“Pay peanuts and you get monkeys.”
It captures the essence of a deep-seated issue that prevails in the financial mindset of many: failing to see the forest for the trees.
It’s human nature to look for easy wins, shortcuts, and low hanging fruits. Cutting costs is one such apparent win. We can control it, it is predictable, and it provides immediate gratification. It’s also a glaring example of a blind spot most businesses, and people, have. They overlook where the real leverage lies.
It’s not in saving pennies. It’s in making dollars.
Lots of it.
Take a look at any successful venture. You’ll see a team that understands the value of investments, whether in resources, talent, or time. There’s an opportunity to double, or even triple, the results in these ventures.
A need for control leads to obsessing over dollars and cents. You feel better knowing where every penny goes when you’re in control. But, spending too much time cutting expenses without considering the tradeoff for increasing income can cost you more in the long run.
Don’t get me wrong. I’m not saying let expenses spiral out of control. My point is that we need to shift our focus. Our energy should be redirected towards increasing income instead of reducing costs. That’s just as true for personal finance as it is for business.
You’ve heard the latte example from personal finance influencers. You won’t get rich by cutting back on coffee. You might save a few hundred bucks a year, but the real wealth comes from increasing your income. There’s potential to make way more through salary negotiations, side hustles, and investments.
This brings us back to Ogilvy’s full quote:
“Clients who haggle over their agency’s compensation are looking through the wrong end of the telescope. Instead of trying to shave a few measly cents off the agency’s 15%, they should concentrate on getting more sales results from their 85% that they spend on time and space. That is where the leverage is. No manufacturer ever got rich by underpaying his agency. Pay peanuts, and you get monkeys.”
The bottom line is simple: no business ever flourished by underpaying those who drove its revenue.
Similarly, no individual ever built wealth by obsessing over minor expenses. If you focus on saving pennies, you’ll miss out on generating wealth.
In the grand scheme of things, increasing income will make a big difference. Pay peanuts, and you’ll indeed get monkeys.
