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Underrated Success Tactic: Actually Doing the Math

Doing the math

  • If your problem involves comparing 2 things that happen at the same time, then just add up the 2 effects and see which is bigger.
  • If your problem involves comparing 2 things that happen at different points in time, you need to discount things that happen later.
  • If your problem involves comparing things that aren’t directly comparable (say the benefit of enjoying your job more versus earning more money), you can convert one to the other by imagining a trade-off point for each. 

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IDEA EXTRACTED FROM:

Underrated Success Tactic: Actually Doing the Math

Underrated Success Tactic: Actually Doing the Math

https://www.scotthyoung.com/blog/2018/11/21/do-the-math/

scotthyoung.com

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Key Ideas

Doing the math for better decisions

It forces you to not rush and assume the answers to questions without actually going out into the world and checking them first. It may take a few minutes to pull up a spreadsheet and see how one approach compares with another, but the answer you get will be far more accurate than if you had skipped the work and just stuck with prevailing assumptions.

Doing the math

  • If your problem involves comparing 2 things that happen at the same time, then just add up the 2 effects and see which is bigger.
  • If your problem involves comparing 2 things that happen at different points in time, you need to discount things that happen later.
  • If your problem involves comparing things that aren’t directly comparable (say the benefit of enjoying your job more versus earning more money), you can convert one to the other by imagining a trade-off point for each. 

SIMILAR ARTICLES & IDEAS:

Get The Most Out Of Your Time

It starts with knowing what your time is worth. For instance:

  • People who spend their time doing more profitable work make more money. 
  • People who...

Monetary Value of Time

We all have some idea of how much our time is worth. On extreme ends, it is easy to know if a task is worth your time. For instance, if someone offers you $0.07 per hour and another $7,000 per hour, you would have no problem to decide.
However, in the middle of the time-value spectrum, it is less clear if a particular task is worth your time. While everyone has an hourly value, few people know the exact amount.

The Real Worth Of Your Time

Use the Realized Income Methods to calculate the value of your time. It is based on the income you received and will help you make better decisions on how to spend money day-by-day. You need two numbers for your calculations.

  1. How much time you spend to earn money.
  2. How much you earn during that time.

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The zero-sum budget

Using this method forces you to “spend” every dollar that you make, by allocating all of your earnings into the different categories that your finances require.

It prevents waste and m...

Steps of the zero-sum budget

  1. Determine how much you make on any given month.
  2. List your bills: Once you determine how much money you'll make this month,  figure out how much money you need to spend next month.
  3. Compare and contrast:  Once you see your monthly income and your monthly bills on paper, a clear picture of how much money is left over emerges.
  4. Spend all of your money on paper: decide where that money will serve you best.
  5. Track your spending.
  6.  Make adjustments to get it right.

Never Lose Money

  • Rule No 1: Never lose money.
  • Rule No 2: Never forget rule No. 1.

If you work from a loss, it's much harder to get back to where you started, not to mention ea...

High Value at a Low Price

  • Price = what you pay.
  • Value = what you get.

You lose money when the price you pay does not match the value you're getting. For example, when you're paying high interest on credit card debt or spending on stuff you hardly use.

You gain money when you look for opportunities to get more value at a lower price: For example, buying quality merchandise when it is marked down.

Form Healthy Money Habits

Most of your behavior is habitual. You can change your habits and the earlier you start, the better.

Saving is a habit. Learn the habits of saving properly early. Pay attention to your money habits. Strengthen those habits that help your finances, and break the habits that hurt your finances.

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