Personal Finance

Your time or your money?

If you were to ask people on the street which they valued more: their time or their money, the most frequent response you would probably get is “My money!” After all, money seems to be what we’re constantly in pursuit of. It’s at the root of almost everything we do, and even a good share of the decisions we make are money-based. We work and/or invest to earn money; we comparison shop to save money; we earn more money so we can spend more money. (After all, the Joneses live right around the corner!)

However, the truly wealthy would answer differently. Their time is more valuable than their money. Most of them amass their fortunes not in the pursuit of wealth itself, but in the pursuit of the time and freedom to enjoy them. Their money allows them to spend time with their families, fund charitable causes, travel, and basically enjoy life, doing the things that are important to them. If you were to quit your job today, how long could you live on whatever money you have? Most people wouldn’t even last a week. Not very enjoyable, no doubt. But those who have learned how to make their money work for them and not the reverse could live indefinitely. They have discovered how to use their money to create time.

Have you ever considered what your time is worth? It’s a question that has only recently come to the forefront of how we live, work, and play. What is your time worth? How do you go about calculating such an ephemeral and intangible thing? Why is your time an important consideration?

I once read of an exceptionally thrifty person who, when building a home, pulled nails out of old used lumber from a demolition site, straightened them out, and used them! Now the first thing I’m thinking as I’m reading this is I certainly wouldn’t trust rusty nails to hold my house together. The second thing I’m thinking is this person has way too much spare time. The third thing I’m thinking is this person values money more than time. Instead of going to the hardware store and spending a few dollars on quality nails for the home that will protect his family, he chose to spend days, possibly weeks harvesting lesser-quality items just to save a few bucks. Seems like a pretty inequitable trade-off to me.

Each person values time and money differently, falling somewhere between miser and spendthrift. Our attitude toward money plays a significant role in how we make that comparison. How many times have you said you wouldn’t pay someone “that much” to do something? You make that judgment based on a comparison between the worth of your time versus your money.

So, how can you compare your time against your money? One way to figure the worth of your time is to base it on what you earn in an hour at your job. In other words, what would it cost you to pay yourself to do whatever you’re doing? Let’s say you make $12 an hour (that’s roughly $25,000 a year). We’ll use this figure for the following 3 examples.

Example 1 Suppose it takes you an hour to mow your lawn. If you were to “pay yourself” to do it, that would mean it “costs” you $12 to mow it, and that’s not even considering the actual costs of lawn care, such as a mower, gasoline, oil, maintenance, etc. However, if you could pay the kid down the street $10 to it for you, you’re now ahead of the game.

Example 2 In an effort to save the $6 you would spend down at the car wash to wash your car, you decide to do it yourself. It takes you half an hour, so you’re even, right? Wrong! You haven’t factored in what it cost you in materials (cleaning solution, washing and drying items, water usage, etc.). Looks like you got the short end of the deal.

Example 3 Let’s say you have fairly uncomplicated taxes. You can go to a paid preparer and probably pay around $100 or more or you can tackle it yourself.

Scenario 1: You go the do-it-yourself route on paper; it takes you about 6 hours total. Total “cost” to you is $72 ($12/hour x 6 hours); net “gain” is $28 ($100 you would have paid minus the “cost”).

Scenario 2: You do it yourself with a tax software program that costs $25 and only takes you 2 hours. Total cost is $49 ($25 for software + $12/hour x 2 hours); net gain is $51.

This is an instance when doing it yourself does save you money. How much it saves you is up to you.

Another way to weigh your time against your money is to consider whether you have or could gain the skills to do whatever you’re considering. Let’s say the engine goes out on your car and you decide to rebuild it. If you’re a mechanic, then great. You already have the skills to do it and you have access to the right parts. If your knowledge of the internal workings of cars lacks something, but you don’t “have the money” to get it done professionally, you might be tempted to do it yourself. But stop and consider whether you really will save anything, after you factor in parts, travel time back and forth (and gas) to pick up and exchange parts (because you probably got the wrong ones the first time), not to mention your time, and a few smashed fingers! Many people fail to realize that when the learning curve is huge, they’re not going to save themselves very much, and may even cost themselves more in the process.

The bottom line is, there are some things that you can do yourself that will save you money and others that won’t. Those are decision that you should always consider carefully. Granted there may be times when you flat out don’t have the money to pay someone else to do something for you. At that point your money is truly more valuable. But if you can “afford” it, then by all means do it if it makes financial sense. There’s no shame in paying someone else to do something you can’t or don’t want to do anyway. Consider it doing your patriotic duty by boosting your local economy!

Now, of course, “saving time” only works if you put the time to good use. The time you save by paying someone else to do something for you should be put to use bettering yourself or your skills, learning something new, increasing your residual income, etc. After all, the rich don’t get rich by paying someone to mow their lawn while they sit and watch television; they get rich by learning. If you can use that time to learn how to create more time then the sky is truly the limit. If you sit in front of the television and waste it away, you’ll never gain the true freedom that comes from being able to enjoy what your money can do for you.

We all wish we could have more hours in day. You probably never imagined that you have the power to create that time. Look for ways to “save” your time instead of your money and then use that time wisely. Your time or your money? You make the call.

About the author
© Simple Joe, Inc.
Chemain Evans is a quality control specialist for Simple Joe, Inc., makers of the popular Simple Joe’s Expense Tracker PC software. Expense Tracker is a quick and simple way to keep track of your expenses and stay within your budget. Expense Tracker is ideal for tracking personal, business, home and club expenses. This article may be freely distributed as long as the copyright, author’s information and an active link (where possible) are included.