I love aphorisms and clichés particularly when I realize how much more profound and far reaching in scope they are relative to their ubiquity. One of my favorites is “Time is Money” which comes to us from that great source of aphorisms, Benjamin Franklin. He wrote those words in Advice to a Young Tradesman about the dangers of time ill spent.
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Franklin concludes his advice with this; “waste neither time nor money, but make the best use of both”. Whether we are talking as Franklin was to a young entrepreneur or to an individual about personal finances the guidance is equally sound. In our modern world of computers and instant communication life moves at light speed. What hasn’t changed since Ben Franklin’s day is our desire to save money but are there times when a bargain is more costing us more than regular price?
The average adult American earns about $42,700 per year which divides out to about $21 per hour. You may earn more or less depending on where you live, your education and your job, so feel free to substitute your hourly rate for the national average. For the purposes of this article we’re going to assume that your hourly wage is what your time is worth.
Call a spade a spade
Bargains that aren’t bargains is the confluence where time and money cross paths. One of the places in which this occurs is and where we should really pay more attention is online. There is no question that there are great deals to be found on online. The web provides access to suppliers that we might never otherwise have access to for products we couldn’t otherwise purchase begging the question are they really good deals.
Let’s say you need a new widget for a project around your home. You could just go to the local hardware store and buy the widget you want for $50. or you could spend an hour of your time finding a better deal online, which you do. You live in New York and you found a guy in Montana who is having a closeout sale on the exact widget you want and is selling them for $25 and is offering free shipping to boot!
That’s half price and no cost for shipping even taking into account the hour you spent researching you will still have a net savings. That was worth an hour of time on a Wednesday night, until you realize that you need the widget in your hands by Saturday morning so you can work on the project over the weekend. Express shipping from Montana is going to cost $20. Still you think I saved $5. plus gas so you’re ahead of the deal.
It’s a real bargain until you open the package and find that the widget does not include the $.20 screw you need to attach it to your thingamabob. So off you go to the hardware store to buy the screw. Fortunately the hardware store is around the corner from your house and you can walk so there is no gas involved just 20 minutes of your time at a cost of $7. Your great deal has now cost you $52.20 instead of $50.
By now you’re thinking this guy has lost his mind, he’s making a big deal over $2.20, I’ll get over it and know better next time. That is until you discover that the guy in Montana sent right-handed widget when you needed a left-handed one so you buy the correct one from the hardware store and you have to pay for return shipping of the wrong widget and at the distinct pleasure of installing your widget with your $7.20 screw!
The internet is not the only place where failing to take into account time is more expensive than the cost savings. Easy examples are driving 45 minutes each way to a specialty store to save $15. For the average person that means spending $31.5 to save $15. and that does not include gas.
With a little advanced planning you can turn that $16.5 deficit back into a savings by combing the trip to the specialty store with other things you have to do in that vicinity such as doctor’s visits, kids activities, or other shopping. Making the stop when you pass that way on your way to or from work might make you 10 minutes late for dinner but keeps the money in your pocket making the bargain a bargain once again.
Budgeting time to save money
Vacation time is expensive because we are not only spending money but we’re also spending a lot of time. Vacations are full of opportunities to spend money on bargains that aren’t bargains at all. My wife and I planned a cruise this past winter. We live in the northeast and I’m a little paranoid about weather delays, so we decided to fly down to Florida a day early to be safe. and not lose thousands of dollars in the process.
I researched flights and found that we could fly out at 7 PM for $50. less, each than if we flew out at 7 AM. Great deal right? Wrong, flying out at 7 PM put us on the ground at 9:30 PM. While flying out at 7 AM would have cost $100. more in airfare we would have had an full day on the beach instead sitting around the house waiting to go to the airport during rush hour. The wasted day at home and the time in traffic was worth hundreds of dollars in time just so I could save $100. in airfare.
Gas is expensive and $.15 per gallon is a big difference but driving even 10 minutes each way to fill up is not worth it. Most cars have no more than a 15 gallon gas tank. Taking the savings of $.15 per gallon and the full 15 gallons realizes a savings of $2.25. Driving 10 minutes each way just to fill up will cost you $7 in time for a loss of $4.75 or an extra $.31 a gallon more than the station around the corner.
The secret to saving money is in understanding the factors that go into cost are more than the ticket price of an item. The biggest factor may be your time, remember that even outside of work your time has value. Spend it with as much frugality as you spend your dollars and in the long run you will be richer in both your bank account and your life.
Photo Credit: Tax Credits