Note: This article is courtesy of Iris.xyz
What do Kim Kardashian, Donald Trump and you have in common financially? Let’s connect the dots.
Kardashian gets robbed in Paris at gunpoint of jewelry worth $10 million-plus. A couple of things are disturbing about that sentence. First, being robbed at gunpoint must be completely terrifying. Second, having $10 million of jewelry must be equally so. The first needs no explanation, but I think we should dig a little deeper into the second.
Protecting your jewelry often needs a separate schedule on your property/casualty coverage. The amount of insurance coverage and cost necessary to fully protect the value of the Kardashian-West jewelry would be astronomical — and I suspect not completely scheduled. This raises a key point with property casualty insurance — you should make sure that you are covered for the expensive things that can go wrong in your life. Manage your cost of insurance through higher deductibles since you can most likely absorb small losses. The first thing you can learn from the Kimye scenario is to review your insurance, take pictures of the items you are insuring, make sure you are covered for their actual replacement costs (if they have risen or dropped in value) and manage the smaller costs (minor collisions, damages, or losses) by self-insuring through using a higher deductible.
But the second example is a bit more subtle. Even if you could afford tens of millions of dollars of jewelry, would it make you happy? Everyone enjoys some special items. If you eat a wonderful piece of chocolate cake, the first bite is delightful. Each subsequent bite becomes less enjoyable until (maybe after a whole cake) you eventually reach a point where you never want to see another chocolate cake. Maybe the next day you forget your lesson and overindulge again, but eventually, the lack of self-control will diminish your chocolate cake experience. It is the same with overspending. If you carefully lay out your purchase decisions, you may enjoy them more, and that enjoyment will last much longer.
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