The phrase “penny wise pound foolish” was coined by Oxford scholar Robert Burton in 1621. To be penny wise and pound foolish means to focus so intently on saving small amounts of money that you miss out on bigger opportunities. Since the phrase has survived hundreds of years, I think its meaning has broadened to mean anything that sacrifices long-term gain for short-term gain.
Here are a few penny wise and pound foolish mistakes to avoid.
Don’t buy a cheap mattress or office chair.
If your body is going to be using something for multiple hours a day, invest everything you can afford to get a good one! Especially when it comes to mattresses, however, more expensive doesn’t always mean better, but it generally does. I’ve experienced excruciating and expensive back pain from using a mattress too soft for my back. Since then, I’ve researched and bought quality, firm mattresses.
Through trial and error, you probably have a decent idea of what firmness you need in a mattress. Trial and error is actually a key way that you can avoid being pound foolish here. Set out to find the right mattress. Be willing to look at several options and possibly returning a mattress that doesn’t work for you. We’re talking about hours per day for years! This decision matters a lot!
My office chair cost me 600 dollars. It’s an earlier version of the OM5 Gaming Chair. It dynamically adjusts to your posture when leaning back and is very comfortable, as it had better be for this price. In the past, I’ve shopped for a “good deal” on an office chair. Sure enough, my back paid the price for it! Gosh, it seems as if my back always takes the brunt of the punishment for my pound foolish savings.
There are times to look for good deals. When it comes to mattresses and chair, “good deal” just means “bad back.”
Don’t buy cheap, unhealthy food to save money.
Ramen noodles are the classic money-saving meal that college students go for. There’s also fast food, which maintains incredible popularity. Fast food is cheap, both in cost and in quality. But it’s probably cheaper to cook healthy food at home. That takes work, I know, so this advice applies more to choosing quality, more expensive foods at the grocery store. And when you do go out to eat, pay a little bit more for a healthier meal. In the long-term, it will save you money on fewer medical expenses.
Don’t not invest in stocks to avoid market crashes.
Ah, the double negative. It’s back in style, isn’t it? If you invest in the stock market, you might lose money in the short-term. The volatility can be scary. But the stock market over time has gone only one direction and that is UP. The reason is simple. Businesses and people in them continue to provide greater and greater value to the world, which increases the value of the overall stock market. Better yet, inflation is always present (now more than usual), and stocks are a natural hedge against it. If a company is valued in dollars, and those dollars go down in value, it simply takes more of them to equal the company’s true value. It’s not one to one, and there are other factors, but stocks generally do better in inflationary times than cash.
Personally, I think the market is a bit overvalued right now, probably because of the fed pumping it with trillions of dollars. Or perhaps it’s inflation making everything look overvalued when US dollars are simply worth less now. Either way, I’m still invested, because my time frame is longer than the next year or two, and I think stocks will continue to go up in the long term.
If you stay out of the market, you might save some money in the short-term (penny wise), but you will miss out on life-changing compound gains in the long term (pound foolish). This is not financial advice, it’s just my opinion.
Penny Wise & Pound Foolish Conclusion
Being “pound wise” in life is one of the best approaches you can have. It constantly sets you up for a better future so that you’re always reaping the rewards of previous decisions. It will result in more “painful” investments now, but any regret will melt away once you realize the superiority of your decision as you enjoy it. This is opposed to the penny wise approach, which tries to set up a better future by making unwise sacrifices now that backfire. The best way to know the difference between the two is projection.
When faced with a decision, project the impact of your choice in two years. Will it be a net benefit or detriment in two years? When buying a cheap mattress or chair, for example, you can imagine the cost savings, but also imagine a life with back pain where you loathe sitting at your desk or going to bed. That isn’t worth any amount of money!
I’ll leave you with one last tip: Go on vacation. It’s expensive, yes. It’s penny foolish, sure. But the memories, new perspective, and break from the grind can really pay off! I’m convinced, anyway. I’m going to Greece next month.
