Saving Your Money the Right Way Can Go a Long Way

Saving your money the right way is something most people know they should do, but probably don’t. Some people have a system for how they save their money, and some people try to cut out spending in certain areas. Yes its great to save, but if you are not doing it right, you could be making it even worse for yourself. Today I will be going a purchase analysis I recently went through, and discussing why this person was actually fooling themselves, based on the numbers.

The Purchase

The man in question today is my brother, Rahhim Shillingford and his decision to buy a push cart for golfing. The push cart costs $159, and he says he wants to buy it for when he golfs by himself. The benefits of a push cart is that you don’t have to buy a real cart at the course but still do not have to hold your clubs on your person. You can just place the clubs on your small cart and push it as you walk.

Rahhim states he will only bring the push cart when he’s by himself because when he golfs with others he just gets a cart. He believes he will save money because he won’t be buying a push cart every time he plays by himself, or buying a real cart. He also will be getting exercise because he’s forced to walk more.

The Logistics

Typically, buying a push cart at a course costs $3 per round and a cart costs $10. I asked Rahhim how many times he played a round by himself last year and he said 3 times. It is a fair assumption this number will remain the same as Rahhim is a NYS Real Estate Agent, a Personal Trainer, and a Football Coach, so his schedule remains busy. He simply just doesn’t have the time to golf a lot, let alone by himself.

If Rahhim golfs by himself 3 times this summer, buying a push cart would cost him $9 and a real cart would cost him $30. Obviously the push cart would save him $21, but Rahhim thinks he can be even more financially savvy by getting his own push cart. If he stays at this same rate, it would take him 17.6 summers to make his money back on the push cart. This number is called the Payback Period, which is the amount of time it takes for an investment to make its money back.

Analysis

Truthfully, 17.6 summers to make your money back on something that only costs $159 is really ridiculous to me. Fortunately for Rahhim, $159 is not make or break purchase for him, but this doesn’t mean it is not still a poor investment. $159 can get you a share of Apple ($AAPL) with some money left over or even more than 5 shares of Jumia ($JMIA). Thinking of the purchase on the other side, it would take Rahhim 17.6 summers before he could say, “Damn, I should’ve bought that push cart.”

In his defense, Rahhim believes he is saving his money by doing this, he is just not doing it the right way. Making a big purchase to solve such a tiny problem just puts a dent in the wallet. When making purchases, you have to wonder, “How will this purchase benefit me? And how will this purchase affect my purchasing power?” If I was Rahhim, I would just buy the push cart every time I play by myself. Even if every other summer he golfs 4 times, it’ll still be many years before he breaks even.

Conclusion

Saving your money the right way is more than just going to the clearance rack at stores because at the end of the day you still spend money. To save your money right is to understand if you really need something and if you don’t, don’t buy it. One important to trade off to note is that if Rahhim owns his own push cart, he will be less inclined to buy a cart when he’s by himself.

If you are wondering if Rahhim and I actually had this conversation, we did. He did not listen to me though, and bought the push cart. When the push cart came in the mail, it was too short for him. Another reason he should’ve never purchased it, but I digress.