The Time/Money Formula

Sometimes it can be hard to know if a time-saving product or technique actually is worth the extra cost. Here's a simple formula that will help you decide.

First, you need two pieces of information: how much extra the item costs you, and how much time, expressed in minutes, you'll save by buying it.

Once you know this, divide 60 by the time saved and then mulitply by the extra cost. This will tell you how much money that product is really costing you, expressed in dollars per hour....and that can be an eye-opener.

For example, in my article "Time Saved, Money Wasted" I talk about pre-peeled onions that cost $1 extra each. (I'm not kidding!) It takes a whole thirty seconds (or .5 minutes) to peel an onion (and yes, I did peel an onion and I timed myself) so when you plug these two figures into the formula, you get:

60 divided by .5 minutes = 120 x $1 = $120 per hour.

That's right. You're paying for that extra half-minute at a rate of $120 an hour!

Let's try another example. If it takes three minutes to pack a lunch for your child, and one of those prepackaged, grab-and-go crackers, meat and cheese lunches costs $1.75 more than than your do-it-yourself ingredients, how much are you spending per hour to save those three minutes?

60 divided by three minutes = 20 x $1.75 = $35 per hour!

(Maybe filling a lunch box with a P&J sandwich, a banana and a refillable container of apple juice--which would cost about a $1--is looking like a better idea?)

Example #3:
It takes you 30 minutes (actual prep and cleanup time) and cost $3 worth of ingredients to bake a homemade pie. A frozen pie involves no prep time and the baking time is only five minutes longer, for a net time savings of 25 minutes. The frozen pie costs $6, or $3 more than homemade.

60 divided by 25 minutes = 2.4 x $3 = $7.20 per hour.

At that rate, I say "Buy the frozen pie!"

There are actually two versions of the Time/Money formula. The examples above let you know how much money it can cost you to save time. In a few days, I'll show you the flip side: how much time it can cost you to save money.