Time ⌛️ is our most valuable resource. Don’t Squander Your Time! It’s worth a lot more than you think. Let’s talk about Time Value of Money and how much TIME that THING your want costs.
😴 Hey, don’t fall asleep on me yet!
One of the mindsets that has helped me accumulate my wealth is a built-in sense of cost thriftiness. I’m not cheap, but I am ruthlessly cost efficient.
A big downside and trap that I have experienced with this mindset is obsession in the pursuit of cost savings. I become absolutely obsessed about purchase decisions. Funnily, I have no qualms going to Starbucks every day and paying for a Venti Mocha and yet when it comes to buying an App on the App Store, I will pour hours and hours of research into the decision of spending $9.99 for a productivity app.
Why this is a Trap
This approach is a trap! 🪤
Time is worth a LOT of money. I suspect that many of us as humans fall into this trap. We hem and haw about spending money that is a no-brainer if we step back and consider the big picture and true value of our time.
Let’s crunch the numbers and figure out how much our time is worth in dollars.
Value of Time – Crunch your Numbers
Let’s take an example and crunch the numbers. Say you make $125,000 a year. And say you get 4 weeks of paid vacation per year, and work 40 hours per week. That $10 purchase of an App costs about 12 minutes of work time.
That salary works out to over $50 per hour!
Instead of debating with yourself for 15 minutes whether a purchase of $10 is worth the cost, you would be better off to just spend the money, spend zero time thinking about the decision, and work for an extra 15 minutes.
I Caught Myself in the Trap
Here’s a trap that I recently caught myself in. My bill for hosting this Web site is due soon and will cost about $120 for the next two years. But, if I decide to move to a new hosting provider, my bill for the next two years could be cut in half to $60. That’s a $60 savings over two years! This is like candy to my brain. I want to save that $60!
The trap is in the hidden costs to switch hosting providers. I spent more than an hour researching alternate hosting providers, features, capabilities, and costs. If I switched, I would need to spend 3-5 hours to execute the site move and get everything setup and working like I want. And that assumes everything will go perfectly and there would not be any surprise gotchas or things that require additional time to troubleshoot and workaround.
If I make $50 per hour, that switching cost is about $300 worth of my time! 😲 (6 hrs * $50/hr). Instead of saving $60 over two years, I would squander my time by an order of magnitude more than just letting it be. I would be far better off to pay the $120 for the next two years and not spend a minute of my time pursuing this red herring of an opportunity to save money.
Time Cost Calculator Download
↘️ Download Excel Calculator for Time Cost ↙️
This Excel calculator tells how much of your TIME that thing you want to buy will cost in relation to your salary. Is it worth the hem and haw of indecision, or are you better off just doing it and moving on with your life?
Time is our most valuable and constrained resource. We cannot create time. Time cannot be extended. We can only manage our time. Let’s spend our time wisely.
Leave a Reply