It’s so worth it. Does that sound familiar? Either we’re all rockstars at securing top value or it’s so worth it has become the most ubiquitous justification of spending I’ve ever heard.

If the things we deem worth it are as useful as we claim, we must be making some kind of value assessments to confidently and publicly announce those assertions. But are we?

I worry that worth it has evolved into an empty outward statement of value to quell our own inner uncertainties over whether we’ve made the best purchase decision or to placate others who might otherwise object to our spending choices.

The thing I find most puzzling about the it’s so worth it claim is the frequency with which I hear it. Primarily because I know that the majority of people do not track their finances.

How can you make a proper assessment of how much something is worth if you don’t know the parameters of your resources?

[tweetthis]To make a proper assessment of worth, you must know the parameters of your resources. #budget[/tweetthis]

 

Sure, value is partly dictated by a purchase itself, but a complete assessment must also consider the context of your means. If you don’t track your income and expenses, you can’t have a thorough grasp of that context.

What’s Worth It… In Context

Money is a limited resource. The more limited a valuable resource, the more precious each unit becomes.

Think of how big a deal it was when you had a whole dollar to spend as a kid. Compared to the pennies and dimes you’d collect for your piggy bank, a dollar seemed like a huge sum. That same dollar today though, in your grown up world of expenses and adult responsibilities might feel like it doesn’t buy much of anything. The value is the same, but the context adjusts how that value manifests in your life.

Similarly, the context of your financial circumstances today must be a key consideration in how worth is evaluated.

A meal delivery service for example, might be worthwhile to a six figure earner who frees up their time by not having to prepare their own meals. And while anyone might enjoy saving time and effort in meal prep, paying the same sum on a smaller $40,000 salary might call into question the  worth of that expense.

Not only can an extra couple hundred dollars in food expenses eat up an overwhelmingly large portion of a smaller household budget, it could leave insufficient resources to cover other essential living costs, creating conditions that lead to the accumulation of debt and under-saving.

Beyond immediate budgetary considerations, so-called worth it expenses should also consider the value of would-be savings. In the example of the food delivery service, D.I.Y. cooking could reduce costs for a family by some $300 per month. But it’s not just an extra $300/month that the family should consider; it’s the opportunity cost of that $300/month.

What else could that sum buy or afford? $300/month put into savings and investments for example, could easily grow into an amount worth far more than the convenience of at home meal delivery … or not.

Ultimately, assessments of value and worth are up to each individual to make, but to do so effectively, the full scope of the context must be evaluated. If you don’t know your income each month, the total of your monthly expenses, and fail to consider trade offs and opportunity costs, it might be time to review your assessments of worth.