage is $65 plus tip, equaling $308 a month.
- Transportation: If we travel 20 miles round-trip to the spa, we’ll estimate it costs you $0.74 per mile to maintain and operate your vehicle, equaling $59.20 per month in travel costs to our support our massage habit.
- Time: The time you invest in your habit is also considered a deduction. Our massage habit takes up four hours a week, plus two hours of travel time each month. If your time is worth $40 an hour, you’re losing $240 worth of time every month.
For our massage habit example, our total cost is $607.20.
Our conclusion is a weekly massage habit costs us $7.20 a month. Is it worth it? That’s where you need to decide if cutbacks are necessary. If you don’t want to drop your habit, try finding ways to reduce the impact of the overall cost to make your habit a wise choice.
Do you have questions about any of your financial habits or would you like to make an appointment with a financial representative to discuss your financial plans?
Article Source: http://moneyning.com/life-style/how-much-is-your-habit-costing-you/
* First Financial is not responsible for the content listed on any external websites.