Value of food

 

When it comes to food, I am one of those people who are willing to save on clothes, makeup, etc just to eat better and more of it.  I know different people have different views of how they perceive the idea of food because some eat just because they need to survive while others enjoy the luxury of high quality taste.  Eating out on a regular basis, I have developed a guideline/concept of looking at food in a whole new different way. 

My perception

After being finance major, I have perceived this world with terminology from finance to relate to my every life. And Of course my everyday life would definitely include Food and lots of it.  Food is not only means of survival but it also marks value in terms of class and money. Queen Elizabeth I’s era had their separation of a high class vs low class society.  People of low class would eat vegetables, fruits and fish while the upper class like Queen Elizabeth herself gets to dine in exquisite dishes made with fine ingredients and meat.  In this case, how exactly is food measured in terms of value of its money?

I noticed that dishes served in very small portions of food with nice presentation and appearance tend to be more expensive than dishes with bigger portions but had a less appealing appearance.  In this case, food is seen from how much it’s worth based on its capital value  like how stocks are observed for their worth.  Money that’s put in an account with accumulated compound interest is worth more when you let it sit for longer.  Wine is a very good example of this because the longer the wine sits for, the larger the worth values it becomes. 

Value for your food Dollar

Most people now a day’s tend to worry more about their health rather than dealing with how much it’s worth.  Companies have come up with excellent marketing strategies to sell their food by hiring people to score their nutritional value and adding healthy marks on the outside of product labels.  Labels like “all natural “, “organic”, “includes acai berry” are popular labels that attracts people in buying their products.  Many restaurants have also started listing calorie numbers next to their dishes and claiming they use all fresh natural ingredients as tactics to attract customers.  Dr. Lars Perner at Marshall school of business have provided a detail written work of marketing strategies that companies use. 

It’s important that we really look the food we spend on and how much of it is really worth what we’re paying for in reality.  Restaurants are nice to go once in a while but spending wise can really hurt your wallet.  Like my mom always said “home cooking is the healthiest.”

Giving up, gaining and gone

 

 I want to introduce the idea of Opportunity Cost and Sunk Cost to our everyday life and the fact that these two terms play a significant role in how to live our lives.  A lot of the times, the terminology and the concepts we learn in the business world are very closely related to what we go through in our everyday life.  The business world can be a very cruel and complicated place to survive in so a lot of the times, I like to break the concepts down into my own simple ways.

Opportunity cost and sunk cost

Basically an Opportunity cost is measured by the next best alternative in choosing between two or more things and a sunk cost is cost that’s spent and cannot retrieve back or recovered.  The opportunity cost of a college student going to college is simply the sacrifice of working in the real world and making money.  During the 4 years of college, the student opportunity cost is the sum of salary money in 4 years making in the real world.  The Sunk cost of a college student going to college is the money spent on tuition, books, etc because that money is spent and will not be retrieved.  There’s no absolute guarantee that going to college will result in a high paying job or even one in the first place.  It’s assumed that the actual return meaning the money you put in for college will expect to have an outcome of a much higher salary when you graduate. 

Actually there’s a very special connection between the idea of risk, decision making, opportunity cost and sunk cost because risk contributes to decision making and opportunity cost and sunk cost contributes to risk measurements.  Costs are the factors that measures risk because the higher the cost of something, the higher the risk it imposes.  Our decisions are based on our gains/losses (risk), searching for alternatives (opportunity costs) and spent expenses (sunk costs). 

Making a simple decision like planning a dinner requires all of the factors discussed above.  Human beings are decision makers and we are good at determining what’s right for ourselves and distinguishing between what hurts and benefits us.  Deciding whether to cook a home cooked meal with fresh ingredients or ordering take out from a restaurant is a simple decision but requires a series of concepts.  The opportunity cost of cooking at home is sacrificing the time to enjoy the ambiance of a nice restaurant and having food presented in your face without work.  And the opportunity cost of eating out is practicing your cooking skills at home and having to take the time to get dressed up.  The sunk costs would be not a guarantee that home cook food is delicious and the ingredients at the restaurant may not be fresh.  The risks are your health going out to eat and spending money you shouldn’t be. 

The importance of incorporating costs such as opportunity costs and sunk costs is to allow your decisions to be made wisely.  Don’t make decisions you will regret later.  It’s important to think about costs and risks because they will benefit in your decision making. 

The power of credit cards and the toxic risks

 

 

Credit cards are the number one killer !  According to credit.com, there was a national credit debt of over 900 billion dollars at the end of 2007. 

Spending money is definitely a lot easier than making that money back.  As a college student, I’ve experienced the danger of spending more than I earn at work due to the invention of the credit card.  The history of Credit cards actually originated in the United States during the 1920’s when businesses and hotel chains issued them to customers. The first bank to issue credit cards was actually in Brooklyn New York by a man called John Biggins.  As time went by, credit cards became more popular and in 1996, the Supreme Court lifted restrictions on the amount the company can charge customers in the Smiley vs Citibank case.  Credit card companies may be making fortune advertising and attracting people to apply for credit cards but poor citizens and college students suffer badly. 

