Have you ever done something to save money, just to wonder whether it was worth all the time you spent after all?
Or on a similar note, have you spent a significant amount of money to save you some of your own time and then debated whether it was really worth it in the end?
As newlyweds many years ago, we had more time than money (which wasn’t hard because we were broke college students). By the time we were both earning steady incomes, we had our first child (who was cranky and took up all of our free time). Life comes in seasons and some are more difficult than others, requiring more of different life resources.
There is definitely a balance needed between time and money in order to optimize your finances without minimizing your life.
There are three main categories that come to mind when considering balancing time and money:
- Earning money by spending time
- Saving money by spending time
- Saving time by spending money
We are going to use a quantifiable approach to determine whether our time and money are being well-spent when trying to optimize both resources.
The value of your time may be more clearly defined if you receive an income, but if you’re a stay-at-home parent like myself that is not currently earning money, it may be a little less clear what your time is worth. Everyone’s time is worth something, but the perceived value they place on it will differ based on their own personal circumstances.
EARNING MONEY BY SPENDING TIME
The first category is fairly straightforward and not really optional for most people, at least to some extent. If you’re a salaried worker and haven’t previously calculated your hourly rate, this will be very beneficial for you! In addition, it can be the start of analyzing the next two categories. I do not believe that anyone’s value lies in how much they make, simply that your hourly rate can be a tool to determine how to best spend your time between earning and saving money.
A few examples of earning money by spending time include:
- Working a regular full-time or part-time job
- Participating in online surveys
- Starting a side hustle such as dog-walking, tutoring or blogging (the Side Hustle Nation blog has a huge list of ideas)
Simply take how much money you earned and divide it by the amount of time you spent earning the money and you’ll get your hourly rate. You can use the spreadsheet below to easily calculate these examples.
For side hustles especially, you will want to include the total amount of time that you are spending, including any extra time you spend to complete the job (preparing in advance, commuting, etc.). For a really in-depth analysis of your full-time job, check out my summary of the book Your Money or Your Life.
You’ll want to ask yourself whether your time was well-spent to earn the amount of money that you did on an hourly basis. You will likely (hopefully!) agree that your regular job is worth it, but something like participating in online surveys may not be depending on their time requirements. In contrast, you may find that it’s possible to find side hustles that make even more money than your full-time job.
SAVING MONEY BY SPENDING TIME
There seems to be an unlimited number of ways to save money. Of course, some are more extreme than others (no thanks, I will never use reusable toilet paper). Michelle has a great list of ways to save money on her blog Making Sense of Cents. There is a huge range of return on your time investment by employing money-saving tactics.
A few examples of saving money that also involve time include:
- Clipping paper or digital coupons
- Running price comparisons on large purchases before you buy
- Obtaining updated homeowner and automobile insurance quotes
- Calling your cell phone, internet or cable company and asking for a discount
- Meal planning in advance
- Submitting for reimbursement, even when they are small amounts
To analyze whether it’s worth your time to complete these tasks, you can use the following workbook to enter the time and the money you save completing the task and it’ll give you an hourly rate for your effort. A couple of these examples are my own personal calculations.
I have personally found that clipping paper coupons is not worth my time, but sometimes I’ll clip the digital coupons in the checkout while I’m waiting. In contrast, I’ve found meal planning to be a very effective way to decrease my monthly grocery expenses by only spending about a half an hour each week.
Listed above were some of the more quantifiable examples of being able to save money. Another great way (the best way!!!)? Budget your money so you know where it goes every month! This can save you a substantial amount of money if you just spend 15 minutes per week.
SAVING TIME BY SPENDING MONEY
Evaluating the benefit of saving time by outsourcing tasks is significantly more complicated. There are often tasks that require additional knowledge or skills that you may not currently have but could be learned. Sometimes it may be worth it and sometimes it may require too much time to really be beneficial.
Alternately, there may be tasks that you can outsource for less per hour than you can make if you were to spend that time earning money through a side-hustle as calculated previously.
A few examples of saving time by spending money include:
- Hiring a housekeeper to clean your home
- Eating out instead of preparing a meal yourself
- Hiring someone to do your taxes for you
- Using a grocery delivery or picking service
To analyze whether it’s worth your time to outsource certain tasks, you want to consider not only the amount of time you are paying someone per hour to complete the task but also how long it would take you to complete the task.
For example, if you were to hire a professional to complete your tax returns, you may pay them $150/hour for their work. It may only take them 3 hours to complete the returns but would possibly take you twice as long. In this case, deciding to complete the returns yourself wouldn’t “save” you $150/hour, but only $75/hour when computed on your own hourly basis.
Several examples are shown in the worksheet below:
I personally use a grocery picking service in my area nearly every week (Kroger Clicklist). It costs me $4.95 per order and saves me at least an hour and a half. It’s definitely worth it to me, even if it does increase my grocery expenses (which I just decreased by making the time to meal plan).
By comparing the items you calculate in this category to your “earning money by spending time” category, you can make a big difference in being able to determine which tasks to outsource and which to complete yourself.
As you may be thinking, there are many other things that should be considered when balancing your time and money.
Some of the additional considerations in determining whether something is worth your time include:
- What else would I be doing with my time if I weren’t completing this task?
- How much do I enjoy (or hate) doing this task?
- Does this task require special knowledge or skills?
Ultimately, you have to decide what your time is worth and how it is spent most wisely. There’s no coincidence that we use the word “spending” when we talk about both time and money!
Note: There are a few examples of each category shown in the spreadsheets above, but you can download the excel file and copy and paste to add more for yourself or edit the descriptions and numbers directly in the workbook here. To download the file click the download button with the arrow on the lower right corner. All 3 categories are included in the workbook so there is no need to download all 3.