by David Allen
Your money mindset should be one in which you see every dollar as investment. And, like any other investment, a dollar invested should be considered against its ROI (return on investment).
ROI isn’t only measured in the form of money, however. Joy, peace, freedom, health, improving the world around you are all returns on money spent.
Knowing your priorities is a must when you are making decisions on how to best invest your money and even more so should you have to rearrange your budget at some point. Just like in a training plan where every small piece of the plan (specific warm up movements, sets and reps schemes, exercise selection, weekly layout, etc) has a specific purpose, every dollar you spend should have a specific purpose, a specific return on investment that you are looking to get from it.
Take a look in your fridge, your pantry, and your trash. How much of the food you are buying are you consuming vs that which you’re throwing away or “storing” for later? Now how much of that food is improving your health, reducing your sick days, keeping your mind clear, and increasing your energy?
There is wasted money and lost ROI in your kitchen. The money you need to afford a nutrition coach and/or a meal prep company is currently being wasted on food that is making you sick or being thrown away.
A nutrition coach helps show you exactly what to eat and a meal prep company ensures you have the food you need and none of the food you don’t. No waste. No loss. Just return on investment.
Don’t Cut, Just Invest Better
One of the best pieces of business advice I’ve heard was from Chris Cooper when he said you can’t cut your way to profitability. He was referring to cutting business expenses in order to improve margins. Instead, he suggested looking at each expenses and asking “How can I maximize my ROI on this expense?” A similar approach can be taken with personal finance. When making changes, we often don’t consider the ROI of certain expenses in relation to our values.
Here’s an example: let’s say you play guitar and pay a couple hundred dollars a month to go to lessons every other week. You need to make some cuts so you drop guitar lessons and convince yourself you’ll use free YouTube lessons to keep yourself playing. Unfortunately, without the structure and accountability of lessons, you stop playing as much and you stop seeing progress. Your motivation to play decreases and you play even less. This has negative impact on your overall joy because guitar was a positive, creative opportunity to “escape” for a moment.
This is the result of not having clear values and a clear ROI focused investment strategy of your money. Knowing your values, knowing that guitar provided stress relief and increased happiness, and knowing that life was about to get a little more stressful, a better strategy would actually be to look into increasing your investment to weekly guitar lessons and making a budget adjustment elsewhere to be able to do so.
Thinking about your dollars as ‘investments’ will help you see other opportunities…and have the money to invest in them.
“Be fearful when others are greedy, and greedy when others are fearful.”-Warren Buffett
Easy to say when you’re a billionaire right? The take away is to not get wrapped up in the emotion of a situation and instead to think logically and look for opportunities within it. This thought process is the basis for that. Focus on the lessons to be learned from difficult situations.
Covid was a great example of a difficult situation with many lessons to be learned: being healthy and fit is a buffer against disease, maintaining social connections is vital for mental health, savings in the bank allow you to better weather financial ups and downs.
The better you are able to see the lessons and opportunities and implement change to capitalize on them, the greater your return and the stronger your position when the next crisis hits.
The key is your mindset: invest your money one dollar at a time!