Secrets to credit cards

Credit card companies use many marketing strategies and tactics to persuade people that they are actually doing a favor by “lending” money first and paying back later. Many people don’t know that late fees contribute to high interest rates meaning the more late fees you receive, the higher the interest rates.  It’s very tempting to think that paying money later for money that’s spent now is a wonderful thing but you actually pay a lot more than you spend due to the interest rates.  It’s great that you pay off all your bills once the statement arrives, but that’s not the case for many people.

Companies like to lure in customers by placing an eye-popping low interest rate on letters but when you actually apply for them, you may not qualify for the interest rate you thought you applied for.  Some companies charge for not only late payments but also inactivity and over-limit charges.  This means that you will get charged if you haven’t swiped your credit card in a specific time period or you charge over your limit. 

The idea of payment allocation is something else that’s very tricky companies do to consumers.  Some people that own a specific credit card are eligible to apply for a promotional low interest rate.  They will think of ways to make the most money out of you meaning your payments will be charged with the lower rate but the overall balance left on your account will be charged with the higher interest rate compounded every day.

Tips

Credit cards are actually a good way to accumulate a good credit score but it’s really easily abused.  The best way is to create a budget, save, and spend wisely.  Don’t apply for a credit card for each store because you will definitely be tempted to use it.  Have a couple on hand and it’s  a good way to keep a record of the things you spent using a credit card because you don’t want a surprise attack at the end of the month when the bills come.  And lastly, pay off your credit card bills on time and all of it if possible.  Don’t let interest accumulate because you will end up paying for interest all the time.

Risk in decisions

ImageAs a part of our everyday life, everyone makes decisions on a daily basis whether it’s choosing the clothes or makeup you wear, to bus or drive, or even the meals during the day.  Underneath these decisions are hidden with what’s called Risk.  We may not notice consciously, but Risk is an important factor that plays a significant factor in our decision making in my opinion. 

What is risk?

                           Risk is like a building block to decision making. 

 In finance, Risk is defined as the probability that an investment’s actual return will be different than expected. What this means is that risk plays an important role of determining how much we expect by prediction to gain or lose from choosing or making a decision. Decisions are made by businesses by measuring the different types of risks that are linked to the decision and the overall effect it has on the decision. 

Risks are taken into account on a daily basis when it comes to the financial and business world.  Decisions on which projects to take, papers to sign and companies they want to partner with all have to incorporate risk measurements in the final decisions. Experts often provide valuable tips on measuring risk to provide the building block on making the decision with the best return. Return is the goal you expect from making a decision with risk measurements taken into account.  Ofcourse the ideal goal for businesses is to have the best return with the least risk possible.  This means the ability to maximize gain with the least you can lose from making that decision. 

 Relating all this to everyday life, we make decisions according to the types of risks that can affect either good or bad of different outcomes.  For example, you are trying to determine whether or not to wear shorts or jeans on a typical day in San Francisco.  The risk you take for wearing shorts are to freeze or even catch a cold and the risk you take for wearing jeans are sweating and feeling uneasy if the weather gets hot.  You measure risk by checking out your window and searching for weather forecast online or tv.  Your decision is based on your overall goal you are trying to achieve and the outcome you expect by taking measure of risk.  You decide that wearing shorts produces a better outcome because it looks cuter and you don’t mind taking the risk of a cold day.  These are the things we may not notice on a regular basis because we make certain decisions in merely minutes or seconds but decisions are indeed related to how we view risk. 

How we spend our money and the budgets we create for ourselves all incorporate the ideal of risk.  We create budgets to save money with the lowest risk possible and we don’t overspend our money so we don’t risk being broke.  Risk is something that holds us back from making a decision but at the same time can be advantageous towards making a good decision to gain more. 

Spending on cosmetics

how-to-plan-a-wedding

As a young female college student, I, myself often get suckered into buying new advertised cosmetic products.  Although I know on the back of my head that they are all a waste of money and prices are very expensive, I still can’t hold back from buying them on once in a while.  I’ve been using branded cosmetic products and skin care products ever since I was fifteen.  As I grew older, I realize that brand isn’t important but rather what’s inside the product truly matters.  So I ask myself, what is it that made me think all these years that brand is such a big issue to not only me but to a lot of young females?  The truth is companies want us to believe that the bigger and well known brand, the better and effective their product will work on your skin.  It’s almost like we’ve been hypnotized by all these advertisements and the display work from counters in malls.  What’s the difference between a $10 Walgreens eyeliner vs. a well known brand for $25? Matter of fact, there might not even be a difference in terms of ingredients and how effective they work but rather the brand that matters. 

Hidden truth about cosmetics

Before you start spending all your paychecks on expensive cosmetics, you should think about the alternatives to a cheaper similar product.  What do I mean by that? I like the idea of saving money and forming budgets relating to how we spend our money in everyday life. According to the article,” A cosmetic industry overview for cosmetic chemist” by Perry, the cosmetic industry pockets $170 billion a year.  The cosmetic industry is making a fortune producing expensive products to attract females of all ages.  No matter what age you may be, beauty is never something any female will discard or forget about.  It’s important to look young and beautiful but being smart about your spending strategies is also important.  You can kill two birds with a stone for being beautiful and smart while saving money.   

