Focus on the goal rather than money

PENNY-WISE, POUND-FOOLISH: EXPENSIVE LESSON IN MOBILE DOWNGRADING

By blindly focusing on money, you risk taking on too much risk or living so conservatively you buy inappropriately.

At the start of every year I take a hard look at my expenses and see if there are ways to cut back, so my salary increase doesn’t automatically get swallowed by the inevitable rise in expenses (medical aid and insurance premiums, etc).

It’s a way of gradually managing my lifestyle downward to try to find a few additional bucks to invest or pay towards the black hole, the bond.

I decided 2017 would be the year of the cellphone downgrade. The saving wouldn’t be that significant but in difficult economic times, a buffalo note or two isn’t to be scoffed at.

I opted for an entry-level Android phone. It was a terrible decision. The phone and package I chose turned out to be completely unsuited to my needs.

Apparently you can’t run 105 apps on a phone with only 8GB of internal memory. I’m now officially an app-uninstalling-and-cache-clearing-expert.

Where the decision really came to bite me was on included value. I previously received 100 minutes of airtime, 100MB of data and 100 SMSes. On the new contract, I get R150 of airtime value. Judging by what I paid for recent calls, that equates to roughly only 80 minutes of airtime. Why I didn’t do this calculation up front is beyond me.

So not only am I not saving any money on my cellphone contract at this point, as I have to buy additional bundles every month, I’m worse off in terms of value received.

I often wonder why we’re so wired to think in terms of money: getting a raise, buying something on sale, investment returns, status.

Money is a means to an end. I’d argue that for most people, life isn’t about accumulating as much money as possible, but rather about the goals money can finance: a house, education, holidays, retirement.

Perhaps the reason we focus so much on money itself is because we assume more money can buy a bigger house, better education, overseas holidays, a comfortable retirement.

And sometimes it can. But the focus shouldn’t be the money; it should be on the goal. In my case: what’s the best value-formoney cellphone I can buy that suits my budget and needs?

I’d argue that blindly focusing on money (maximising or protecting it) puts you at risk of two things: taking too much risk for your particular circumstances, or living so conservatively that you end up having to spend more money because you bought something cheap and inappropriate.

Crafting an appropriate financial plan should start with identifying your particular goals. You’re much more likely to make appropriate financial decisions when you have a clear idea about your goals.