The Value Of A Pound Vs The Value Of A Percent

Value of a poundIf you’re anything like me (congratulations if you are), you frequently bookmark webpages that you find interesting and/or useful because you think you’ll refer back to them one day. It’s a nice thought, but it rarely happens because we’re always too busy.

Before I decided to have a clear out this morning, I had over 200 webpages bookmarked. As I was sifting through the pages I couldn’t fathom why I had bookmarked half the pages that I did. However, on a few occasions, I was reconnected with some nice articles, one of which I’m going to share right now…

I read the article on the Lovemoney website over a year ago. Admittedly, I’m not an avid reader of the website. Albeit, fate connected me with this particular article. It’s nothing amazing or ground breaking, but I liked how such a simple and practical idea was put across. It’s the simple things, innit?

The article is quite long, and I only really liked one section of it (I didn’t dislike the other sections, but this one bit just stood-out), where the author explains the difference between the value of a pound and the value of a percentage, and how we get it wrong.

Let’s say you want a DVD. In the shop down your road it costs £20, but with a short drive into town you’ll have it for £10, saving a massive 50%. So you decide to drive into town.

The next day, you want a new TV. On your street it costs £1,000, and in town it’s £990. At £10 less, that’s just a 1% saving, so this time you don’t drive into town.

Somewhere, you’ve made a mistake. The saving in both cases is £10. So do you want that £10 or don’t you?

Love it. I want that £10! I just needed reminding.

This analogy applies to every consumer (which is all of us). Somewhere along the line we forget the real value of the pound, didn’t we?

I don’t like buying cheap junk, whether it’s for myself, or any of my buy-to-let properties. However, I do like the idea of saving money where it can be saved. I’m pretty sure if we put the value of a pound before the value of a percentage, overtime our balance sheets would look a lot healthier.

This is probably a pointless blog post to most of you, but it’s a nice reminder to myself, so I thought I’d quickly jot it down. However, I hope it reminds at least one of you out there what the real value of a pound is, even when purchasing something as basic as a toilet seat.

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5 Comments- Join The Conversation...

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John 20th July, 2011 @ 08:20

Very true old chap! Look after the Pennies and the pounds will look after themselves my dad always used to say. Good use of analogy there too.

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Mike 20th July, 2011 @ 14:46

better still, hang on a day for your dvd, go into town and buy both at the same time and save £20, further subsidising the fuel for your single trip into town :)

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YesAdam 21st July, 2011 @ 14:03

Its sometimes best not to take it "too far" - as I do.

I can spend a day or two surfing the internet on price comparison websites, finding the best price and maybe haggling. In that time I could be actually making money instead of finding a way to save an extra £1.

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Fee 28th July, 2011 @ 13:56

A toilet seat? Each to their own I guess!

The comparison really makes a lot of sense and is a good reminder, so thanks for this different sort of post :)

Fee x

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Amelia 9th August, 2011 @ 15:57

The analogy is a really good one and really made me think! thanks.

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