There are many sites that provide  helpful tips on how to save on cosmetics

A cosmetic industry overview for cosmetic chemist” by Perry is a very intersting article that talks about the hazards of makeup. 

Organic food is becoming more popular nowadays and people are really trying to cut back on eating unhealthy.  If organic food is important, why not think about cosmetics in the same way.  In fact, there are a lot of harmful chemicals in cosmetics that we don’t know about.

Toxic ingredients that are inside many brand name products. 

I’ve recently been a fan of natural makeup brands that end up in Whole foods and many natural food markets.  They contain ingredients that are good on the skin for a very good price also.  Making decisions on what types of products to buy is really like putting two different products on a scale.  You really have to make priorities to what you really want for yourself who may include whether brand name is important, price of the product and the ingredients.

Saving can be easy too!

First, I want to emphasize the importance of saving and the many ways people, most importantly students can save on a regular basis. Saving money is a major benefit because it sets aside savings for emergency use and allows extra money to grow using investment tools.

Why is it so hard to save in the first place?

Walking down the streets of downtown, I notice advertisements are everywhere from buses, buildings and even on the top of taxi cabs. It’s almost like they’re screaming out to you saying “Buy me!” No wonder college students and even I struggle to save money due to the temptation from all these ads everywhere. Companies are targeting online ads nowadays the most because technology has provided easy access for all of us with those handy dandy smart phones. With all the nicely advertised sugar coated products out there, the younger generation of kids out there ends up with racked up credit cards and no savings. There’s so many new innovative products out there today in the market that it’s irresistibly hard for people not to own one for themselves.

My own experience

After so many years of spending and trying to save money, I have accumulated several tips on how to save money.

  1. Set a goal: How much money do you hope to save within a certain time frame?
  2. Motivation: What do I want to use that saved money for? Perhaps to buy something really nice for myself? Invest the money? Or simply to put in a bank for emergency use?
  3. Categorize needs and wants. Ask yourself what are the absolute resources I need for everyday use and those that I can live without.
  4. Create a budget on how much you allow spending every week
  5. Set money aside every week and store the money away.

The tricky thing about saving money in my own opinion is the temptation to spend it after you save some money.

Here’s an interesting piece of advice  that can help college students save money.

Saving money using a step by step procedure is also important for those who want to get started right away. 

What to do with the saved money afterwards?

Money can be put in a savings account that has a minimum. Having a minimum on an account for example $5000 allows the temptation to pull out money or else it will get charged. If enough money is saved up, you have the option of putting into a CD account. A CD account is a certificate of deposit account which allows you to have interest on your money. The longer you allow your money to sit in the account, the higher interest rate you will receive in return. A CD allows the client to put money into an account but aren’t able to draw money out before its maturity date.

It was very hard to keep the money I have successfully savedk but I have learned that control is the biggest power we own.

There are indeed

Subdue your appetites, my dears, and you’ve conquered human nature” by Charles Dickens.

Here is a link for financial strategies to invest money

budgets in everyday life..

 

In this blog entry, I would like to have a discussion about the idea of a budget.  We all deal with budgets in our everyday life from figuring out how much to spend on lunch for students to making decisions for a corporation for a business employee working in a finance firm.  The formal definition of a budget is “one that embraces the impacts of the financial decisions of a firm. Planning which includes showing the effects of planned operations and capital investments on assets, liabilities and equities and cash budgets.  So what does this really mean? And this seems to only pertain to a business level.

To put this in simpler terms, a budget deals with how we allocate our resources in an efficient and smart way, simply how much resources (money, capital, equity) we have on hand, and how we are going to use those resources.  This includes either to spend the resources or to invest.  People may not realize but our daily routine activities deal with the idea of a budget.  In my opinion, budgets not only pertain to physical attributes including money, capital, stocks but also our values, ideas opinions and perception in life.  Every decision we make in life mostly deals with the idea of making an exchange according to our abilities and how much we are willing and able to spend according to how much money we make.  Budgets are like limits because each person has their own values in life and how far they are willing to go in order to take action on something.  For example, I am a person that doesn’t get angry easily and it would take a lot for me to throw a tantrum or pick a fight with someone.  So if I put in a scale, my tolerability to anger would be 9 out of 10.  If someone were to go over that limit to make me angry, I would get really angry and perhaps fight them.  In my opinion, budgets doesn’t just pertain to money and investments because our personality traits can be seen a budget too. 

Budgets can also be looked at by the idea of preferences.  We all have our own preferences according to the budget we have in mind. For example, one prefers to go to Safeway instead of Whole Foods because perhaps their budget is $50 a week on buying groceries and going to Safeway will buy them double the products compared to Whole Foods.  We all have a budget on how much we are willing to spend according to how much money we have on hand but preferences are one attribute to our final decision.  Some people prefer less of something but better quality but others may prefer more of something but not so good quality.  I feel like no matter where we are, we are following a set of rules set by society or the business world.  What we learn in school about finance and school are applicable in the real business world and media and social interactions shape the way we view this world.