Warren Buffett gets all the publicity, but by his own admission, his partner Charlie Munger is equally as important to the success of Berkshire Hathaway. Munger is a fascinating individual (he graduated from Harvard Law School without having earned an undergraduate degree) and a virtual quote machine. A favorite quote is from an old machine tool ad that said “The man who needs a new machine tool and hasn’t purchased it yet is already paying for it.”
That quote applies not only to machine tools, but also to many facets of our lives. It certainly applies to knowledge. If you need specialized knowledge for your job or project and you haven’t yet acquired it, you’re already paying for it by unnecessarily handicapping yourself. It may be expensive, but ignorance is costlier.
It also applies to our cars. Remember the old Fram oil filter commercials? “You can pay me now or you can pay me later.” In essence, they were saying that if you need a new oil filter and you haven’t yet bought one, you are already paying for it by the damage you are doing to your engine.
And it is also applicable to a slew of do-it-yourself projects. If your situation calls for a professional electrician, plumber, or accountant and you choose to do the work yourself, you’re already paying for the professional service. Now that’s not to say you can’t or shouldn’t fix a faulty light switch or leaky faucet, re-wiring the house or installing a new furnace should be left to the pros.
Of course it also applies to life insurance. If people need life insurance (and most working adults do) and haven’t yet purchased it, they are already paying for it. How? By the incredible risk they are shifting to their dependents. And also by the cognitive dissonance that they are no doubt experiencing.
Now obviously from a practical standpoint, it makes no sense to pay for anything that we don’t use, and yet it is done all the time. People pay to join a gym and then don’t go to the gym. People pay for memberships in professional organizations and don’t utilize any of the organization’s resources. People pay for magazine subscriptions and don’t read the magazines. The list goes on.
Saving money on things we don’t need is smart, Most of us own a lot of stuff that we would be better off having not bought. But not buying something that we need doesn’t save us anything and in fact, it can cost use a great deal in the long run.
So if you need that book or that tool or that course or that program or that life insurance, buy it. Because you’re already paying for it.