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The High Cost of Shortsighted Frugality

When an Obsession with Paying Less Can Cost You More

by Michael Hyatt

The productivity app Evernote upped its prices last month. The Premium package, which is what I use, jumped from $50 a year to $70. That’s a big hike, and people are complaining like crazy. I can’t tell you how many Twitter and Facebook rants I’ve seen about this.

I won’t join the chorus. To me it represents a real-life example of shortsighted frugality.

protect your money

Can we be honest for a moment? Yes, by itself the price hike looks significant. But we’re talking $20—for a year’s worth of what every user I know recognizes is a fantastic productivity app.

That’s a pizza. It’s a couple of lunches. It’s a few cups of coffee. And people are threatening to abandon a platform they love over it. I’m all for frugality, but frankly this doesn’t make sense.

What’s really interesting is how the Evernote price hike highlights a divide I see with people all the time.

 

Scarcity vs. Abundance

Researcher Carol Dweck talks about people with fixed mindsets and growth mindsets. I usually frame it in terms of scarcity and abundance.

  • People who approach life with a scarcity mindset are constantly trying to manage limited resources and resent it when outsiders ask for more of their pie.
  • People who approach life with an abundance mindset are constantly trying to increase their resources and use outsiders to bake bigger pies.

This difference has powerful ramifications for personal growth and professional success.

 

What Scarcity Costs You

Compared to scarcity thinkers, abundance thinkers have at least least three ways to position themselves to win.

  1. Abundance thinkers keep their eyes on opportunities. Scarcity thinkers ask how much something will cost if they take action. Abundance thinkers count that cost, but they also ask how much it will cost if they don’t.They frame the issue differently. Instead of factoring the expense, they also factor the opportunity.
  2. Abundance thinkers place a high value on their time. Scarcity thinkers pinch pennies but are spendthrifts with their hours. Take the Evernote example.How many hours does it take to research, switch, and learn a new platform—all to save $20? My time is worth more than a few cups of coffee. I bet yours is too.Abundance thinkers trade small dollars for high-value time, and reinvest their hours in pursuits that will earn double, triple, or a hundred times the money.
  3. Abundance thinkers invest in growth. Because they factor opportunity and value their time, abundance thinkers are happy to spend money on products or processes that enable them to increase their personal and professional resources.They freely share what they know and learn from others. They buy books, take courses, and attend conferences. They outsource tasks they’re not proficient or passionate about. They upgrade their knowledge and their tool kits.They’re not satisfied with incremental improvements when they can make leapfrog gains toward their goals. And they always have big goals because they aren’t trapped by limiting beliefs about what’s possible.

 

Scarcity thinking costs you all of those gains.

Being frugal is wise. But shortsighted frugality is foolish, keeps you stuck, and costs you far more than you bargained for.

Read it at the source.

About Joan Weis