Spending, Saving and ROI
At its most basic saving is about not spending money. After all, if you don’t spend money you still have it and can put it away and save it until you do find something which you want to buy. If you save your money regularly and are wise about your spending, you can get a lot more for your money than you might otherwise have gotten. This is particularly true if you analyze every purchase from the perspective of return on investment (ROI).
For those who don’t know, ROI is simply the measurement of what you get back for the money you spend. Sometimes ROI is pretty straightforward. I have five dollars. I buy five apples. I now have five snacks which will satisfy my hunger. In those cases the decision to buy or not to buy is pretty simple. If I’m hungry and I like apples, I buy apples. If I’m not hungry or I like bananas better than apples, I make a different choice.
Other times calculating ROI can be a little more difficult. Let me give you an example. I pay about a hundred ad twenty dollars a month for cable television, high speed Internet and phone service. At first glance that sounds like a lot. I am going to try to reduce that amount by following the advice Jody gave in her post on how to save on cable, but we’ll leave that for another time and another post.
Although the amount might seem like a lot, when I look at the return on my investment, it really isn’t such a bad deal. Prior to bundling my phone in with my cable and Internet, I was paying about $50 dollars a month for a service I didn’t use all that much. Buying the phone as part of a package through the cable company reduced my monthly cost, and got me a host of free features, like voice mail, that were not available through my other plan.
Next let’s talk about television. It’s true I don’t watch a lot of television, but there are some programs I do enjoy. Cable allows me to see programs I couldn’t get on my local stations. I can also tape exercise shows, eliminating the need for exercise videos. Cooking shows introduce me to new healthy recipes. I reduce my video rental because I can catch movies on television. So having cable, even if I watch it very little, does help me save money on other things.
Finally, we have the Internet. This is where the investment really pays off. I write for this blog you’re reading right now. I have two other blogs of my own. I also am an partner in the Small Business Forum. There are other projects in the works as well. Having high speed Internet allows me to work on all these online projects without wasting time, and allows me to make the connections that bring these sorts of projects into being. Thanks to the Internet, my earning prospects are no longer limited to my physical location. I am now working to make money in a variety of places online, and my earning potential has risen dramatically.
When you examine your purchases and spending with an eye toward ROI you may make different decisions about how and why you will spend your money. The trick is to look at all aspects of what you get for your money, not just the ones that are visible at first glance. If you can do that, you’ll be able to make a wise choice and get the most benefit from the money you spend.
August 12th, 2008 at 9:27 am
This is so true! Great post.
August 12th, 2008 at 11:21 am
As Blessed said, this is so true. I am actually considering switching my cable, phone, internet to one company for the packaged savings.
August 12th, 2008 at 12:13 pm
Wonderful post. I try to keep my eyes open with this in mind, but it is not always easy. And sometimes, it is really hard to know which decision to make, isn’t it. I enjoy living a frugal life - it is almost like a game and I do love to win!
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