Are You Sacrificing Tomorrow to Save Today?

I had a fun exchange on Twitter thanks to yesterday's post (July 21). It gave me a lot of food for thought and it's moved me to address one aspect of saving we don't often consider fully when evaluating our own or someone else's spending.

First, here's the Twitter exchange:

In short, the issue was the level of surprise at what the F2P household, which consists of 2 adults and 2 greyhounds, spent on groceries during the months of May and June combined.

Curious? I'll save you the trouble of looking at the other post and include it here: CDN $2,131.91.

Yup folks, that's $1,066 per month or $533 per person. For additional context, I can tell you that the F2P household averages $947/month based on having done a 6-month trend about 18 months ago.

This back and forth was a lot of fun and, as I was engaging and replying, I couldn't help but think of the pitfalls of looking at only one aspect of our or another person's budget. It's akin to comparing ourselves to others based on only one aspect of life. We can't even compare our actions today to our actions tomorrow based on the consequences of what we do 

Confused? Let me explain by addressing the idea from three angles:

  1. The Forest or the Trees
  2. Quality vs Quantity
  3. Now vs Tomorrow

1. The Forest or the Trees

The F2P monthly grocery spend in this case is a tree. We can zoom in on it but it doesn't tell us much about the forest which represents our lifestyle. Focusing on one budget item tells us nothing.

What then are the major themes we should look at to get a better sense of the story?

Here are the contextual questions one might want to ask:

  • Does the household have any debt? Nope. None.
  • Do they have savings? Yup. Plenty.
  • What's their savings rate? Last year it was 42%. Looks similar this year.
  • How much are their housing and transportation expenses? Less than our grocery bill...combined. Shocking, I know!
  • Any other questions? :)

Based on the above, the grocery bill isn't even worth discussing. If anything, I'd worry about it getting too low...but we'll get to that in #3. 

2. Quality vs Quantity

When we look at what we buy, the price per item is only one factor. The most important factor is  what we're getting for our money. There's no question the F2P family spends plenty. We're also focused on value as opposed to the price tag alone.

Put it this way: I'd rather buy salmon than cod but I can guarantee you I only buy the salmon when it's within a price range I find acceptable. In Canada, that means $8/lb. Yes. I could have more of the other types of fish, but I find salmon tastes better and, more often than not, I feel it's better for us. The same goes for olive vs canola oil, mixed nuts vs peanuts, fine cheeses vs a block of orange get my drift. 

If I weren't very aware of price per unit or price per pound, our grocery bill would be at least 20-30% higher than it is. We pay attention to price, including purchasing clearance items in bulk, but we won't compromise on the quality of the food we buy. I can't think of a better return on investment than buying what we'd buy anyway but for 70-80% of the regular price. Curious to know more? Here's how I shop.**

This type of shopping works best when a person tends to be patient and opportunistic. Indeed, the same principle affects everything we buy and often leads us to buy used because you can get quality for a fraction of the price (cars, furniture, tools). It can take us months or years even to make a purchase until the right item comes along.

3. Now vs Tomorrow

When it comes to purchases, thinking of the tradeoff between now and tomorrow is paramount. When we want more now (variety of needs/wants) for the same total cost, there's a price to pay:

  • We have less left over to be opportunistic when coming across something else we want/need.
  • We buy smaller single quantities and pay considerably more per item as a result.
  • We buy cheaper versions of what we might be a better, longer-lasting product because that's how we get to buy more! 
  • We buy on credit or take advantage of a "buy now pay later" offer and pay the price.

And, when it comes to certain products, the cost to our future is even greater than we realize. We can be impacting our future health and wellness in material and permanent ways.

Here are some examples:

  • Cheap processed foods: heart disease, high blood pressure, disturbed sleep, depression, diabetes, obesity, joint pain, fatty liver, tooth decay, infections, dementia and many more issues.
  • Cheap shoes: joint pain, corns, hammer toes, heel spurs, bunions, back pain, shin splints, etc.
  • Cheap mattress: sleep disturbances, back pain

The best example of how what we buy now can affect how we live and spend tomorrow is the prevalence of health care spending, particularly on prescription drugs, as a result of eating crap and moving less. When I hear someone spending less on food than I figure they can spend and still eat well (veggie/fruit gardeners and freeconomists aside), I can't help but wonder about what else they're spending on, either now or in the years to come:

  • Prescription drugs to treat chronic diseases (average is $1,000 per person per year***)
  • Over-the-counter sleep aids, pain medication, and other
  • Dental work to address cavities and extractions
  • Medical appointments to address ongoing issues
  • Assisted living 

It may take years, but when we choose cheap stuff over health and wellness, the cost can be more than any one of us can bear later in life (both monetary and non-monetary). I don't know about you but the idea of having a high quality of life for decades to come leaves a better taste in my mouth than the idea of eating Wonder Bread.

So there you have it: context, value and future costs all play a part in evaluating spending/saving patterns, whether they be our own or someone else's. 

I can't close on this post without giving a big "thank you" to Mrs. Escape @, Nicola @, and The Cottage Retreatist @ for the fun exchange yesterday. You gave me more to think about than I expected. I love it when that happens!

Any thoughts on quality vs quantity and consuming now for a better tomorrow? I'd love to hear them.

*What's included in the grocery spend? Everything you buy at a big box grocery store (food, beverages (incl. wine), cleaning supplies, paper products, beauty and bath products, the occasional clothing item...).

**I also go to big box stores, but I try to keep that to a few outings per month max. I don't want to deal with the traffic and the crowds if I can avoid it.

***For more on big pharma, you may like this post.

Image credit/copyright: Gustavo Frazao/Shutterstock