Get the MAX Out of Your Life
Credit: Lasseter Winery
I had been toying about writing this article for a while now. Most of us would come across the term “maximum yield” in economics. I like to apply this theory to my daily life, especially when buying food and shopping.
TL;DR
In this post, you can understand the purpose of getting maximum yield out of your expenses and energy!
1. What is the point of Maximum Yield?
The maximum yield is defined as the largest yield one can harvest from the resource over an indefinite period.
Credit: Wikiwand
2. Why is it important to understand the point of maximum yield?
When you understand the point of maximum yield, you can learn to manage your resources carefully. You do not want to invest too much or too little. You also do not want to harvest too much or too little from your assets, to promote sustainable growth.
3. How to apply the concept to your daily life?
I used the concept to measure my experience.
One classic example is that I will not buy a branded tee shirt - a logo printed across the shirt for a price tag of $100. I would prefer to get a plaint tee-shirt from Uniqlo. The Uniqlo tee shirt may cost slightly less than $10 during its sales.
So, what does this have to do with maximum yield?
Both tee shirts provide the same returns - you can wear either of them for countless occasions. You can accomplish that goal with $10. Is there a point to spend the additional $90 for the logo? I do not see the need to pay a premium in this case. It does not bring me more positive experiences. Hence, I find that it is a waste to spend an additional $90 on a branded tee shirt for myself.
The same applies when it comes to food. For example, would you buy coffee from a hawker stall that sells it at $2 per cup vs Starbucks? They are 100 meters away from one another. I will buy from the hawker stall if the coffee is better than Starbucks. If $2 can buy me happiness, I am willing to travel a little more.
However, there are times when I would pay for a premium too. For example, I do not mind paying a premium on air tickets. When I take a long-haul flight, I prefer to upgrade my seat because I enjoy having more legroom. On top of that, it might reduce the chance of getting Deep Vein Thrombosis. Hence, The extra cost elevates my experience. However, at this point in my life, if I were to splurge and get a First Class flight, I would bash myself for splurging. The extra spending will only bring me post-trip regrets. You want to make your money work for you in this case; by paying the correct amount that is worth the experience!
You want to harvest the maximum yield out of your expenses and your energy! You get a better experience from skiing if you go in your early 30s vs 60s! Sometimes, it might be best to spend more for a better experience.
Regardless, this is just a concept that you can consider using in your life. It’s up to your personal’s take on it. There is never a right or wrong answer to life.
x, Esther
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