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Understand What Money Buys


opportunity costs means making hard decisions

❝You should be far more concerned with your current trajectory than with your current results.❞ -James Clear

I'm reading a personal finance article about how to save money - one of those articles makes fun of people for spending money at coffee shops. These articles are a dime a dozen, but it gets me to think about how much money I spend at coffee shops. Lately, I've been spending a lot of money at coffee shops. It's been more than I have spent in the past.


I decide to look into it.

Much of my shopping at coffee shops happens during the weekends. I'm in my 20s, and I am studying for an intense exam - the Chartered Financial Analyst exam. I've recognized that I am wildly unproductive when I try to study at my apartment, so I tend to head off to various coffee shops where I know I'll be more productive. Unfortunately, this comes with a high price tag. I don't want to feel like a freeloader, so I buy coffees and snacks to justify my studying.


I can save a lot of money by cutting out the coffee shops and studying at home, but I'd be back to where I started. I'm telling myself the story that I'm going to study at home and instead get distracted and decide to read Wikipedia articles.

I decide to look beneath my spending at coffee shops. I need to figure out what I get for this money I'm spending. I'm sure some people spend money at coffee shops strictly to get a caffeine fix, and for those people, all those articles talking about cutting out coffee shop spending as a ticket to retirement may make sense. However, it's not just about getting a caffeinated beverage. Some people go to coffee shops to socialize with friends (like on the TV show Friends). Other people go to a coffee shop as a break from work. Still, others like the experience of meeting new people.


For me, the coffee shop is a place to study away from my apartment. The only reason I buy the coffee is as a sort of rent payment for using their space.


Perfect! Now I know what I'm getting for my money. Now I can ask myself whether or not there's a more efficient way for me to get what I was buying. I ask myself if there's a cheaper way to find a place to study that's not at my apartment or at a coffee shop. I settled on the public library.


Understanding all the elements that underlie your spending gives you more clarity. It allows you to see how much you're paying for various elements. Most importantly, it allows you to see if there are less expensive ways to satisfy those needs.