The balancing act between personal productivity and frugality is a tough one. While I always try to be as productive as possible, I also believe in keeping my cash and cutting costs everywhere. This Frugality VS. Productivity war in life is very difficult to balance but there are ways to identify the correct path.
Let me give you an example. If I can get a lawn service to cut my grass for $21, should I take them up on their offer knowing that it would take me 3 hours to finish the task myself? If I make $60/hour at work, does this mean that by cutting my own grass for 3 hours is actually costing me $180 in time? Well, no. However that is the mindset that many people have and I hear it all the time. By the way, your cost is $7/hour.
To work this out, we have to identify a few things:
What is your time worth? For the sake of argument, let's assume that you make $60/hour at work (yes accounting people, that includes monetizing all of the benefits, etc.). Does that hourly value apply to your personal life? The 'easy way out' philosophy would say yes; outsource everything at home that you can pay someone less than $60/hour for. However it's not that simple because we are not looking at the flip side of the equation. All you are considering at that point is emotion (i.e. laziness) and ego (i.e. I'm too good to do this).
In order to really determine the value of your time, you have to clearly identify what your time is being used for at that particular moment. How would you spend this free time you paid for? Are you going to watch TV, kill time in a chat room, or would the time be spent doing something with a greater value?
A Greater Value: To make this simple, let's revisit the lawn service sample from earlier. To me, I would pay $7/hour to spend time with my daughter. However, I would not spend that money if the intent was to free up time so I can troll around on eBay. So even though I get paid a lot more at work, that has nothing to do with my decision. You have to get to the point of understanding that the reward of watching TV for example is not nearly worth $7/hour. If you are going to pay someone to complete a task, you better be sure that your time will be equally (if not more) productive and or profitable.
So what is more productive? This is going to vary by individual. I mentioned that paying $7/hour to spend time with my daughter was a no brainer for me. My daughter is happy, I am happy and unstressed, my wife is happy, and the grass gets cut - All at the same time. Yeah, that's productive and actually a cheap price to pay for everything that I would gain. For you, that may be different.
Let's skip the family part of it and pretend you are writing a book. Should you pay $7/hour in order to provide you with more time to write your book? That all depends on a series of questions: What is your deadline? How much can you write in 3 hours? Are you really going to write or are you going to sit and think about it (you can think about while mowing the grass you know)?
The point of determining the greater value is to place the activities on a scale and determine which has greater "Total value". Money is only a portion of this "total value". You also have to consider health, stress, family, goals, time, etc. While this sounds complicated, I am not asking that you complete an full, written analysis each time. These are considerations that you are already thinking about, they just have to be applied to your decisions.
- Mark
Productivity vs. Frugality
