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The Relationship Between Cost and Value

November 12, 2010 by Chris Billows in Think (Speculation)

If you have the balanced relationship with money, you see it as a means to an end. Money is a tool that gives you control over your life and more money can give you more control over your life, but to a limit. How we spend our money determines the value of what we experience in life. In a very real way, money has two facets. Its cost to buy the things we want and the value of what we are get.

The problem is that we spend lots of time thinking about cost and very little if any about value.

In my job I deal with giving out people money to provide their own care. It works really, really well but there are always people who try to get away with stuff. I have had clients spend the money on things that fall outside of the boundaries of what we allow. When this happens, we ask for the money to be paid back.

Why? Because there is a double cost to them misspending the money.

1) The monetary cost. The money that was given out is gone.

2) The value cost. The value gotten for the monetary cost is not the value that was agreed on.

Its a double cost.

For example, one of my kids has a really expensive calculator for school, a $165 graphing machine. This thing is brilliant, but being a teenager my kid is not very astute with responsibilities at times. I informed my kid that if this thing is lost or damaged they will need to buy a new calculator out of their own money PLUS pay me back the money. Is this fair? How does $165 become $330?

1) A lost calculator needs to be replaced at the cost of $165. This would be paid for by my kid, not by me.

2) The original value of my cost has been lost. My original $165 has been wasted because its purpose was not realized. I also could have spend that $165 on something else that would have given me something I valued. If my money is going to be wasted then I deserve to have that reimbursed.

So it is not just about money, but also about value. If we don’t get our expected value because somebody made a poor decision or mistake, then we should get the money back so that we have the opportunity to do something else with the money.

We need to remember that the cost of our money expenditures is only one side of the coin. The value of those expenditures is what determines the degree of control over our lives and our happiness.

About The Author: Chris Billows

Chris Billows is a knowledge seeker, a libertarian who believes in social responsibility, a health care bureaucrat, and a business dabbler. The Journals of Doc Surge is his personal blog. Doc Surge (a cool synonym for Billows) is inspired by Doc Brass from the Planetary Comic series who in turn was inspired by the 1930s pulp hero Doc Savage.
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