February 13, 2017

Don’t Step Over Dollars to Pick Up Dimes

An important step in reaching your financial goals is taking a careful look at the things you are doing that you assume are helping with your financial future. This process is essential because oftentimes in our pursuit of financial success, we get caught up in the small stuff that we think is important, but in reality, accomplishes very little.

For example, how many of us have driven out of our way just to get cheap gas at Costco? I know I have. In fact, during one of these recent excursions, it occurred to me that most of us have the tendency to focus on certain areas of savings while ignoring others. The old adage “penny-wise and pound-foolish” really applies here, or as I call it, stepping over dollars to pick up dimes.

It goes like this: If I save twenty cents a gallon on a fifteen-gallon tank of gas, I’m up three dollars. But that hardly covers the extra gas it took to get there, the additional travel time, and the hassle of dealing with traffic!

That is a small example, but think about how this works on a larger scale. Let’s assume you decide to do your own taxes. You may save a few bucks, but more importantly, odds are you will miss out on potentially greater tax savings as well as an organized and manageable account of your finances for the year.

Sure, it makes sense to get gas at Costco if you are already there for the pallet of toilet paper, and in some cases it may even make sense to do your own taxes. However, my point here is that when making financial decisions, we need to remind ourselves to focus on the big picture and not overlook the things that really matter.