Improve Your Frugality by Asking Yourself These 2 Questions

by Jessica Sommerfield · 2 comments

I’m always looking for new ways to curb my spending, save money, earn freebies, and ultimately, live a more frugal lifestyle. This has especially meant becoming more careful about my purchases over the last few years. Looking back, I’m painfully aware of the money I’ve wasted:

  • Impulse purchases that weren’t accounted for in my budget
  • Multiples of items I barely use to begin with
  • “Great deals” that just weren’t what I wanted or needed, so they ended up in the donation pile

To avoid regretful purchases in the future, I’m more deliberate than ever about what, when, and why I buy things. Still, there’s plenty of opportunity for even better insights or angles that make this principle click a little better. Asking this question about potential purchases can do that:

How much does it cost… in my labor hours?
If you’re an entrepreneur, you need to factor labor hours and production costs into the final price of your product or service. Otherwise, you’d be losing money. If you’re paying so-and-so a certain amount for a certain number of hours to make or sell your products, you need to earn more than that. This is a basic business principle. But, even if you’re not in business, this principle can help you weigh the value (not just the price) of your purchases more carefully.

Use the Formula

To figure out how many hours of labor it would cost you to earn the item you’re thinking about buying, divide the cost of the item (say, $40) by your hourly wage – say, $10 (I know many of us hate to do math, but rounding numbers up to multiples of ten can make it much easier!). If you earn a monthly salary, there will be a little more math to do, of course. In this example, it would take you four hours to earn that purchase.

Ask the Follow-up Question

Now it’s time to ask the follow-up question. Picture yourself at your job, doing what you do for a living, for four hours. Is your labor, sweat, brainpower, creativity, stress, and time worth it?

If the number of hours you’d be working for that purchase doesn’t mean anything to you, it might be helpful to convert all your other expenses into hours of labor for an easy comparison. For instance, how many hours of labor does it take you to pay your cable bill? Your mortgage?

Comparing what it costs you in hours of your life for these necessities can help you see whether non-essential purchases are reasonably valued. Is that pair of $100 shoes worth 10 hours of labor? Is that $30,000 car worth nearly two years of your hard-earned money?

What to Do with the Answers

Based on your circumstances, the answer to these questions will be different each time. What you decide to do with the answers is entirely up to you. After all, the exercise merely gives you a different way to look at spending.

This isn’t an earth-shattering concept. We know that we work for our money, which we use to pay for living expenses and things we enjoy. But sometimes money can become abstract and far removed from its source – our own labor. Thinking of the things we want to buy in terms of what they cost us, personally, might make us think a little longer about whether they’re worth their price.

David’s Note: I’ve been doing this for years, and I will tell you a secret. Not many extras will be worth it once you make the calculation. That shiny TV may seem awesome but it’s never going to be worth working an extra 20 hours to pay for what you already have because that means 20 hours of less time using it. And that new iPhone for $40 a month? You are literally working 3 more hours every month for the rest of your life just so you can carry the latest phone that is marginally better than the one you already have in your pocket.

The beauty of using mental tricks like this one is that you’ll eventually get used to not splurging, and the desire to buy slowly melts away too and you no longer even have to make the calculation. Once saving becomes a habit, then the magic really accelerates and you can be financially free in no time.

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  • Jody says:

    These are 2 great questions to ask yourself before an impulse buy! I will definitely keep these in mind the next time I walk into Target (I can never buy just what I need in that store haha)! Thanks for sharing!

  • Jeff says:

    Calculating how much stuff would cost me in terms of labor hours was the best thing I could have learned. It puts things into perspective when you’re trying to figure out whether you should splurge on a new gadget or not. Totally saves me a ton of money!

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