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How Much Is Your Time Worth Myth
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A post on Make Love Not Debt deals with the idea that your time is worth money and that you shouldn’t do something yourself if you can pay someone, what your time is worth, to do it for you. Him estimates that they save $360 per year by doing their own laundry instead of sending it out to a service, but he wonders whether or not its worth it for him. He wonders if his laundry time is worth more than $360.
I say it’s not. Conventional wisdom states that to calculate the value of your time, you should consider how much you could make at your job if you were to work an extra hour instead of spending it on whatever task you’re analyzing. If you can make more at your job, then you should hire someone to do the task and instead spend your time on your job.
I think the whole thing is a joke for most people and that it’s really just an excuse for someone to claim they are worth too much to spend their time on menial chores. This line of reasoning only really applies to folks who can honestly work an extra hour and get paid for that extra hour (and will in fact work that hour instead of doing the chores). For the average person, this line of reasoning is a wholly inaccurate. For most people, if you hire someone to do your laundry, the time you save won’t be spent at work.
I can understand justifying hiring someone to do the work on other grounds (like you would prefer to sleep, hang out with your friends) but to use the “time is money” line is a little disingenuous.
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More likely inaccurate than disingenious… Most folks are on salary, so yes they’re extra time is fiscally worthless. But… that extra time could be spent working more or learning, both of which give you a chance at increasing your income. Personally, I only outsource stuff that I don’t want to do or am not willing to take the risk of doing wrong. Cleaning gutters is a perfect example; I’m not going to risk falling off the roof when I can pay someone else $100 to do the job for me. $100 is nothing when compared to what I could lose if I were to fall off the roof.
One of the major personal finance magazines (Money/Kiplinger’s/Smart Money) had an article about this within the past year or so that really showed how many things that people outsource. I vividly remember a quote from a man who justified his decision to pay someone to teach his daughter how to ride a bike. Give me a break!
I think this argument is used quite often by people who want to appear affluent or don’t want to do jobs that they consider to be beneath them. For example, many people in my neighborhood pay to have someone cut their lawn because it is hard work, yet they also pay a membership fee to exercise at a gym. Why not do it yourself and save both fees?
I don’t get paid much for sitting on my butt watching TV or surfing the web. Since I can’t get extra hours at work and don’t really want to get a second job to pay for someone else to do my chores, I guess I’ll just do my own laundry, clean the house, wash the car, mow the lawn etc.
If you happened to run your own business or were a contractor getting paid per hour then getting your laundry done is worth it. But by the same math that is being done on that post what about taking that money and simply buying a used laundry machine? That way you can cut the amount of time doing laundry down considerably and the savings increase by factors after the cost of the machine has been recouped?
Having a washing machine and drier means I don’t have to think about my laundry and I don’t have to plan my clothing around when laundry day happens to be.
54 hours per year to do laundry? I don’t think so — doing the laundry might take a couple hours. The rest of the time is spent waiting for the laundry.
So, do something useful during that time. Pay bills. Read a book. Talk. Do a Sudoku puzzle. Bring along a cell phone and call your family. Balance your checkbook. I’m sure most people could find something to fill two idle hours, that would free up two hours at another time during the week.
Of course I guess you could outsource all those things too. But what is people’s obsession with not doing anything themselves? Who cares about what one’s time is worth? Even if an activity isn’t entirely enjoyable, there’s still something to be said for exercising a little independence.
As with any idea, it can be taken too far. But the implicit point (that cutting expenses as much as humanly possible isn’t always and exclusively the correct decision for everybody) is valid.
When I lived in an apartment, I paid the laundromat’s staff to do my laundry. It cost about 20% more than doing it myself in their machines, and the fact that I could leave the laundromat, do other things, and come back later in the day when I was done running errands, without worrying that my clothes would be stolen by another patron if I didn’t keep a constant watch on them, was worth the 20% to me. Even when the errands I was running didn’t directly generate income or other savings, there was a question of opportunity cost to be considered, and given the state of my life, the number of demands on my time, and the disproportionate burden imposed on that time and attention by doing laundry at a public laundromat, the 20% premium to have somebody else do the watching and switching and then hold the stuff behind the counter until I picked it up was worth it to me. Which is not to say that I’d argue with anyone who said the same deal wouldn’t be worth it to THEM. Different lives, different valuations for time, leisure, work, and opportunity costs. As it should be.
Now that I live in a nice big house with laundry equipment in the basement, I do my own laundry, because doing laundry has gone from “go to the laundromat, fight for a machine, then sit there for several hours doing nothing but watching to make sure people don’t steal your stuff” to “throw the clothes in the washer, do other stuff until you feel like a break, then throw the clothes in the dryer and repeat”. The only opportunity cost remaining is the time I actually spend _working_ on the laundry, instead of all the time I used to spend watching the machines and guarding the stash, which amounts to about a 98% reduction in the level of imposition on my other activities. Plus, the cost of running my own W/D is way lower than the cost of paying the laundromat to use theirs, so it would be quite a bit more than that old 20% price premium if I kept paying somebody else to do laundry.
We could quibble all day about whether, from a strictly financial perspective, it made sense for me to pay the extra 20%. I’d run the numbers on a typical day of alternative errands and contract work, other people would disbelieve them or accuse me of cherry-picking, and we’d go round and round until we all got tired of the argument and went back to simpler things like discussing whether helping waitresses avoid taxes is equivalent to stealing or equivalent to rescuing people from armed robbers.
But that would miss the point. It was the right decision _for me_, _at the time_. The numbers work out close enough that it wasn’t obviously insane, and even if there were a few cases where I arguably overspent relative to the direct financial return, there are significant nonfinancial returns in most expenditures on labor-saving services.
BTW, the “myth” of measuring the marginal value of one’s time isn’t a myth…it’s just a tool that some people can misuse. It’s one of the core premises of the single best personal finance book of all time, ever: “Your Money or Your Life”.
Our main “violation of frugalist doctrine” is that we outsource gardening (once every two weeks) and heavy cleaning (also, once every two weeks). This frees up weekends for having fun – or at least less pressured errands – as opposed to drudgery, for the price of about two and a half hours pay per month. And we don’t need to buy, store, or maintain much housecleaning or yard equipment. I figure this buys us one to two weekend days per month, so it’s worth it.
I think ‘myth’ is the wrong word, it would’ve served me better to use ‘misuse’ or something like that. I also can’t imagine staying in a laundromat for hours waiting for my clothes to be washed and dried…