Do you think in terms of expenses, or investments?

Consumers generally think in expenses. Groceries, energy bills, mobile phone. Everything that is money out the wallet is piled into the mental ‘expense’ category.

Businesses generally think in investments. Software is checked if it makes the business more productive, services if it makes the business operate more efficiently.

But I try to split my cost mentally into expenses and investments.

Expenses I view as the things I must incur to survive. Investments are the additional cost I would make, to gain more value out of that original expense.

Groceries, rent, bank account, phone subscription, travel expense. There is a minimum of cost I have to incur there where I am personally completely fine.

However, I could upgrade some of those expenses. Travel 1st class in the train cost me an additional 60 euros a month, but has around a 15 hour productivity boost return. If I can monetise even 1 of those hours, it’s already worth the cost.

It doesn’t really matter what the value is here; productivity, confidence, relationship, fun, comfort, or whatever else.

What matters is that you do a quick upfront analysis - of what you believe to be the added value of a purchase/upgrade. Do I believe this purchase will make me more productive/comfortable/confident/healthy/etc? Feeling is just fine here, doesn’t have to be a full-on business case.

Then you must always remember to actually evaluate that. Does it bring the added value? If not, revert back to the ‘baseline’ expense.

I’ve found this little framework gives me a lot of peace. It makes me less busy with keeping my monthly cash out as low as possible, and more focused on how I can be valuable and productive. Investments I view as the multipliers of value and productivity.