When you make a decision do you consider all of the options or only the cost option? We’ve observed that people often rush to make a decision to save purely on cost. Whether the decision is personal organizational the same considerations apply.
We were working with a Fortune 50 company that mandated across the board cuts in departmental budgets within their IT organization. They were implementing a new conferencing strategy to increase collaboration and reduce travel. The project manager made the decision to cut a $400,000 line item from the budget without understanding the full implications. That line item had the potential to save millions of dollars. They saved the money but lost bigger savings because all aspects of the decision were not fully considered.
A personal example comes from a colleague who saved lots of money on a flight by taking connecting flights rather than going direct. Unfortunately one of the flights was delayed which caused him to miss his flight home. He saved money but it cost him time and talent that he could have used to do other productive things (rather than wait in the airport.) He also lost a night home with his family.
There are three kinds of costs to consider when determining what “savings” is costing you:
- Time – your time is precious. No matter what your role, you get the same amount as everyone else. There are 365 days in a year, 24 hours in a day and 60 minutes in an hour. It’s the same for executives, employees, moms, dads, friends and family. Once you spend your time you can never get it back. So make sure the time you trade is worth the money you save.
- Talent – you are uniquely gifted. You have special talents and abilities that no one else has. If you are “spending” your talents doing things that don’t make the best use of them then this is a cost. We recommend that you clearly identify your talents and focus them in the way that you make the best use of them. For example, if you have a talent for growing business but you are currently responsible for creating budgets, perhaps your talents are under-utilized and you should consider how you can make a change and apply your talent.
- Treasure – money is the currency of our lives and an important resource to manage well. It is always good to get the most value for your money. However, it’s not the only measurement when considering saving. Balance between saving money and the lost opportunity of talent and time. This balance is where the blessing of a rich life is found.
The next time you are facing a decision about savings, consider the cost in all dimensions including time, talent and treasure. The total price of savings may turn out to be higher than you expected.