When I was in Thailand, I got obsessed with the banana pancakes you can buy from stalls at most evening markets. A hot, delicious dessert for a mere 35 Baht – or about 85p.

Or should I say…35 Baht from most stalls. At my local market, there were two different vendors with stalls at opposite ends. One charged the normal 35, but one had the sheer bloody cheek to charge 40 Baht – or nearly a pound!

I tried the more expensive option once, thinking it might be a superior product – but it was exactly the same. So, outraged by this price gouging, on every future evening I’d walk out of my way – and join a longer queue – to save roughly 12p on my dessert.

On one occasion, the cheaper stall wasn’t there – so I chose not to get pancakes at all, rather than pay the higher price.

With the benefit of hindsight, this is clearly insane behaviour. (Not that I needed to wait for hindsight: my wife rightly told me at the time that I was being stupid.)

But I’d got myself trapped in a penny-saving spiral, and I couldn’t find the way out.

The wrong focus

To be somewhat fair to my crazy past self, we weren’t flush with cash at the time. We’d just spend the best part of a year in two of the world’s most expensive cities (New York and London) while not earning much, and we still didn’t really know how we were going to get more money coming in.

But I hadn’t appreciated that we’d already made the decision that made the difference: moving to a country where our rent was about £300 per month. Once we’d based ourselves somewhere so cheap, in the scheme of things it made very little difference whether we went all-out spend-crazy or tried to emulate the monks we’d regularly end up sharing buses with because we were too miserly to take a taxi.

Yet because we’d been drawn there by the low cost of living, that’s what had my focus. I got obsessed with the game of spending as little as possible, even if it meant queueing twice to buy my curry and rice from separate stands to save literally less than a penny (which I also did, but thankfully only once before even I realised I’d taken things too far).

The savings equation

How much money you save is – obviously – the result of how much you earn minus how much you spend.

Having made the correct big spending decision – to move somewhere cheap – I should have counted that job as “done” and shifted my focus to the other part of the equation. If I’d put the same amount of energy into earning money as I did micro-optimising our already minuscule spending, we would’ve ended up vastly further ahead.

This is why the advice to “look after the pennies” is generally useful, but can become counterproductive if you’re an obsessive and self-competitive type. It can also be seductive because it feels more controllable: it’s easy to come up with a way to be sure of shaving a bit off your budget, but impossible to find a series of steps that will be guaranteed to earn you more.

So, don’t end up haggling over 10p in a Thai market. Instead:

  1. Get the big spending decisions right. Find ways to cut your biggest expenses and reduce your overheads (like monthly subscriptions).
  2. Stop thinking about saving. Before you get trapped in pointless over-optimisation, shift your focus to earning more.
  3. Enjoy as many banana pancakes as you like.

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