Spending: What Do You Gain, and What Do You Lose?

When we spend money, we rarely consider to exactly what we’re gaining or losing with each purchase. We might consider gain/loss for a particularly large purchase like a home, car, or pricey vacation. “Wow. If I spend a few thousand on this, I won’t have a few thousand to dedicate to my retirement or my emergency fund.” This is called opportunity cost. Every purchase “costs” you something else. Your money is finite, so what is spent on one thing isn’t available to spend on another thing. Easy, right?

However, gains and losses go beyond just dollars and cents. Opportunity cost is about the money, but you should also think about the other things you might gain or lose with your purchases. This isn’t easy. In the heat of the spending moment, all this thinking goes out the window. You see a thing, want the thing, and buy the thing, pretty much on autopilot. However, if you stop and think about what this thing is costing you, beyond money, you might find that you can talk yourself out of even more purchases, increasing your savings.

I’m not saying that everything must be overthought, or that you can never buy anything that “fails” on the gain/loss scale. However, the more aware you are of the true costs of your purchases, the more you can tailor your buying to your true needs and values.

Want some examples of this thought process in action? Here we go. First, I’ll list the gain. This is the item or experience you’re buying. Then I’ll list the loss (beyond money) and unpack the thought process a bit.

Gain: Any Kind of Stuff

Loss: Space & Time

Anything that falls into the category of “stuff” (excess clothing/shoes, toys, tchotchkes, physical media, furniture, decor, etc.) requires you to “lose” space in your home. The smaller your home (or the more crowded), the more acute the loss. You also lose time because all stuff requires maintenance, cleaning (or cleaning around it/moving it), and eventual work to dispose of it, sell it, or trade it. Consider these losses before adding more stuff to your space.

Gain: Smart-Anything

Loss: Privacy and control of your data

Smart TV’s, appliances, assistants, black boxes in your car, and other smart equipment can be neat and can possibly make parts of your life easier or cheaper. However, you lose some privacy because that smart thing reports everything you use it for back to its mothership. (And in some cases, it’s capturing data even when you aren’t actively using it.) You also lose control over that data. Most smart things have user agreements that do not allow you to opt out of data selling and sharing. And if that thing or its owner are ever hacked, that’s more of your data splattered everywhere. Before you bring smart things into your home, think about whether the convenience or discount is worth the privacy and data loss.

Gain: Cell Phones and apps

Loss: Quality time and relationships

While these are smart things, I give them their entry because they have issues beyond simple privacy and data loss. While those are still huge for cell phones, you also have more existential losses. Smartphones can steal your time. Their addictive, dopamine-inducing features make it so easy to check one message and then look up six hours later and wonder what happened to your day. This ability to suck you in can cost you quality time with loved ones, and can even end relationships if you (or they) can’t control the technology. Full-blown addiction is possible. Think carefully before investing in a smartphone, and if it’s controlling you and costing you valuable time, think of downgrading to a dumb phone.

Gain: Car/House/Boat/RV

Loss: Time

Cars, houses, boats, RV’s, ATV’s, and other big, expensive items can be necessary and/or fun. However, they also cost you time. Cars and houses have to be maintained and repaired. If you do much of that maintenance yourself you’ll save money, but lose time. Even if you hire it out, you’ll still spend time waiting for the repair person or waiting at the auto service center. RVs/boats/ATVs also have the same time problem, but compound it because not only are you waiting for the item to be repaired, you’re not having fun with it in the meantime. If the RV has to sit in the shop for three weeks, you can’t use it for fun. Before you fork out for these big-ticket items, ask if you’re okay with the time loss. In the case of a car, you may have no choice if you don’t live in an area with mass transit. But if you’d rather not spend the time, you can rent instead of buying a home, or stay in hotels instead of owning that RV. You can also rent an RV, boat, or ATV for a while and have all the fun while leaving the maintenance to someone else.

Gain: Eating Out

Loss: Health

Eating out can be a fun and social activity. It can also ruin your health if you do so too often, or eat/drink the wrong things. Before eating out, ask yourself if it’s worth the hit to your waistline, blood pressure, cholesterol, or (in the case of drinks) the hit to your liver. Once in a while is likely fine. Every day is likely problematic unless you’re consistently opting for healthy choices.

Gain: Experiences (Especially Crowded Venues)

Loss: Health, Safety, Security

I’ve never been much for concerts, cruises, crowded tourist destinations, sporting events, and the like. Beyond the fortune these things often cost, I’m simply not comfortable in crowds. Now, in the age of Covid, terrorism, and mass shootings, I’m even less so. Any time you expose yourself to crowds you’re increasing the potential for illness, muggings, or other poor outcomes. While the odds might not be great, the chance of something bad happening now regularly enters into my calculus when deciding whether or not to spend on such experiences. If you’re a crowd person this stuff likely won’t bother you, but the crowd-averse might rethink such purchases.

Gain: Travel

Loss: Environmental/Local Concerns

Travel can be great, but it generally carries a heavy environmental cost. If you worry about the environment, then things like plane travel, cruises, and long car trips may cause you to rethink your habits. In addition, travel often takes a negative toll on destinations with issues like traffic, mistreatment of locals, and overdevelopment causing problems. If these things concern you, travel may be something you want to forego, or at least reduce.

These are just a few examples of how spending can cost you more than money. You can probably come up with more for the items you purchase most frequently, and your values. Next time you’re tempted to purchase something, think beyond the money. If there are costs and losses you find unacceptable, rethink the purchase. For purchases you can’t (or don’t want to) avoid, perhaps you can find ways to mitigate the issues so they bother you less.

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Jennifer Derrick

Jennifer Derrick is a freelance writer, novelist and children’s book author. When she’s not writing Jennifer enjoys running marathons, playing tennis, boardgames and reading pretty much everything she can get her hands on. You can learn more about Jennifer at: https://jenniferderrick.com/.