Category: Budget

Expenses: Value vs. Cost

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My wife and I celebrated our 10-year anniversary last year with a trip to Europe. During our trek around Paris, making sure to visit the notable landmarks while placing a greater importance on sampling the local fare and wine, each purchase prompted an immediate calculation of our seemingly weak dollar to the mighty euro. At the time, the EUR/USD exchange rate hovered around 1.40. That 40 percent surcharge of sorts took a significant bite out of our finances over the course of the 10-day trip. Due to the euro’s free fall in the final months of 2014, the exchange rate has since plummeted to 1.10. I’ve prevented myself from calculating the potential savings – thus far – had we waited 12 months to celebrate our wedding vows.

In hindsight, though, the cost of the trip has now faded to the point where I would have to look through last year’s spreadsheets to see how much money we actually spent. The memories are as sharp as ever, however. That’s the true value of money well spent. It’s difficult to buy things that result in true happiness, and so for those items that do, the exchange rate involved is meaningless.

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The Percentage-Based Budget

Several hundred publicly traded companies will report their quarterly earnings this week. Some of the names are ones you might recognize, such as Domino’s Pizza, Hewlett-Packard and Home Depot, while most others are companies you didn’t know existed, starting with Aixtron SE and ending with ZAGG Inc.

All of these companies, regardless of sector or size, share one distinct commonality: a detailed balance sheet. In layman’s terms, all publicly traded companies share their budgets, plotting total assets and against total liabilities, for regulatory purposes and shareholder examination.

Fortunately, our personal finances are not held up to such intense scrutiny, although it may not be a bad thing. Income level aside, if your accounting practices were held up to the light, would your budget pass the Securities and Exchange Commission’s test?

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