My monthly visit with Tony, my barber, inspires me every time. As I've written before, Tony Ramundo is an engaging guy who loves life. He's a life-long barber, which has given him thousands of long-term relationships. Tony spends 30 minutes of 1-on-1 time with more than a dozen people every day. And people tend to use their 30 minutes to discuss life's mysteries - after with the usual chit-chat about why the Reds can't figure out a way to win.
Last week Tony was telling me about how he and his brothers took a big leap in the early 1990s to set up a new, larger barber shop. There was a point where they were debating how much to spend and whether or not to get a sizable loan. Tony said something that stuck with me:
"We were deciding whether to spend $10,000 on new equipment instead of using our old stuff. $10,000 is a lot of haircuts."
Tony went on to describe how he and his brothers always thought in terms of "how many haircuts" it would take to make investments. He even said that he uses this exercise to keep himself from spending money frivolously in his personal life.
Behavioral economists would say that "thinking in haircuts" is a psychological tool that people can use to outwit their material cravings. A new car would be nice, and a loan is easy to get; but think about how many haircuts it will take to pay it off. This ensures that the positive impression of driving that car around town is balanced by the negative impression of how many hours of hard work it will cost to pay for it.
The Haircut Analogy (got to get a trademark on this...) is a great example of how challenge can drive improvement. By challenging ourselves to consider the cost of something in terms of hard work (rather than just money), we may make better choices.
And you can use this in your own life pretty easily. Just take whatever you do for a living, and put it into the dollars per hour you work, or the dollars per activity for your business. At our interactive advertising agency, our President, Jay, likes to keep our minds on costs by backing out how much Revenue and Profit we would have to bring in to cover the cost of investments. In other words, "Hey, that's a lot of banner ads to cover that cost!"
The idea here is not to simply prevent yourself from spending, but rather to better way the true cost and ensure it is worthy. Tony and his brothers ended up taking the loan and bringing in new equipment, after all!