When I think about bills, I annualize them. $30 a month? That’s $360 a year. $5/mo? $60 a year.
I use this to help me grasp the long term cost of all my decisions, but nobody else I know does this.
For instance, my brother and I are moving soon into 2 separate apartments (we currently share a 2 bedroom) and the new complex doesn’t have Google Fiber Internet. I complained to my brother that on top of everything else I’ll have to pay $5/mo extra for Google extended storage I was getting for free.
He said it’s only $5/mo, just get and don’t worry about it. I was like, that’s $60 a year which is basically a Costco membership. He said “oh hmm, good point yeah”
So I’ll work on reducing my storage usage on Google to be able to stay on the free tier, but am I alone in thinking this way about everything I buy?
The next level of this is to calculate the amount you would need to have saved to support the cost in retirement. E.g. if you have a $60 annual cost, you need to save $1500 just to cover it for the rest of your life (following the 25x rule for retirement savings).
The time value of money crosses my mind similarly. The value of this $5 today if invested instead would be worth XX in X years. Lol
That’s a great way to look at it.