The Life Philosophy of Money

I am extremely blessed to be spending my summer vacation in a gorgeous setting in a very expensive house in the south of France. You would think the owner of the house would be happy and carefree, but you would be mistaken. He obsesses with saving money on phone, electricity, repair work, etc. He MUST get the best deal possible. God forbid you call the US without using VOIP or some discount calling mechanism.

Given his desire to skimp on the small (for him) expenditures, his quality of life is compromised. The water pressure is low, the electricity keeps blowing up, his tennis court only has lamps on one side of the court (“it should be enough”) and half the lamps are broken. More importantly, it’s always on his mind, getting in the way of his enjoyment of his beautiful house.

What’s even more discouraging is that the same individual who goes to extreme lengths to maybe save $10,000 a year thinks nothing of buying a boat he rarely uses without doing the rent versus buy analysis. He does not know how much he spends a year (though I can guarantee you it’s a lot!) and sometimes finds himself short on cash!

This individual’s life philosophy of money is to be “penny wise, but dollar foolish” which is essentially the exact opposite of how you should lead your life! Relative to your income you should be penny foolish, but dollar wise. Don’t fret the small things – enjoy everything that makes your day to day life pleasant (after calculating what a “penny” is for you), but be careful about the bigger purchases that can radically alter your financial wellbeing. For most of us, this means being careful with the car and house we lease or buy.

So stop worrying about the small things, it’s time to enjoy life!

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  • Maybe he is happy the way he is. Who are we to judge ? But I don’t think it’s good business to operate the way he does. If he is renting the house, I doubt he will get repeat business.

  • I know it seems “irrational”, but for some reason consumers get a huge amount of utility out of thinking they got a deal or somehow “saved” money. I remember reading a study a couple of years back that said that people are actually more likely to buy an item at 39.99 than at 34.99 because the price somehow conveys that they are getting a bargain. So even though it seems to you like this guy is not maximizing his utility, perhaps he is getting emotional benefits that exceed the value of what he is actually saving in Euros. I have friends who will spend $400 on a pair of shoes they would never have bought for $200 because the original price was $600 and they are so excited about how much money they are saving. I used to try to argue with them and convince them that they were wasting their money, but then I grew to recognize that the real benefits for them are emotional, and that the shoes themselves are not the largest source of utility.

    I bet if you set up a controlled experiment where you gave people a dollar and asked them if they wanted to exchange it for a candy bar, you would find that many more people would agree to the trade if you also told them that the candy bar had cost 1.50 than you would if you told them that it cost 1.00 – even though whether or not their utility from the bar is greater than or less than 1.00 should not be affected.

    I say if this guy is getting pleasure from thinking he is being thrifty, live and let live. If it really annoys you, pay for the lightbulbs yourself – clearly you value them more than their cost! (or maybe you don’t, because you are also being “irrational” and would receive negative emotional utility from paying for something that you feel the owner should be paying for himself!)

  • 1)To avoid the pain of using VOIP or some discount calling mechanism, WHY did’nt you use your own mobile phone ? ?
    2)A boat is as useless as a luxury car
    3)Avoiding waste on electricity or fresh water is an ecological attitude
    4)You should broaden your mind and imagine that others may have a different frame of references :”Of life, money and philosophy” or “the life of money” or “The philosophy of life (without/ with) money…….. etc … 3 key words and so much to think about . Le titre était prometteur, le contenu décevant.
    5)I wish that your south of France host is only a very occasional reader of your blog.

  • My point was not to write how to live with little money. We humans adapt surprisingly well to changes in our financial circumstances for the worse. I also believe that we should not get attached to material goods – be they money or products – but instead cherish our life experiences, our friends, family, etc.

    However, that is besides the point I was trying to make. When someone is blessed with the financial independence my host has, he should be much more grateful towards his life circumstances and enjoy his life much more than he actually does!