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How to calculate RoI?
Okay so like, I've been thinking about this for a while now. Return on Investment aka RoI. You know how literally everything is ROI now? It's crazy. Like, genuinely crazy.
Everything gets put through this metric like it's some kind of ultimate truth or something. Thinking of getting a master's? Better calculate the ROI. Want to go on a trip to Goa? ROI. Considering a career change? ROI. Your parents asking why you're not married yet? Probably calculating some weird life ROI in their heads (we don't need to go there).
And I get it, for some things it makes sense. You're investing money in actual stuff, you want to know if you're making it back. Cool, that's literally what the metric was made for. But then some consultant — and who else, honestly — decided "you know what, let's put ROI on literally everything." Education, relationships, experiences, mental health days. Just... Everything and It's wild.
Okay but like, the real problem:
Here's what I can't wrap my head around. Not everything is a number. Like, I'm serious about this.
Let's say you do a masters, right? Could take you a year to see returns. Could take ten years. Could be that you meet one person in that program who becomes your business partner and changes your entire life trajectory, and you wouldn't even know that was coming. How do you even measure that? When? After how many years do you go "okay, the ROI is now positive"? And in what? Money? Happiness?
This is the thing that bothers me. The metric assumes you can reduce everything to a number. But you can't. You really can't. Or you can, but you're losing something massive in the process.
That Goa trip, though
This is where it actually gets on my nerves. Your friend says "I can't afford to go to Goa." Why? not because of money. Just because the returns from the trip does not make sense financially.
Brother. You've been on your phone for 20 minutes calculating whether vacation is statistically profitable. You're already tired. Just admit you want to go to Goa. That's the whole thing. You want to go.
But no, we have to justify everything with numbers now. You can't just want something anymore. You have to ROI it first.
Plus, The timing thing makes no sense
You don't know when the benefits will actually show up. You could learn something completely random. Useless at the time. Then three years later someone asks you for that exact skill and suddenly everything changes. When was the ROI? When you learned it? When you used it? When you realized you used it?
And sometimes things that look like terrible investments turn out to be amazing. You take a job you hate. Sounds like bad ROI right? But it teaches you what you don't want, so next time you make a better choice. Was that bad ROI or good ROI? Depends on how you look at it.
Here's what I actually think
I think ROI works when things are simple. Put money here or put money there. Sure, ROI. Compare two investment vehicles. Fine, ROI away.
But when you're deciding whether to spend time with your family, pursue a passion, go back to school, change careers... that's not simple stuff. You can't replace those choices with other choices. They're specific to your life. And trying to ROI them just doesn't work.
So like, final thing
If someone tells you they can't do something because the ROI is unclear, send them this blog. Or just grab them for tea and tell them to chill. Some stuff is worth doing because it's worth doing. Some returns you can't measure. And some of your best life decisions will look absolutely stupid on a spreadsheet.
Anyway, that's been on my mind. Hope it makes sense or at least makes you laugh when you realize you've definitely done this with something.
Until next time! Cheers!