The Cost Per Use Rule

One of the best pieces of advice I’ve found about being frugal (specifically, about being more mindful of your spending) is the Cost-Per-Use (CPU) rule.

Here’s how it works.

Set a limit for yourself on the CPU of anything you purchase from here on out. Obviously this only works on physical, non-consumable goods… like a hammer, or coat, or deluxe baby stroller.

For me, I’ve set the limit at: $1.00

When you go to a store and you’ve got a product in your hand, take a few seconds to estimate what the CPU is based on how many times you will use the item in a year. If the number of times you will use the product multiplied by your CPU is greater than the price of the product, don’t buy it!

Example:

You want to buy a new flashlight that costs $12.00 and you remember that you went camping six times last year where you used the old flashlight and used it twice to rummage through your car at night and you used it for five nights when you helped the school crossing guard for evening classes. Based on that estimate, your math looks like this:

$12.00 (Price) x $1.00 (CPU) = $12.00 / 13 (estimated uses) = $0.92 CPU

Buy it!

If my math is wrong, forgive me, it wasn’t my strongest suit in school. Also, I’m aware that this goes against the theory that you should always buy the best version of whatever forever product you plan to own, but this is less a rule and more a way of looking at frivolous spending.

In the scenario above, if the flashlight cost $25.00, the CPU would have been higher than the price and you probably shouldn’t buy it. It’s important to be honest with yourself about the number of possible future uses because you can convince yourself that you will use ANYTHING more than you actually will, just to buy it.

This rule also gets a little tricky when you consider Feature Creep.

“It’s only $3.00 more to get the flashlight with the built-in carabiner! This deal’s a steal!”

IF… and that’s a HUGE IF, you went to a store on purpose to buy just one product, you weren’t planning on buying a flashlight with a carabiner. So you probably don’t need it. And… that carabiner option probably only cost about $0.12 for the company to add. It’s NOT a deal.

Advertisements