This principle is not about actually saving money in the sense of putting 10% of your paycheck into your savings account (which I think you should at least do regardless), or saving up for a Dave Ramsey style $1000.00 emergency fund, but rather about the other side of the coin of saving – spending. I’ll boil it down to one phrase -If you can’t afford to lose it, you can’t afford it.
I see people employ the opposite of this principle all the time. They buy luxury vehicles, over financed homes, and just expensive crap. The problem is these types of “keeping up with the Joneses” people can’t afford to lose the “things” they purchase. They get trapped in a cycle of debt and a thirst to spend. I don’t ever want to be caught in this situation so I employee my own rule of “If you can’t afford to lose it, you can’t afford it.”
Said another way, aside from big ticket items like a car or a house, if you can’t immediately replace the thing you just purchase – phone, tv, jewelry, couch, whatever.. then you shouldn’t buy it, because you can’t “afford” to lose it. I always use this check when considering buying what I call a “luxury item” – something that’s not a basic need such as basic food, water, shelter, and clothing.
How many things have you purchased that you couldn’t afford to lose? Maybe you’re one of the lucky ones that can afford to lose anything… maybe one day I’ll be there, but life’s not about just owning stuff.. you can’t take it with you when you’re dead…