How Much is Your Time Worth?

More and more these days, I'm basing financial decisions on TIME as well as money. In the "olden days," we'd drive all the way across town to save a dime (my wife still does this sometimes) but now I usually give it the time test before I decide to buy. Consider the following situation:

I'm at a store and thinking of buying a $20 item. I KNOW it's $2 cheaper at another place but that's a 15-minute drive away. What do I do?

I buy it at the first place -- $2 is not enough to account for the time and effort associated with going to the second store (much less the gas cost these days.)

But let's change the scenario a bit. What if the place it's $2 cheaper at is in the same mall -- just at the other end? For me, this would be a toss-up. For my wife, she'd go for the cheaper price.

Let's change it again. Let's say that you're considering buying a $500 item, but it's $50 cheaper (still the same percentage savings) across town (15 minutes away.) Is it worth the drive? I'd say it was.

So I guess it's the relationship between the absolute dollar amount saved and the time/effort expended to get it that's the deciding factor for me.

What about you? How do you make the time/money trade-off? Do you have any examples you could share with the rest of us?

Comments

[Lord]

How much do I need it? How soon? Is it something I could save for my next shopping trip or do I need it now? One really has to do a fair amount of shopping to know prices at various stores. Shopping the same ones usually doesn't leave much to compare and it is hard to get me to learn a new store and a shopping pattern. The reason for shopping different stores is rarely price for me. It is design and selection. For that I go to unwarranted lengths, but it's what I find important.

[Edmund]

I am not going to address your examples directly.

I have had many discussions with others in which they think what I am doing is not worth the time I spend on it. Sometimes you also have to consider the educational value of spending the time learning how to do something, even though it doesn't save enough money (or make enough money) justifying the time you spend on it.

[Mike S.]

I think you're leaving out one key dimension:
Are you going to go to location B for other reasons in a reasonable timeframe?

[Rick]

Sometimes I think rather than trying to quantify how much my time is worth, it's more of a subtle, qualitative feeling. Am I in the mood to drive across town to save $5? Sometimes I am, sometimes I'm not.

For instance, I do nearly all my grocery shopping at Walmart. I know King Soopers or Albertsons might have cheaper prices on certain items. But is it worth to go to three separate stores to do my grocery shopping? Plus look through all the ads to find which store has the cheapest prices? Usually not.

Of course, I only spend about $50-$75 a month on food (I'm single). If I were buying for a family of six, the answer would probably be difference.

I guess to answer your question specifically, $10 is probably the difference in price it would take for me to make a trip to a different store.

[Rocketc]

Another factor here is quality. Whenever my father purchase any type of electronic or appliance, he bought the best one possible regardless of price - but some of the things tended to last forever. A couple of examples: a Maytag washer that lasted for 23 years in a family of 7, a shop vac from the late 70's that he used until fairly recently...
One the other hand, my wife and I needed a new stove 3 years ago, but only spent $150... today it is a piece of junk. I would like to replace it, but it is going to cost at least $250 to get something decent. That means I am going to be out almost $400 and still only have a $250 stove. If I had only spent $100 more three years ago, I wouldn't be in this situation.

No. I would not drive 15 minutes to save $2.00 - gas alone would cost me that much. Well, perhaps not quite that much, but enough.

I would walk 15 minutes to save $2.00. Better health for me, better health for the planet, better savings for my wallet. A win all around.

[Bob]

I guess I would estimate what my "leisure" (non-work) time is worth per hour. In the first example my leisure time would have to be worth less then $8 per hour (doubtful). In the example provided by the author my leisure time would have to be worth less then $200 per hour (um, it is). The value of that time may depend on my mood too.

Additionally, I would suggest that the value of my leisure time is inversely proportional to the amount of it I have.

Retired = more leisure time = lower value to leisure time = driving around town looking to save $1.

Married w/young children = less leisure time = high value to leisure time = one stop shopping to get home and sit on couch.

Both Lord and Mike S allude to the idea of batching trips to do your buying. i.e. don't go out 6 times for 6 things. Make a list of expected purchases, figure out what store generally has the best prices on the majority of the things you will purchase, and then plan your trip accordingly. Rick does one stop grocery shopping, he's willing to trade off a couple of bucks on a few items for the expediency of the overall trip.

I tend to make exceptions for items over a certain price. I review ads for TVs but not for carrots. Perhaps because it is easier for me to "see" the value of saving $50 on a single item (electronics) than $1 on 50 items (grocery) despite the fact the savings are the same. This, of course, would exclude those who enjoy coupon gaming. (That's totally a hobby, leisure time defined. :)

Thanks for a great site. Your suggestions are both thought provoking and practical.

[Big Cheese]

My father always valued his non-working time as free and would often spend hours to do a task that he could get done for $20 such as shovel an icy driveway, etc. It depends on your outlook.

Driving around to find a better deal doesn't just cost time but physical resources like miles on the car and gasoline as was rightly stated earlier. Therefore this type of a cost should be separately analyzed in the payback analysis.

Way to keep us thinking FMF!

-Big Cheese