\u00a0<\/span>The world of advertisements wants us to all treat ourselves like kings and queens, but the simple truth is doing so would benefit them more than us. While there\u2019s definitely been a cultural shift towards embracing frugality (just look at Extreme Couponing on TLC), many people still struggle with budgets and keeping their spending under control. One of the best strategies I\u2019ve heard of to moderate your spending is to start measuring your purchase costs in time rather than your money. It involves calculating your time-money exchange rate.<\/p>\n
It might sound a bit odd, but start off by figuring out your approximate hourly wage. That\u2019s a good benchmark for what your time might be worth \u2013 it won\u2019t be perfect, but it\u2019s a start. According to government statistics, the average hourly wage in the U.S. is between 23 and 24 dollars an hour. Let\u2019s say $24 for this example. \u00a0So, each hour of time has a value of $24.<\/p>\n
Let\u2019s start by looking at something simple like lunch. On the surface, it may seem like eating out for lunch saves time, but that\u2019s not quite true if you look at the time exchange. A half-decent lunch can easily cost eight or ten dollars, which works out to about a third of an hour of work. Or, you can spend five minutes and make a sandwich at home, or pack some leftovers. So, eating out actually \u201ccosts\u201d you 15 extra minutes of your time, because you need to work that much longer to pay for lunch. On a more extreme case, I knew someone who would take a $20 taxi ride to work every\u00a0Monday\u00a0morning because she didn\u2019t want to get up early enough for the bus after the weekend. She spent almost the entire first hour she was at work just earning the money to pay for her indulgence. When you think about the time it takes you to earn the money for impulse decisions, the impulse decisions can feel a lot less attractive.<\/p>\n
This strategy of the time-money exchange rate can be applied to things we don\u2019t do as well as things we do. Take couponing for example. Many people still avoid couponing because they find it hard to see the value in small coupons of $0.50 or $0.75. I\u2019m far from an extreme couponer, but before my grocery shopping trips, I take about 10 minutes to look through my flyers and a local coupon site or two. It\u2019s unusual when I can\u2019t find $5 or more in coupons that I can use. This puts my hourly rate at about $30 ($5\/10 minutes x 6), which is quite worth the time I put in.<\/p>\n
Does looking at your time-money exchange rate influence how you view your purchases?<\/strong><\/p>\n