We have all heard this phrase in our lives (Penny Wise, Pound Foolish), but have you ever stepped back and taken a look at your own spending to see if you have ever been foolish with your spending – especially on that big stuff?
First of all, I want to be sure everyone knows what this statement really means. At the most basic level it means that you are wise when it comes to the small stuff (like grocery shopping for instance), but you are frivolous and unwise when it comes to the big stuff (like home purchases). Now, when it comes to those big purchases, this statement doesn’t mean that you are just heading to the dealership and saying, “I want that one” without trying to score a deal. What it means is that while at the dealership you immediately head to the Porsche lot and try to find yourself a “deal” even though the Chevy lot has many cars that are much cheaper and will certainly get you from point A to point B.
There are many times at work when I discover that my co-workers are penny wise and pound foolish. They talk about how they don’t often go out to eat because it just gets too expensive, but when we walk out of work together I see them hop into their newly leased BMW. It just doesn’t make any sense! But, in our society today everyone assumes that leasing a car is the norm, so we do it without thinking sometimes. We also find ourselves looking for the largest, most executive looking house we can find even though there are only three people that need to live in it and a simple Cape Cod style house would do just fine.
Don’t get caught up in the penny wise pound foolish lifestyle. It only leads to an empty bank account and a big head.
Do you have any stories about people being penny wise pound foolish?
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My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.