Law of 752
If you are like me, you enjoy an occasional coffee at an overpriced coffee bar. It’s fun to get out, sit down with a friend, and have a tasty warm drink.
Financial experts love to talk about how your lattes and avocado toast are killing your financial future! But is that reeeeeally the case? What’s up with everyone trying to shame you out of your guilty pleasures by telling you how they will add up? Will they add up? If so, to how much? Maybe it’s still worth it!
In today’s post, I am going to teach you a quick and easy way to quantify your expenses so you can decide if they are worth it or not.
As your FinanciallySavvyParent, I promise to always keep things as simple as I can. This trick is no different. There is a very quick and simple way to figure out the impact of your spending habits. When applied, you will have an objective measure that will allow you to decide if a certain regular purchase is worth it or not.
I introduce to you, the Rule of 752.
Super Simple Math
Say you spend $3 a week buying a latte. What would that $3 be worth if instead of buying the coffee, you invested the money for 10 years, and it compounded at 7%?
To quantify that, we take $3 and multiply it by 752. The result is $2,256. 
So if it were all or none, you could either have one $3 latte each week, OR $2,256. Maybe that seems like WAY too much money to be wasting on coffee! Or maybe, the benefit that you derive from having that cup of coffee with a friend each week is happily worth $2,256 over 10 years.
That choice is up to you! But now you know whether it is worth it or not and can make better decisions.
I recently had a guy from the phone company come over to replace my router. He tried to upsell me on a better router that would cost about $6/month from the phone company. Maybe he is a good salesman, or maybe I am a gullible guy (also possible), but I was able to quantify it.
$6 works out to $1.50 each week. Applying the Rule of 752, that comes out to $1,128.
Now, I work remotely. I make super fun youtube videos.
The Internet is an important part of what I do. For 10 years, I would happily pay $1,128 to have a more reliable connection. For me, it’s worth it. The point is, I was able to quantify it.
Making your own choices
Is $20 a week more for a leather interior in your new car worth $15,040?
Is an extra $50 a week for an extra 200 square feet on your house worth $37,600?
I don’t know. You tell me! But now we can go into it and have make some informed decisions about what we buy and the opportunity cost of what you are giving up.
Getting Shamed
Most people that hear about the Rule of 752 look at is as a way for people to tell you, “look how much you are wasting. Never spend on this crap! Never spend on that useless garbage! Just invest it all and use it when you are old.”
I don’t think that is the way to approach it. It’s true, those $3 coffees can add up over time, just like all of the choices we make. Maybe it might be better to invest it and let it compound.
Some weekly expenses will be worth it, and others won’t. If it’s worth it to you, Go for it! Drink the coffee! Once you realize the impact of small changes, a whole new world will open up for you, and you will see things differently. The point of the Rule of 752 is to make informed decisions, and teach your family to do the same.
