Pay for Value

Value is one of the more complicated concepts we have. It can mean a lot of different things. Expensive shoes at 50% off is cheap according to market value. It might be priced just right, depending on its intrinsic value. But it could also be 100% over-priced if you've already got more shoes than you need. But I'm not saying we should just keep our money. What I am saying is to pay for value.
Value is one of the more complicated concepts we have. I've wanted to write about it for some time, but it's been very challenging so say the least. I mean, it can mean a lot of different things so I'm not sure where to start.

And, to be honest, it can be very confusing.

There's sentimental value, which is what something - like a shirt - means to us. But that same shirt could have a different price value - or what that shirt would be worth if it went up for sale.

And that's just the tip of it. Because when it comes to price, well there's just a lot of different ways it can be priced.

For example there's intrinsic value - or what it's "really" worth. But there's also extrinsic value - which is what it's worth depending on how it's used. And then of course there's market value - which is simply how much other people think it's worth depending on what else is out there.

And that's what I mean by confusing. Because when we think about value, none of those things should be what we think about. In the words of Warren Buffet:

'Price is what you pay; value is what you get.' 
-Warren Buffet, Letter to shareholders, 2008

And that isn't true only for stocks; it applies to everything. Expensive shoes at 50% off is cheap according to market value. It might be priced just right, depending on its intrinsic value. But it could also be 100% over-priced if you've already got more shoes than you need.

But I'm not saying we should just keep our money. Money is just a conduit of value. It has no purpose other than to be spent.

What I am saying is to pay for value. If it's not something useful, if it's not something that can help us reach our goals, it's better if we think long and hard before buying it.

That doesn't mean we can't indulge in luxuries or treat ourselves. In fact, those might be a necessity if we want to continue good habits.

So what it really boils down to is making an informed choice. Because every time we buy something it's an opportunity to bring more value into our lives.


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photo credit: Rebirth Cycle via photopin cc

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