I talked to an interesting club yesterday about the notion of expensive. Some were obviously using it to justify their out of control spending but some interesting principles came out. What if I told you to go on holiday and spend Kshs 150,000? For some of us, it may be something we can easily do. The rest of us may think that it’s a tad expensive. What if we multiplied that amount and took it to Kshs 1, 500, 000. Now that would be really expensive right? Almost on the verge of criminal. Expensive. Expensive. That’s the word I want to explore today. We use it a lot. We say, that’s an expensive book, an expensive car, an expensive house, an expensive school, expensive property, expensive clothes etc. But who wrote the law on what is expensive and what is not? Expensive can be extremely relative. What is expensive to one person may not be expensive to another. It can also be expensive to someone but they still make the choice to do it. There may be some of us who simply run away from doing anything that is deemed expensive. Then there are those of us who are doing expensive things, but the wrong set of things. Lets go back to the holiday for Kshs 150,000. That’s literally about four hundred shillings a day. This is money you would have in your wallet at the beginning of the day and by the end of the day it is no longer there. You may have spent it on lunch, airtime, transport etc. So is that holiday really expensive? Wouldn’t say it is. In fact in my opinion it is the lunch that is expensive. It’s an expensive habit, one that can buy you a fairly decent holiday. I have spoken to many people who think that those who go on holiday are rich and have a money pot hidden somewhere. Is it possible they just make different choices with the same resources? They have decided to form a habit of going on debt free holidays as opposed to buying lunch daily. This is more logical than expensive. When we are defining what is expensive we have really got to put it into context. How else are you spending that money even if it is broken down into days, weeks and months? So this amount is not expensive because it could be easily be money you are wasting or spending on less important things.
Now let’s look at the Kshs 1, 500, 000. You may have been on the same page with me on the previous example of Kshs 150, 000 but I’m sure you are now on the verge of telling me off because Kshs 1, 500, 000 is expensive. Firstly using the same logic, there are those that easily spend 4, 000 a day. Yes, they exist. This is about Kshs 30, 000 a week. In case you doubt, go do some research amongst bar owners in town on what some of their patrons will blow over the weekend. For some people they are ignorantly spending money that they cannot afford. Others (and keeping all issues about consuming that quantity of alcohol aside) honestly look at this the same way we looked at Kshs 150, 000. But for majority of us this money is not readily available to spend. It may be equivalent to an entire salary (or double, triple, quadruple a salary), rent, school fees. It may be money you really work hard to make in your business or the new machine you need. It could be the entire salary of somebody you pay. This now looks expensive because it is something you use on necessary expenditure. It’s no longer just lunch money. It’s your rent or school fees so you are allowed to choke at the thought of going on holiday with the equivalent sum of money. Making sure you have a decent roof over your head and the school fees has value to you. Now what if I said to use the Kshs 1, 500,000 for a deposit on a home or to start a business or to buy a car. You would find it. In that scope it does not look that expensive. I have seen people pull out their hair to find money to pursue various ventures or to upgrade their car. Suddenly moneymaking ideas come to light or they figure how to borrow and pay back. Just because you borrow money and pay in installments does not make it less expensive. So before you call someone’s holiday expensive, at that point in time they may just consider it valuable and worth the price. They may have been doing the rationale things like investing all along and that year they have decided to go on holiday.
You will spend on what you value. What are your current spending patterns revealing about what you value? Have you been holding yourself back from doing “expensive” things yet spending this same amount of money on things that have no real value? In our Centonomy classes we always tell people that our job is not to dictate where to spend or not to spend money. That’s up to you. Just understand the choices you are making and let things align with your values. Let’s not look at “expensive” as a negative or scary concept. It doesn’t mean you should not do. Just like it doesn’t mean you should do it if it’s not important to you. So my message is not to necessarily go for expensive holidays. That was just an example. It could be anything. You could care less about the holiday but there is a particular university you want your child to go to. Or there is a business you want to start. You always thought it was too expensive. That could be what you feel but so what? If it has value to you, you can figure it out.
Waceke runs programs on Personal Financial Management and Wealth Creation. Find her at waceken@centonomy.com| twitter @cekenduati| facebook.com/cekenduati