Following my "Why I spend $200 a month on AI Tools" video this week, I wanted to talk a little more generally about what I spend my money on and what I don't. For many years I was extremely cheap when it came to buying stuff. I would always buy used electronics or clothes and would never think of spending as much money on random tools and subscriptions as I do now. While being cautious with your spending is definitely not a bad thing, I completely overlooked the concept of ROI (Return on Investment).
Return on Investment is pretty self-explanatory: it's the return that your investment yields you. For example, I buy a stock for $100 and sell it for $120, my return on investment is 20%. Now how can you apply that to your spending habits? You shouldn't judge an expenditure by its cost but rather by its ROI.
Here's where it gets interesting: things like designer clothes bought just for status have essentially zero ROI. But things like laptops, tools, or education can have insanely high ROIs. I'll give you an example: I recently bought a new phone and my old habits kicked in and my initial plan was to buy a used phone for as cheap as possible. But then I thought about how much I use my phone for content creation and how much better the quality would be if I just invested more and bought a new phone. And I'm so glad I spent more money on the new phone because the quality of my content improved drastically, which led to new partnerships, which led to new revenue. The ROI on that phone was insanely high. Same goes for my AI tools. They cost a lot of money, but it's nothing compared to the revenue they bring me because I get so much more work done.
Now, not everything needs to generate revenue. Rest and entertainment have real value too. But here's the key: if you're buying something that actively takes time away from your goals without giving you anything in return, that's a negative ROI. If it's fueling your productivity or helping you recharge so you can work better, that's positive.
To sum up, don't just look at costs but try to identify the potential return on your spending. Stay cautious with things that drain your time and money without giving back. Be bold when it comes to things that could have an insanely positive ROI, like investing in education, mentorships, or a new business idea.
💡 My Recommendation of the Week:
Challenge yourself for a week to identify the ROI on all the things you spend money on. Food that makes you feel good and gives you energy? Positive ROI. Course that teaches you a valuable skill? Positive ROI. Netflix subscription you use to procrastinate instead of as genuine rest? Probably negative ROI. I think you get the idea. After the week, you'll have a much better feeling of what you should spend more money on and what you should cut down.
Have a great week,
Chris