Is there an amount of money that's too small to concern yourself with? People make that case, usually saying something like "Life is too short to waste time counting pennies." They're missing the point, though, because they're focusing on the wrong thing.
If you focus on the amount of money, it's easy to miss what the real issue is, and end up doing the wrong kind of analysis.
Some people do a "time is money" analysis, such as: It's not worth spending an hour to fix an error that costs you less than you could earn by working for that hour instead.
Some people do a "bang for the buck" analysis, such as: It's better to put your effort where it can make a huge difference (getting a lower interest rate on a mortgage loan, perhaps), than to put it where it only saves you a few cents (figuring out which box of cereal has the lowest unit price).
Both these sorts of analyses (and others like them) are wrong in two ways.
The less important way is simply that they're wrong:
- It's not true that ignoring a minor error costs less than spending the effort to fix it. In particular, it's not true if it's a systematic error--one that would be repeated every month or multiplied in larger transactions. It's also not true if ignoring it marks you as a chump, to be taken advantage of in other ways or by other people.
- Similarly, it's not true that that optimizing small transactions offers a small return compared to optimizing the big ones. Careful attention to unit prices, stocking up during sales, and the other tricks of a careful shopper can easily shave tens of dollars off your monthly shopping bill--which, multiplied by 12 months in a year for 30 years, puts it at the same order of magnitude as the huge savings from a better mortgage rate.
As I say, though, that's the less important way in which the whole line of thinking is wrong. The important error is in imaging that the world can be divided up into "big things" that are worthy of your attention and "little things" that you shouldn't waste your time with. That's a grotesque error with considerable potential to ruin your life.
The "things that are worth your attention" are the things that you're doing.
There are things that aren't worth your attention, but the correct response is not to go on doing them while thinking about something else. The correct response is to do something else. Something that's not worth your attention is not worth doing.
Understanding this is the most powerful tool I know for aligning your actions with your values--and nothing will do more to make you happy than that.
The reason to pay attention to the little transactions--saving three cents on a can of soup, perhaps--is not because such savings, multiplied over all your transactions, add up to a significant amount of money (although they do). The reason to pay attention to the little transactions is that you're doing them.
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