Recently I attended a two-day course on Cost Benefit Analysis. I learnt about the basics of financial management, especially on capital spending. It is not only significant for work, but also to manage personal finances.
Anyone who pays for a product or service is a customer. But, do we reflect on what we purchase and how it benefits others? People around us can live well and share the value if we spend smartly. This is called “value for money”.
Value for money is not solely measured by financial outcomes, but by how resources are equally shared without wastage.
If you want to buy something for your children, buy something they can play with friends. Buy a football or badminton racquet instead of a gadget. The sports equipment lets your children spend time with their friends.
The main components of value for money are 3 Es — economy, efficiency and effectiveness. Another example is to have laminated flooring for your house, rather than carpets. Carpets need to be cleaned often as it collects dust, which could affect your health, especially if you are allergic to dust.
Value for money also depends on your goal. Another scenario would be if you buy a superbike to travel faster. It is worth it because you save time and reach your destination faster. Spend in a way that enriches you and moves you towards your ideal life.
There are lots of benefits to spending efficiently. You can save money and make the purchase economically worthwhile. It may not be tangible, but it may benefit you in other ways, such as health, environment and safety.
Some basic steps of cost benefit analysis: Remember that the outcome is not visible and results are not necessarily monetary. Remember to satisfy others. We live in a society and we should care about people around us.
S.S.
Klang, Selangor