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How Many Hot Chocolates Is That?


While out for a walk with a friend, they see some fresh lemonade advertised in a window and suggest stopping in to buy some. While I am happy to wait for them to get their lemonade, I do not immediately buy one because I am going through an internal financial check about how much I value that lemonade. If it is the hottest day of the year and we have a long walk ahead of us, I probably buy it. If it is a cool fall day with only a half-mile walk to go, I probably do not. But in either situation I am asking myself a question that seems weird in lemonade weather: How many hot chocolates is that?


I love hot chocolate and drink it throughout the year in the way some folks drink coffee. Enjoying stove-top hot chocolate, properly melted with actual chocolate rather than using a cheap mix of mostly sugar, is a delight of starting my work-from-home routine each day. However, sometimes I am on the road and either need to purchase a hot chocolate elsewhere or want to try the best local hot chocolate whether in Paris, Seoul, or Belgrade.


Trying these decadent hot chocolates, or even buying a Starbucks peppermint hot chocolate when on the road, provides me a lot of joy that I would never want to sacrifice for less important purposes. So when it comes to buying something, I calculate how many hot chocolates it would cost. If the lemonade is relatively inexpensive, is that lemonade as valuable as half of a future hot chocolate? If it is a bit fancier, is it worth an entire future hot chocolate? If a snack looks good as well, is this lemonade and snack stop worth two hot chocolates?



Setting Your Spending Metric


The relatively inexpensive item that adds big value to your life will probably not also be hot chocolate. (If it is, please contact me so we can exchange our favorite hot chocolate destinations!) While you will have a different spending metric, this same concept is replicable. There is a whole blog about personal finance called How Much Is That In Tacos?, declaring a clear personal spending metric.


If you are struggling to determine your spending metric, it may be something small that is still important enough for you to allocate money into a high yield savings account for routine happiness spending. Other avenues to explore include the place from where you would want a gift card or the event you look forward to each week. Just do not think too hard: Your spending metric should be an apparent joy that you look forward to because it is the baseline for other spending decisions.



Scaled Spending Metrics


While hot chocolate is my baseline spending metric because even small purchases can be measured in hot chocolates, I also use a mid-tier spending metric and high-tier spending metric for larger purchases. For me, the mid-tier is how many baseball games, and the high-tier is how many two-week vacations to Greece a purchase would be.


The mid-tier comes into play a lot when considering events or weekend trips. I often find that an event costs two baseball games, but I would equally enjoy going to the game 10 minutes from my home after spending the morning at the pool. If that is the case, I should not spend money to go to the event because I value my regularly occurring joy more highly, even though it costs less. On the other hand, if a trip somewhere would cost four baseball games, and I would readily give up five to go, I should definitely take the trip!


You may be wondering why a high-tier spending metric is even necessary because that level of spending is so rare. First, I hope it is rare because too many high-tier spending situations would be quite stressful. That said, you almost certainly have some. Here are some examples where that high-tier spending metric is important:


  1. Our current home is a two-bedroom condo with a pool in a part of town we love. Before this, we lived in a one-bedroom apartment in a part of town without the food and entertainment we love. Living here costs almost two vacations to Greece a year (or almost one Greece vacation each) more than living at our previous home. When moving into a more expensive place, it is worth considering whether you want to give up the value of a Greece vacation (or your high-tier spending metric) for that home. We ultimately decided the move was worth it because the pool lets us feel like we are on vacation on a Tuesday afternoon and the proximity to our favorite places saves us a lot of time, money, and stress.

  2. Last year we bought a sectional and new big-screen TV. Together, they cost about 80% of a Greece vacation. I weighed this one for years, and for years we opted to keep our old couch rather than upgrading. We prioritized the Greece vacation while slowly saving up for these upgrades. This is an example of deciding something is less important, meaning it should not be prioritized, but it also should not be neglected altogether. Save slowly in a high-yield savings account for these items.

  3. New technology including new smartphones, computers, and adjacent accessories are expensive. For the expensive tech purchases, consider whether it is worth cutting that Greece vacation in half or whether you can purchase a refurbished product or older version to save on the cost.

  4. Any vehicle is a big purchase. Do you really need that truck even though it is five two-week Greece vacations more than a car? Maybe yes, maybe no, but weigh that ten weeks in the Mediterranean over having a larger vehicle for the four times a year you truly need it and could rent it instead.

  5. Home and property renovations often cost multiple Greece vacations. Consider the joy from the renovation versus the memories you will make from the trip to make the right decision for you.

  6. A controversial one to consider is whether a degree or certificate program is worth it when compared to a high-tier spending metric. This is less apparent since if the program will almost certainly lead to an immediate jump in salary after completion, that may mean more Greece vacations going forward. However, if the future salary is less predictable and your current employer is not assisting with financing, it is worth pausing to consider the value of certain education programs.


This is by no means a comprehensive list of high-tier financial decisions, but this gives you an idea of what you may encounter. Having both a mid-tier and high-tier spending metric before you encounter situations where you need one provides a clearer and unbiased comparison. If you wait to define your metric until you encounter a spending decision, your excitement around the new purchase may immediately bias you.


Additionally, your high-tier spending metric may be completely different from mine. If you are more of a homebody uninterested in travel but love having the latest technology, your high-tier spending metric may be the latest smartphone, and you may turn down a two-week trip to Greece because of how many smartphones it costs. We all have different spending priorities, and that is why it is important to identify yours.



Remember Your Personal Spending Metrics


On a humid 95-degree day it can be difficult to remember how delicious a cup of hot chocolate from Angelina is because a lemonade sounds so refreshing. But if you get in the habit of referencing your personal spending metrics whenever you are making a spur-of-the-moment spending decision, you will eventually check yourself without forcing the comparison. This takes time, but it is worth it. For me, it results in more hot chocolates and more happiness.


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