Price is What You Pay, Value is What You Get: The Psychology of Smart Spending

Warren Buffett’s famous quote, “Price is what you pay, value is what you get” is a golden rule for personal finance. But in a world of flashy marketing, impulse purchases, and social pressure, it’s easy to confuse PRICE with VALUE. Understanding this difference is key to making smarter financial decisions and getting the most out of your hard-earned money.

The Trap of Paying for the “Brand”

Imagine you’re in a coffee shop, staring at the menu. A plain black coffee is £2, but a fancy caramel oat milk frappuccino with whipped cream and a drizzle of gold-dusted syrup (or whatever they’re selling these days) is £5.50. The price difference is obvious, but what about the value? If you genuinely love the taste of that fancy drink and it makes your morning feel special, it might be worth it. But if you’re just buying it out of habit, peer pressure, or because Instagram convinced you that basic coffee isn’t cool, you might be paying for branding rather than value.

The Psychology of Spending

Retailers know how to make us focus on price rather than value. Ever noticed how supermarkets place expensive “organic” produce right next to the regular version? The price difference makes you think, This must be better!—even though the value (taste, nutrients) might be almost identical.

Or take “limited-time offers.” That £50 jacket marked down from £100? It makes you feel like you’re saving, but if you weren’t planning to buy a jacket in the first place, you just spent £50 you didn’t need to.

Value Over Cheapness

On the flip side, buying the cheapest option isn’t always the best choice either. A £10 pair of shoes that fall apart in three months is worse value than a £50 pair that lasts three years. This applies to everything—cars, appliances, even food. Ever bought a bargain-bin toaster that burned everything, then had to replace it twice? That’s false economy.

Subscriptions: The Silent Money Drainers

Many of us are guilty of paying for things we no longer use—gym memberships, streaming services, or that app you downloaded for a free trial and forgot to cancel. These small monthly payments don’t seem like much, but over a year, they add up. If you’re not getting real value, cancel them. That £10 a month for a streaming service you barely use could be further contribution to your investment portfolio, or a nice meal out once in a while.

Netflix premium prescription = £18.99/month = £227.88/year

If you simply invest one of your TV subscriptions in a low cost index fund instead, without any further top-ups, that would grow to £3305.23 in 10 years! Was your one out of many subscriptions worth £3305.23?

The Experience Factor

Sometimes, the best value comes from spending on experiences rather than things. A £200 designer handbag might look great, but will it bring you more happiness than a weekend trip with friends?

I have written a separate blog post on my encouragement for you to spend on enriching experiences rather than materialistic items. Click below 👇

From Cost to Worth

Next time you’re about to spend money, ask yourself: Am I paying for value, or just for the price tag? Whether it’s coffee, clothes, or cars, shifting your mindset from cost to worth will help you spend smarter—and ultimately, save more for the things that truly matter.