The Time/Money Formula: How Much Money Will You Save?

A few posts back, I provided a Time/Money formula to let you know if buying any particular "time saving" product was worth the extra cost. By using this formula, you get a cost per hour figure, which provides a better idea of the real price.

For example, it can be hard to decide if spending $1 to save two minutes makes sense, but when you use the formula:

60 divided by the number of minutes saved x the extra cost = money per hour spent.
(60 divided by 2 x $1 = $30)

you'll realize that you're paying for that two minutes at an hourly rate of $30.

For a lot of people, that's more than they earn per hour, so they may actually be working two or three times the number of minutes saved to buy the product. In the example above, for instance, if you make $10 an hour, you're working six minutes to make the money to buy a product that saves you two minutes!

But what about the flip side? What about spending time to save money? Well, I have a formula for that, too.

Suppose you want to save $50 by mowing your own lawn, but doing that takes an hour and a half. How can you know if this is a good idea?

Try this computation:

60 divided by the number of minutes spent x the cost saved =money per hour saved.
(60 divided by 90 minutes =.66 x $50 = $33 per hour saved)

For someone who makes $20 per hour, that’s a pretty good deal. But if you make $45 an hour, you’re spending an hour and a half, worth $67.50 at your pay scale, to save $50.

Of course, there are other factors involved in any such decision. You may need the exercise involved in mowing your lawn, or if you may just enjoy doing something outside. But if saving money is your motive for sweating in the hot sun, this version of the Time/Money formula will help you decide if its worth it.

So again:

To find out if it’s worth spending money to save time:
60 divided by the number of minutes saved x the extra cost= money per hour spent.

To find out if it’s worth spending time to save money:
60 divided by the number of minutes spent X the cost saved= money per hour saved.

I’m going to post these formulas in the sidebar. Try 'em out....you may be surprised at the results when you start checking things with the Time/Money Formulas.