When it comes to attitude concerning affordability, I have seen many people advocating that one should think “I can afford it.” While this style of thought has its merits, I believe it is fundamentally flawed and, when practiced alongside vanity, will present unnecessary complication and do more harm than good. Besides, there are other, more rational ways of looking at the question of affordability, which I will mention one here.
The question of affordability depends mainly on two factors. The first is the availability of time or money in exchange for the item desired. This is the most obvious representation of affordability. The second is the opportunity cost with regards to the item desired.
As I do not want to attack a strawman, I make no sweeping claim that the first factor is predominantly what the “can afford” advocates had in mind. Rather, I wish to stress the importance of evaluating the opportunity cost. It is a fairly easy decision to make if the item concerned and alternative uses of one’s time or money can be quantified or ranked. Even when quantification is not possible, questions of whether the spending is made consciously can still be asked, and that will function as a safeguard against wasteful spending.
While rational, fact-based evaluation is important, it bears little direct relationship to the psychological portion of decision-making. Appeals of whim, desire and vanity, among others, can often be the overwhelming factors upon which an action is done. Thinking “I can afford it” unfortunately appeals to vanity too readily; in addition, the saying by itself is not meaningful when the two factors of affordability are not taken into consideration. Therein lies the great danger of unthinking and adding to the herd mentality within oneself.
With the framework of opportunity cost fairly easily applicable to situations I encounter, I find little need to resort to the “I can afford it” attitude. In fact, there is new found confidence in saying the four words “I can’t afford it” because I can’t justify spending the money — due to inability to cross the set hurdle rate, or the money could be more profitably employed elsewhere.
What do you think?
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