Steven here from munny.club, a weekly newsletter where I share a different perspective on personal finance concepts. If this doesn't interest you or you don't find it valuable, you can unsubscribe at the bottom of this email. If you have feedback, just shoot me a reply!
A popular way of looking at money is to think about opportunity costs. What else could I be spending this money on? In Dollars and Sense, the authors posit that this is the basis for all value. A product is valued based on what else you could do with that money instead. I think this is an interesting way of looking at things.
Opportunity cost is often applied when thinking time, especially when people compare how much money they make per hour and how much something costs. It's common to hear someone say "Wow you are willing to spend 2 hours doing that when it could just cost you $20?" Later they will discuss that because you make $50 an hour, you are effectively spending $100 of your time for something you could have paid $20 for. It’s easy to start to think this way if you’re paid hourly or you work in an industry that bills hourly, but it ain’t that simple.
There are multiple issues with this line of thinking.
You are allowed to enjoy doing things that are not economical.
It's not a healthy way of thinking – are you really paying $50/hour to sleep? Is it more worth it to pay for a babysitter than spend time with your kids? Life is not really an exercise in economic optimization — it’s a depressing way to live.
Most people can't just work more to make more money, which most seem to forget. You can’t skip sleep and turn your hours into dollars instantly. Time isn’t money unless you make it so.
People these days are obsessed with saving time by using life hacks, but for what? We cannot save time like we save money. It must be spent elsewhere, immediately.
If you earn $20 an hour, that doesn’t make your time any less valuable than someone making $100 an hour.
Instead of thinking about the monetary equivalent of your time and trying to "get the most out of it", ask yourself what the intended value for each hour is.
Is it to be productive?
Is it to be entertained?
Is it to get fit?
Is it to relax?
There is danger and exhaustion when trying to make every hour a "valuable" one, especially when your only measure of value is productivity. In an ironic twist, it’s perfectly okay to “waste” your time, even if its your most finite resource. It’s up to you to decide what is a valuable way to spend your time.
What should this newsletter cover next?
Reply to this email or leave a comment. Tell me what money things you have on your mind.
I read every reply. Thanks!