A wise Chinese businessman once told me that before purchasing something, he considers the following:
The minimum capital requirement to recover the amount he spent.
Meaning, he has to know how much capital he needs to invest that will gain an amount equal to the amount he spent.
For example, he wants to buy a nice watch worth Php 50,000. If he has a business where he gains 10% on his sales, then he has to shell out Php 500,000 (or Php 50,000 divided by 10%) in order to gain back his Php 50,000.
Pretty large sum of money, right?
It is quite a simple habit yet this has made him frugal and wealthy.
Hope you find this technique useful when you find yourself wondering if you still have to buy that expensive car or bag. 🙂
– Mag, Your Partner in Decision-Making