Strategy & Planning
Personal Costs: Don't Waste Precious Time!
Author: Ronnie Nijmeh, ACQYR.com
How do you define your personal costs? Do you waste your precious time in a line only to save a $1.25? Well what if I told you that if you want to save that $1.25, you'll have to spend $125? Would you do it now? No! Well I hope not! What advantage is there to spending $125 to save $1.25? None! So why do people do it?
Well let me put it this way, do you quantify every little thing you do? Not likely. But if you did, you'd realize your inefficiencies spent on frivolous things and where that time could have gone. Real life isn't usually as clear cut as the example above (you don't usually know that you put forth $125 to save $1.25), but that doesn't mean that you're not putting in more than you're receiving. That is, you don't usually know that you're incurring a personal cost.
How do you define your costs?
Is money the only cost? What about time? Or how about happiness? Is it worth lining up for an hour to save a couple bucks? What if you're worth $500 an hour? Then is the few dollars you saved in line worth it? Not a chance!
All types of cost should be factored into your "personal hourly rate." Don't forget to include the value of relaxation and the time spent with family, but also the high cost of being unhappy. What is your time spent with your family worth? How about watching your kids grow up or spending a romantic evening with your spouse? Is it worth thousands? Millions? I'd bet it's priceless.
Let's conservatively break down your personal hourly rate:
Family Time: $200/hour
Idea Creation: $100/hour
Relaxation: $100/hour
Happiness: $100/hour
For a grand total of $500 an hour.
You might be thinking: "Oh please, it's only a few minutes spent in line!" But think of it this way, in those 15 minutes could you have thought of an amazing new idea to start a business? Or perhaps in those 15 minutes, could you have seen your baby's first steps? What are these things worth? Only the $1.25 that you saved?
Now the "personal hourly rate" is a conservative estimate and it only considers the main sources of your time. Perhaps the time that you sit at your desk thinking or planning your business is worth more to you, or perhaps your well-being is reliant on a little more than rest and relaxation? But consider the point: don't incur costs that have no immediate benefit to offset your personal hourly rate.
Lining up for 15 minutes at a gas station to save a few pennies may not be worth it if it's causing you to waste $125 of your personal hourly pay ($500 per hour x 1/4 of an hour). Also factor in the gas that you're burning while waiting or the decreased satisfaction of a cold meal at home! It all adds up! (Economists call this the "opportunity cost;" the cost in terms of passing up on alternative options).
Don't Entirely Forget About Costs!
Being cost conscious is important, don't get me wrong! We all want to save money, but weigh the positives and negatives. Think about all forms of cost and gains, not just the monetary ones. Also consider whether the purchase you made was a common, consistent one (such as buying gas for your car), versus larger purchases (such as the car itself). Common purchases should be treated with caution when you start seeing yourself eat into your personal hourly rate.
Do yourself a favor, if you see the gas prices drop and there's a massive line, don't go. Skip the $1.25 that you'll save and, instead, do something with your time. Get home an extra 15 minutes early and spend that 15 minutes on "idea creation" to build your business or spend it with your child or spouse. Or even getting inspired by reading a few ACQYR.com articles!
$125 spent to save $1.25, would you do it now?
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Published: October 07, 2003
