Money Is Time, Part 2

Do you consistently calculate how much time a purchase costs you?  Try it some time.  Or all the time.  It will definitely change how you spend money when you also consider that you are buying time.

I've heard others talk about this, but the ones I've heard don't do it completely.  They usually say something like, "To calculate how much an item costs you in time, divide the cost of it by your hourly wage.  That will tell you how much time you have to work to earn the item".  So a person making $25 per hour would have to work 4 hours, or half of a work day to pay for a $100 item, right?  Not right.

I'm using estimations and round numbers here, but let's start with sales tax.  It's conservative to put it at 5%, meaning that you need to pay $105 to get it.  Assuming free shipping.  Or if you are going somewhere to buy it, you're going to spend money on gas, wear and tear on the car, or bus fare, or whatever.  Plus the time to get there.  Put that into your calculations too.

If you've ever had a paycheck, you know you don't bring home 100% of your hourly wage.  80% would be a very high percentage, so it would be generous to figure $20 per hour, so 5+ hours of working to cover the item.  If you have an unpaid lunch break your up to at least 6 hours.  If you have a commute, probably add another hour.

So in this case, the real time cost of a  $100 item is more than 1/4 of one of the limited number of days this person has on the earth.  He or she is never going to get that time back.  I hope it's worth it.

Try making the calculations with your own numbers.  It's eye opening.  For me, it's been a great help in getting me to not make frivolous purchases, increase my earnings per hour so things cost me less time, and to get more enjoyment from the smart purchases I make.  It's worth every minute.