Sometimes we can get caught up in the emotion and excitement surrounding those small victories in life, that we can lose sight of the bigger picture things that are more important. I really think that this happens a lot when it comes to our money, and how we spend our time trying to save or make it.
Someone I know, a great person and otherwise very smart, is a good example of this. Here are two things this individual does that I think we can learn from in terms of opportunities to reprioritize our focus:
Focusing on Side Income to the Detriment of Primary Income
The whole concept of side income is one that I actually endorse. Multiple streams of income are a good thing, and often our hobbies and skills can help us make extra money. In the best of cases, this could even mean a sustainable income stream that could evolve into a new lifestyle altogether!
That being said, I wonder if the idea of side income can sometimes be so tempting that many folks take their eyes off the ball? Side income has been all the rage in some personal finance blogging circles, and to be sure, some have succeeded wildly. At the same time, many others are simply chasing a dream.
A more concrete example is someone I know who is always selling things via eBay or craigslist, and talking about it quite a bit. Now, as I mentioned above, I think extra income is great! However in this case, he’s really into it and gets quite excited over selling something he didn’t need for $20.
I’m not at all knocking that part of it, but it’s the time and energy spent on it that I would like him to consider. Let’s say it takes 3 hours to take pictures of an item, place the advertisement, respond to inquiries, and then actually complete the transaction via shipping or meeting the buyer. What is the effective hourly wage in this case? Less than minimum wage.
Perhaps if a lot of that time was reallocated to one’s career, financial goals could be achieved quicker? Then we can focus on side income for what it is: extra money that’s nice to have and fun to earn. Seems like a win-win!
Spending Excess Time on Saving While Forgetting the Value of Time
This concept is similar to the one discussed above, in terms of where to invest our time. The idea is that our time has value, and we should always respect ourselves by remembering this! It’s something that I’ve had to learn over time.
Here’s where I’m going with this: sometimes the time spent trying to save money makes the whole endeavor not worth it.
Let’s say that you spend 15 minutes searching for coupons online, or clipping coupons, so you can save $1.50 on some purchase. Time adds up. So, in this case, it’s like an effective hourly rate of $6.00, which is not quite minimum wage.
Similarly, driving somewhere further to save money is also an example of this. Driving an extra 10 minutes to go to a cheaper grocery store might save some money, but how much? Let’s say you’ll save $3 on your total bill. Well, for 20 minutes of driving, this means that the effective rate is $9.00.
However, then we can factor in the cost of gas. If that 20-minute round trip costs us ½ gallon of gas, that might be another $1.75 gone. Then, your effective hourly rate goes down to $7.25.
Bottom Line: Sometimes it helps to remind ourselves that while the little victories are fun (and low-hanging fruit should certainly be taken advantage of), it’s the bigger victories that matter more for our lives!
My Questions for You
What do you think about the idea of focusing on the big wins, and not sweating the smaller things as much?
Do you ever do any such calculations on the value of your time, in terms of whether or not some course of action is worth it to you?
Do you have any other examples to share?