Most women at one time or another have heard about Salary.com’s program which calculates what it would cost to hire a replacement to do all the work a mother does on an annual basis. We know, intellectually, that there is economic value for everything a mother contributes to her family; while that value does not appear in calculations of our nation’s GDP or is included in calculating social security benefits, we are aware that the choices we make have an economic impact on our households.
However, have you ever considered what your economic value is per hour?
Women are busy. We have responsibilities ranging from caring for our children, balancing our budgets, planning our meals, cleaning our homes, running errands, working outside the home, and more. While we’d all like to be the superwoman who can maintain perfect life balance and perform everything seamlessly and quickly, the reality is it is impossible to do. We have to make choices, assigning priority to those things which have the most urgency or bring us the greatest benefit.
We often think that, by doing certain activities or making something ourselves, we are “saving money.” However, if the time that it takes to complete a task is significant, then you might be better off not doing that activity or buying the object you need. One way of determining if what we are doing is the best financial choice is to find out what our savings or loss is if we were being paid to do the task by the hour as though we were being hired by an outside source to do the job.
For instance, I can make my own biodegradable laundry soap with $2.50 worth of ingredients in ten minutes; I can buy the same amount of biodegradable laundry soap for $41.50, saving $39.00—or $234.00 per hour. Obviously, my return on my investment is worthwhile, so I continue to make my own laundry soap regularly. I can also make two homemade sixteen-inch pizzas in fifteen minutes (using my KitchenAid and not counting the time it takes for the dough to rise) for $5.00, saving $13.00 compared to take-and-bake from Sam’s Club and $52.00 per hour. It is well worth my time financially to engage in doing these things for my household.
There are times, however, where I have found that doing something myself does not help my family’s bottom line. One summer, my husband and I considered getting a new lawn tractor to mow three acres of land, as our old one needed to be repaired at close to the cost of a new mower. However, we realized that, by the time we divided out the cost of the mower and added in gas and maintenance, we would have spent the same amount per use as it would cost to hire our neighbor to come and mow for us. What would have cost us $40.00 to do ourselves, plus two hours of labor, our neighbor could do for $40.00 and one hour of labor. (He has one of those fabulous John Deeres that really could move.) We were very surprised by this; we had assumed that buying the tool and doing the work ourselves would save us money. However, by taking the time to calculate all the costs involved, we realized the hourly return on the investment wasn’t worth it.
Frugality should not be thought of only in terms of how much money you save, but also in terms of how much time you save. The cliché “time is money” is true for a reason. I had an old colleague who made her own dresses because she could make a particular dress she liked for $15.00, instead of spending $50.00 in the store. If sewing was something she enjoyed doing, then making the dress herself is certainly a great decision. However, she despised sewing…and it would take her six hours of misery to make one. Her savings came to $5.83 per hour, which isn’t bad…but could she have done some other task that would have saved more than $5.83 an hour that she could have enjoyed more, and then just bought the dress? Was the time spent worth the end result? Ultimately, only she could make that decision…but I wonder if she would have made the same choice if she thought about her actual hourly earnings.
Saving money isn’t always straight-forward; sometimes you have to look at different aspects of your life to find the best way to make a household budget work. Considering your hourly savings rate could give you some additional insights into how to manage your time and money, and may even make your life just a little easier.