When you’re working hard to make the most of your money, you might lose sight of the importance of another resource: your time. It’s easy to calculate the financial cost of a weekly visit from a house cleaner or an annual subscription to a meal-planning service, but what about the time those expenditures save you? What at first seems like an extravagance could actually be a smart financial choice.
Choosing between time and money isn’t easy, though. Let’s explore the connection between the two to help you maximize the value of both.
Factoring in Time to Your Paycheck
When you think about the value of your time, the hourly rate on your pay stub is a good starting point, but it’s incomplete. Before you can decide when it’s worthwhile to spend money to save time, you first need to calculate the total amount of time you spend to earn money.
That means looking beyond the hours you spend at your workplace. Include the time you spend commuting, checking email or making phone calls outside the office or working on a side hustle. Track all your working time for at least a few weeks if your schedule is routine. If you freelance, work a seasonal job or otherwise have a variable routine, try tracking your working time for three months.
Next, look at your pay stubs or tax return for your take-home pay. Let’s say it’s $1,000 a week for 40 hours of work, but commuting takes you 10 hours a week. You spend a total of 50 hours a week to earn that $1,000, so divide $1,000 by 50 to value your time at $20 an hour.
You can use this dollar figure to make informed choices about your time. If your time is worth $20 an hour, paying a house cleaner $35 an hour doesn’t make financial sense. But paying someone $15 an hour to do yard work does, especially if you can use that time to work.
Hourly employees and freelancers quickly realize the payoff from outsourcing life tasks because they can immediately spend the time to earn more. But even if you’re a salaried employee and don’t get paid for that extra time now, working a slightly longer week could put you first in line for a promotion and a pay increase in the future.
The Hidden Benefits of Saving Time
The potential to make more money isn’t the only benefit of paying someone else to do tasks for you. Spending money to save time can make you happier. Multiple surveys have found people who value time over money—by working fewer hours, living closer to work or in other ways—feel happier than those who value money over time.
One set of researchers went beyond a survey and conducted an experiment. They gave $40 to participants to spend on a time-saving purchase and later gave them the same amount to spend on a material good. The recipients were happier after spending the money to save time than after buying a product.
Don’t Forget This Powerful Force
Spending money to save time clearly offers the potential to improve your life, but so does saving money and allowing time to work its magic. Money you receive—and invest—today is worth more than money you receive tomorrow. Over time, your investment’s value grows thanks to interest earned. Eventually, you begin earning interest on the interest, a concept known as compound interest.
The lower the interest rate, the longer it takes to begin earning compound interest. By historical standards, interest rates have been low for more than a decade. If that continues and you delay saving, you’ll have to wait that much longer for time to increase the value of your money.
Also important to consider in the time-money trade-off is inflation. The cost of living grows over time, eroding the value of money and reducing your real return on an investment. When looking for a place to park your cash, seek out high yield savings accounts, certificates of deposit and money market accounts to be sure you’re staying ahead of inflation.
Experiment to Find What Works for You
Because some of the benefits of extra time are intangible, the choice between time and money is part financial, part emotional. But that doesn’t mean the decision has to be difficult. Try experimenting. Once you’ve determined the value of your time, consider making one time-saving purchase that makes financial sense. Keep it up for a month or two, and then check in with yourself.
Have you spent the time in a way that makes you better off, either financially or emotionally? If so, it’s worth continuing. If not, try making another trade or two to see if outsourcing a different task does the trick.
Soon, you’ll know more about how you value your time and money, and you can make smarter choices about how to trade one for the other.
This chart is titled "The Cost of Daily Tasks." The intro reads "Hiring a housecleaner or handyman might seem like an extravagance, but have you considered what it costs you to do housework? Use our data as a starting point to answer that question. Every week, Americans spend an average of the following." There are 5 bar charts. The first is for cleaning. Americans spend 2 hours and 10 minutes. If your time is worth $15 an hour, cleaning costs you $32.55 a week. If your time is worth $20 an hour, cleaning costs you $43.40 a week. If your time is worth $30 an hour, cleaning costs you $65.10 a week. The next chart is laundry. Americans spend 1 hour and 15 minutes. If your time is worth $15 an hour, laundry costs you $18.90 a week. If your time is worth $20 an hour, laundry costs you $25.20 a week. If your time is worth $30 an hour, laundry costs you $37.80 a week. The next chart is tending to their lawns and gardens. Americans spend 1 hour and 15 minutes. If your time is worth $15 an hour, yard work costs you $18.90 a week. If your time is worth $20 an hour, yard work costs you $25.20 a week. If your time is worth $30 an hour, yard work costs you $37.80 a week. The next chart is maintaining and decorating their homes’ interiors. Americans spend 25 minutes. If your time is worth $15 an hour, interior maintenance costs you $6.30 a week. If your time is worth $20 an hour, interior maintenance costs you $8.40 a week. If your time is worth $30 an hour, interior maintenance costs you $12.60 a week. The last chart is maintaining and decorating their homes’ exteriors. Americans spend 21 minutes maintaining. If your time is worth $15 an hour, exterior maintenance costs you $5.25 a week. If your time is worth $20 an hour, exterior maintenance costs you $7.00 a week.\ If your time is worth $30 an hour, exterior maintenance costs you $10.50 a week.
Elizabeth Whalen is a freelance writer based in Seattle. She loves writing about business, financial services and sustainability.
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