What You Pay in Time


You probably think about costs in terms of dollars (or whatever your local currency is). I suggest that you experiment with an alternative way of thinking — think about costs in terms of time: The time you spend earning the money. (See also: Track Your Spending. Or Not.)

There's a famous part in "Walden" where Thoreau argues that it's cheaper to walk than to take the train — if both people start from zero.

Thoreau gets up and heads off walking toward your mutual destination. You, planning to take the train, first have to go to work and earn the money to buy a ticket. Given the wages and ticket prices at the time, it's almost a day's pay to buy the ticket, meaning that Thoreau had a good chance of getting there ahead of you, even though it will take him all day to walk.

Plus, Thoreau gets to spend the day on a pleasant walk in the countryside, while you're spending the day working.

Depending on what you earn and how much the ticket cost, the results might be different for you. But the point is that you ought to do the calculation.

You ought to do the calculation for everything.

Of course, things are more complicated than in Thoreau's day. He made a big point that having to buy new clothes to undertake some new enterprise was a danger sign — it would take days or weeks of labor just to get even for the cost of your new wardrobe. He would have been horrified at the idea that having a job meant that you had to buy a car — it takes weeks or months of labor to cover that cost. (And weeks more every year, to pay for registering, insuring, fueling, and maintaining the car.)

He probably would have been horrified at the idea of income taxes, too.

That's the calculation I want you do — for any expense, what is your all-in cost in terms of time. By "all-in" I mean for you to include not just the time you spend working. You also want to include both the time you spend supporting your work habit — your commute, the hours you spend sitting in a stupor after work because you're exhausted, the time you spend on vacation escaping from your work — plus the time you spend earning the things you only need to pay for because you're working — tools, clothes you buy because you need to "look nice" at work, your car, and so on.

A lot of people have thought of making this calculation before me, of course. In particular, it's a central theme in the book "Your Money or Your Life" by Joe Dominguez and Vicki Robin. (I wrote a review of the book for Wise Bread.)

The point is to make yourself a thoughtful consumer. It probably only takes you a few minutes to earn enough to buy a snack, if you do the calculation in terms of your gross pay.

Instead, do the calculation the right way. Figure it in terms of your net pay, after taxes have been deducted. Figure it in terms of the hours you actually spend, including your commute.

Only when you do the calculation correctly do you have the information you need to make an informed decision about whether this or that little indulgence is worth it, in terms of the minutes of your life you spend earning it.

If you try to do the calculation for real, you'll run into borderline cases. Is it a work expense to hire a lawn service? If you work so many hours you don't have time to mow your own lawn, maybe it is. Is it a work expense to go to the hairstylist? If your boss insists that you look your best for customers, maybe it is. Is it a work expense to hire a tax accountant? If your taxes are more complex because of your job — or if you don't have time to do them yourself because of your job — maybe it is. No doubt part of your vacation is pleasure; it's not merely an escape from work.

Don't get hung up on details like that. The goal isn't to come up with the one precisely true number. The initial goal is to be clear in your own mind about how much of your time is spent supporting your efforts to earn money — and how much of that money is spent just to enable you to spend your time that way.

The deeper goal is to align your spending with your values.

How many hours does it take to buy a week's worth of meals? If the answer is what you expected, you're all set. If the answer is a shock to you, then maybe your spending is not properly aligned with your values. Maybe you'd honor your own values better by eating out less. Maybe you'd honor your own values better by eating less expensive meat and more cheap rice and beans. On the other hand, maybe spending the extra hours commuting and working so your family can eat locally grown organic food is exactly in line with your values.

I don't know. I can't know. Only you can figure these things out. I just want to provide this extra tool for figuring them out accurately — think about what you pay in terms of time.

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Guest's picture

It is really difficult to regain lost time. As the old adage goes' Time is Money. If most people start treating time as they treat money they would be more successful in thier endeavors.

Philip Brewer's picture

True, but there is a key difference: You can save up money; you can't save up time—it goes on flowing by at one second per second, no matter what.

Guest's picture

Great article!

At the risk of being too esoteric, money is nothing more than a representation of time + effort. Amassing money gives the illusion of power by ignoring the reality that time + effort cannot be amassed. Power is only found in the spending side of the equation when purchasing someone else's time + effort.

We forget that products and services are also nothing more than a representation of time + effort too. We disconnected from this awareness when bartering disappeared and money replaced direct trade.

How I spend my time + effort (money) is as important as how I purchase someone else's (product or service). This makes buying from a good source equally as meaningful a part of frugality for this family. How frugal is it if what made it frugal is both unfair (effort) and unsustainable (time)?

Guest's picture

Money often costs too much...(Ralph Waldo Emerson)

Guest's picture

This is mind blowing. I have always thought in terms of hard currency how much something costs. I now know that it is much bigger than that it is much bigger than that. Its not just the house your buying. Its the insurance, the taxes, the electricity, the furniture, the car in the driveway, the lawn that needs to be mowed and shoveled when it snows etc.