The price and value of deprivation

Price is what you pay for and value is what you get. Usually this is applied for things that you purchase. But I guess it's equally applicable to things that we choose not to purchase.


If we choose not to buy something for $10, then we would have saved that $10. That's the price we had saved. But did we also correspondingly lost $10 worth of value? Rationally, we should choose to deprive ourselves of something if we can lose a value much lesser than the price of the goods or services that it costs. However, just like when we purchase things and we tend only to look at the price, we also NOT purchase something by only looking at the price, and not the value of the goods that we cannot enjoy.


Let me some examples. In my crazy 50k saving days, I used to scrimp and save on food. I would choose not to eat even when I'm hungry just to save a few dollars. Or, I'll buy low quality food that isn't healthy but is cheap. The price I've saved from not buying better quality food is perhaps a few dollars, but the value I lost is definitely more than the price I saved. Who knows what kind of long term health effects I could get from this? How about shoes? I used to buy cheap-skate shoes that wouldn't last me 1 month. Compared to a better quality branded shoes that cost up to $150 a pair, I might have saved $100 or more dollars. But the value I lost from not purchasing a better pair of shoes and not enjoying them, and even have to keep hunting for a pair constantly, is much more than $100.


Is it worth it?

That depends on where you are in your life stage. When your human asset is low, you have plenty of time and energy but likely have very little money. So, we don't mind going all the way out to save that few dollars. Of course it's worth it to save a few dollars. But when our human asset is built up to a point where we would rather spend money to save energy and time - those two most important and finite things that each of us have, then it's definitely not worth it.


Having said that, do know that while price is uniform, the value that we derive from the same goods and services is different for different people. To a foodie, spending $120++ a meal on an atas Japanese Omakase is a experience well worth the price. The value derived for that foodie is much more than the price of $120 paid. To deprive that joy of eating that meal can save him $120, but he correspondingly lost much more than $120 (If he eats Sucky Sushi, he will lose perhaps $10,000!). To a person who neither appreciates nor care about authentic Japanese cuisine, eating a $120 or a $10 Japanese meal makes no difference. It might not be worth it to spend that money.


So, spend on things you truly enjoy, regardless of how other people think. You are not others, and the value you lost by depriving yourself of something, just to save the price of paying for them, is not worth it, at least to you.


My friend Rolf will said this very aptly - Know yourself.