Beware the Hidden Costs

Financial advisers will tell you to budget 1-4% of your home’s value for repair and maintenance.

Assuming a $400,000 home, that’s somewhere between $4,000 and $16,000 every year. A “hidden cost” that people normally don’t think about when buying their dream home.

Other examples of monetary hidden costs:

  • An imported car that needs expensive spare parts.
  • Investment fees that an unethical salesperson doesn’t share upfront.
  • Credit card interest.

Some other kinds of non-obvious costs — including non-monetary ones — I’ve been thinking about:

Lifestyle Creep

Getting used to luxury, so your cost of living in everything — food, car, vacations — balloons.

Future “Locked-In” Costs

A new Rolex Datejust starts from ~$7,000. It’ll also cost you $800 every 10 years to service it.

Work-Related Costs

A teacher told me on Facebook that you “use your own money to: buy a laptop, projector, printer, paper, ink, markers, decorate the classroom, buy presents for students, pay for the kids’ food especially during school events, etc.”

Never been a teacher, but I can think of how your workplace can lead to hidden costs.

I used to work in the tallest towers in Kuala Lumpur, with a luxury mall at the base. Lunches in the mall weren’t cheap, and it’s not socially acceptable to always say “no” when your colleagues invite you.

Time Commitments

Everyone knows having kids1 costs a lot of money. But it also sucks up all your time.

Your next promotion might come with a 20% increment. But how many more hours will it require you to work?

Emotional Labor in Relationships

All relationships require effort. But the toxic ones drain a lot more out of you than they give back.

Family Responsibilities

Someone wise once told me when you get married, you’re also marrying your partner’s entire family2.

As life evolves — deaths and births — your position in a family changes.

What additional responsibilities do you need to carry?

Health Costs

If you don’t take care of your body when you’re younger, you’ll pay the price when you’re older.

Yes, medical insurance and healthy food can be painfully expensive.

But what’s even more painful is feeling sick and an avalanche of hospital bills.

Opportunity Cost From YOLO-ing

Every moment you spend on something short-term meaningless is a moment you could have spent on something long-term meaningful.

For example, doomscrolling Instagram is fun. Bite-sized snacks for your brain. But more wisdom is found in century-old books.

No need to over-optimize. There’s wisdom in doing nothing, enjoying a bit of junk food. Just not too much that it costs you a better future.

Mental Overhead From Things You Own

You used to drive a second-hand Honda, so you wouldn’t have cared if there was a big dent. Now you have a new BMW, even the smallest scratch would ruin your day.

I think the reason why Marie Kondo got so popular was because people intuitively know having too much stuff — especially things that don’t spark joy — clutters your mind.

“The things you own end up owning you.”

– Tyler Durden, Fight Club –

Trying To Impress Others

A never-ending battle — that can lead to both financial and emotional insecurity.

I think the only realistic option is to fight it as much as possible.

“If only we wanted to be happy, it would be easy; but we want to be happier than other people, which is difficult, since we think them happier than they are.”

– Charles de Montesquieu –

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  1. This isn’t to discourage having kids. Having kids is one of the best things you can do in life. It’s just a recognition of how much parents sacrifice for their kids.
  2. Again, not a suggestion to ditch your partner if their family’s a bit weird. Everyone’s family is a bit weird — just understand you’re going to need to invest beyond your own folks.

Pic from Pexels: Mikhail Nilov

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