In this day and age, we can be all too engulfed in keeping up with the Joneses with the latest smartphones, cars and clothes. We often view these luxuries as necessities and can lose sight of the money we waste by constantly upgrading to the newest and best items on the market. Rarely do we think of these purchases in terms of hours at the office and the hard work that generated this purchasing power.
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You may have learned the value of a dollar as a child from a parent or grandparent who lived during an era of economic instability and constantly reminded you to be grateful for the things we often take for granted, like a meal on the table.
You may have learned the value of a dollar from a financial misfortune, like foreclosure or defaulting on a loan. Or you might have learned the precious value of a dollar by paying your college tuition. The hard part is remembering its value when the going is good and you’re financially successful. Despite your financial strength, here are three ways to learn — or relearn — the value of a dollar.
Live on Less
Whether you have excess income or not, formulate a budget and stick to it. This will teach you to stretch your allotted money and not to waste it on frivolous purchases. Limiting and monitoring your spending will put into perspective the expensive nature of creature comforts, and give you the will power to avoid buying them.
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Time Value of Money
Think of purchases in terms of hours. If it’s easier, think back to your hourly wage job from high school. How many hours of babysitting or lifeguarding will it take to buy that new smartphone? Think of purchases as trading your precious time for these items: Is a new purse worth a week at work?
Remember Your Roots
Similar to thinking back to your high school jobs to understand the time value of money, look back to the roots of your career and your first jobs. Try to remember a time when you weren’t making much money, yet still getting by and happy doing it. Chances are you were younger without major responsibilities, like caring for children or paying off debt.
When you’re young, living in cramped apartments with multiple roommates, eating ramen noodles every night, and riding your bike to business meetings or work were all fun and acceptable. The older we get, the more often we forget these simple, but happy, times. You don’t have to revert to nightly meals of ramen noodles, but do remember that most of us come from a fairly humble background, and just because you have money doesn’t mean you need a lobster dinner every night.
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In fact, many CEOs attribute their understanding of the value of a dollar to their humble beginnings and ambition to succeed. Doug McMillon, president and CEO of Walmart, earned his first paycheck working in a Walmart warehouse. Similarly, Jim Skinner, CEO of McDonald’s, started his career as a manager trainee at a McDonald’s in Carpentersville, Ill. Bill Gates, college dropout, co-founder of Microsoft and one of the wealthiest men in the world, has made it public that his three children won’t be getting a large inheritance because he believes it would be a disservice to them. And Warren Buffett, the chairman and CEO of Berkshire Hathaway, is the quintessential case of deep pockets and short arms. Buffett still lives in his humble home in Omaha, Nebraska, which he bought for $31,500 in 1985, according to an article from the Huffington Post. The moral of the story is that we all love nice things and have worked hard to be in a good financial position, but we should always remember the value of a dollar. And we should always remember how fortunate we are to have purchasing power and how much a dollar is really worth.
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