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.

Money Is Time

Among other things that I have let get in the way of me blogging consistently is my son's math homework that I've been helping him with.  I'm not really a very good math teacher because I don't understand how other people don't understand it.  Luckily, he's the same way, so I usually just have to explain it once.

Somehow in my mental ramblings while he was working on a problem, I started thinking about how people often say "Time is money".  Which, thinking mathematically, means "time=money".  So according to the symmetric property of equality, "money=time".  Just as I don't "get" how others don't "get" math, I also fail to understand how people comprehend "Time is money" but ignore "Money is time".

The older I get and less time I have left on this earth, the more I see how money is time.  With money I can buy more time by doing things to improve my health and extend my life.  More importantly, with money I can upgrade the quality of the time that I have.  I can pay someone else to do chores I don't like to do so I can spend my time doing things I want to do.  For example, even though I know how to do it and could save a few dollars doing it my self, I don't change my own oil in my truck.  I buy time.  It's worth it.

Here's something to try when considering paying for a service:  if someone offered to do the task for free, would you let him or her do it for you?  If so, you should probably pay for the service.  Your time is almost always worth it.  Example, I pay for someone else to work on my car, but I do my own mechanical work on my bicycles.  Not because I can't afford a bike mechanic, but because I like doing it, and would do it myself even if someone offered to do it for free.

And yes, this does relate to insurance.  I almost always think "money = time" when working with retirement and life insurance issues.  That's what it's all about.  Having enough money that you control your time.  If you don't or can't do that, you aren't "retired", you are "unemployed".