It Doesn’t Cost A Little, It Costs….well, you know.

I work for a company that is involved in the financial industry.  One of our general newsletters recently had a tidbit of information that I found intriguing.  I thought I’d share it here.

Little things can certainly add up.  If an investor with a $5-a-day caffeine habit were to take the money he or she normally spends on lattes every month and invest it in an account earning a hypothetical 8% average annual return, the accumulation would be almost $150,000 after 25 years.

Tidbits like that make one think about their typical spending habits.

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One Response to “It Doesn’t Cost A Little, It Costs….well, you know.”

  1. Lisa says:

    I read something interesting in a book called Predictably Irrational. It said that whatever price at which we first contemplate purchasing something acts as an anchor from then on and we evaluate purchase decisions relative to that. So if people were used to paying $2.00 for coffee, Starbucks had to make the product seem like something other than coffee so they could introduce a much higher price, or people would evaluate a $5.00 cup of coffe relative to the $2.00 anchor and wouldn’t purchase it. So they tried to make it seem like a store in Europe and like an entirely different product, a specialty. That way they could introduce a brand new anchor. Of course he explains it better than I am here… it’s very interesting. The book is a great read for anyone interested in the psychology of our decisions and purchases in particular.

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