This is post from July of last year that fits in nicely with my usual Friday series on building wealth. It’s been a busy week, and I haven’t had time to write anything new. I should be back with original content next week. If you want to read more in my series on building wealth, please click on that category in the sidebar.
The Simple Dollar has a nice post up on the value of frugality, I thought I might add a bit on the subject of value, dollars, and time.
The writer at The Simple Dollar was asked:
I don’t see why I should spend fifteen minutes making a batch of homemade laundry detergent just to save a few bucks when I could spend that fifteen minutes building my career. Most “frugality tips” seem like a waste of time.
There’s a pretty simple way to look at this, and the poster points it out pretty well. If the value of the 15 minutes is higher than the value of the laundry detergent + the cost of purchasing detergent, then certainly your time is better spent doing something else. (BTW, the cost of homemade detergent is higher than just 15 minutes of time!)
Another example: My employer pays me about $50 an hour (it’s more complicated than that, as I don’t ‘do’, but rather ‘manage’ and ‘think’ and ‘plan’, so my employer is paying me more for my work product than my time, but time is the simplest way to look at things for our purposes). That’s as good a starting point as any to value my time. I hire someone to clean my house every two weeks, and pay her $80. $160 a month just on housecleaning to some is an extravagant expenditure… but do the math. It would take me about 3 hours to clean my house. Thats $150 of value of my time, assuming I like cleaning as much as I like my job, which isn’t true at all. I would charge you $100 an hour to clean your house (which is why I don’t run a housecleaning business). So $160 a month to get back 6 hours to do something I want to do, is a huge bargain for me.
It isn’t all about dollars, frugality of time is as important, isn’t it?
If that’s the case, be honest with yourself about it. It’s not just about earning money, it’s about personal enjoyment, and you’re accepting that the return is less (or possibly nonexistent) because you enjoy doing it. That’s great, but it doesn’t mean that the frugal task has any less value.
Here’s an example. One of my cousins is a meticulous housekeeper, to the point of being obsessive. Yet she enjoys it. She’d far rather be doing that than engaging in other activities. Sure, it serves as great maintenance on her home, but it doesn’t put much financial value in her pocket. What it does do is make her feel good when she sees her sparkling clean house. She often chooses that for a Saturday afternoon instead of networking within her career.
Everyone has different values for time, as well as values for enjoyment. I was making small talk with a friend’s husband a couple of weeks ago, and we got on the subject of wine (to his credit, we were meandering around for something to talk about other than the weather, and even though he’s not into wine, he at least sounded interested so we could not stand there in silence while the ladies were inside going on about weddings or shoes or whatever). We were discussing the cost of wine, and how hard it is for me to spend more than $30 on a bottle for something I’m just going to drink. I was a bit uncomfortable, as I had recently purchased a $70 bottle of wine. He pointed out he would regularly spend $200 on 4 hours of golf, and that it’s worth it because he loves it. He then just asked me if I really liked the wine.
Made that $70 look like a value play.
Don’t focus on the numbers, focus on the value. Sure, the basics still apply – if you are in debt and want to build your net worth, you may need to give up golf and wine for a while. But once you are comfortable and on track with your goals, use more than just dollars to measure value. You’ll find bargains everywhere.