"My time is worth more than that."

So, I was reading a blog the other day by a gentleman who, among other things, says that it's all right that he spends at least $3 per serving per meal on his family, because his time is worth more than what it would require to cook from scratch.

I've come across that statement before, even in supposedly frugal books/articles. And I think, honestly, people aren't quite looking at it the right way. Yes, I get the concept they're putting forth. For instance, let's say it takes me 5 hours to make a scarf and hat for a gift and the yarn cost me 50 cents from a garage sale. Now, I could go to Target and buy a hat and scarf for $15 and the total trip time is 1 hour. The argument goes that my remaining time is worth more than whatever I saved in making it myself, because I only saved the equivalent of $3.63 an hour. This seems to be used especially by people who explain, "because I make $12 (or whatever) an hour at work" as why something less than minimum wage is beneath their dignity.

The problems I see with this thinking are twofold. First, the assumption is you are actually working instead of making the scarf and hat. Or, conversely, that you are somehow missing work in order to do it. Otherwise, this doesn't exactly stand up. After all, unless you have some really cool, unusual job, it's very unlikely that anyone is actually paying you to do whatever you did on your off hours instead of make the gift - watch TV, go to a mall, see a movie... and so on. The $3.63 saved is actually more than the $0 earned in this case. (More in full post.)

The second half of this problem is well, even more problematic. Please bear with me while I build a totally hypothetical story to make my point.

Bob and Joe are both single and 30 years old. They have the same salary, work the same hours, live in identical houses with the same mortgage note, and drive the same automobiles. Bob lives very frugally. He shops sales, makes his meals from scratch, gets his entertainment for free or as cheaply as possible. Joe, on the other hand, tends to eat out a lot and likes to "party" on the weekends. Neither man lives beyond his means. However, while Bob is banking a full $800 a month of his paycheck by living simply, Joe only saves $300. Joe doesn't like to bargain hunt, wouldn't dream of "wasting" his time on garage sales and figures it's okay to treat himself to nice meals because, after all, he can afford it. It is "not worth his time" to live like Bob does and save a penny here or a dollar there.

Flash-forward 30 years. Both men are now 60 and they've just paid off their mortgages. Bob looks at his savings and realizes that the interest alone will pay him more than he needs to continue living as he has, since he no longer has a house note to contend with. He can retire, re-invest some of his interest earnings to put away for his later years, and relax and enjoy himself. Joe, on the other hand, hasn't saved near the amount Bob did and needs more money month-to-month to maintain the lifestyle he's told himself he's worth these past 30 years. Joe looks at his savings and realizes he'll either need to sell his home, move somewhere smaller, and scale way back, something he's not accustomed to doing at all, or, he's going to have to keep on working, probably for many years.

And this is the big trap of the "my time is worth more than that" thinking when it comes to measuring how to do something. That attitude might carry someone through years of his working life, but it has the very real potential to hurt him in his golden years if it frequently leads to spending more for something than necessary, just because the frugal version would've required more work.

THIS ARTICLE FROM FRONTLINE talks about the rising costs of retirement and how many of us aren't prepared for it. In particular:

"According to the 401(k) plan records analyzed by the Employee Benefits Research Institute (EBRI), Americans approaching retirement have, on average, three times their annual salaries in their accounts. Without any other form of savings, these retirees will burn through their 401(k)s in just seven or eight years, leaving them facing 10 or 11 years, based on life expectancy, with nothing but Social Security."

The article then goes on to say people should have 10 - 15 times their annual salary saved. Now, granted, for people like Bob, the amount needed is likely lower, maybe even much lower, considering he already knows how to live on a smaller amount of money than other people in his income bracket. However, for all the (*ahem*) average Joes out there, they're in danger of finding themselves in this very situation, and it could've been prevented by not being so sure that it wasn't even worth their time to save $3.63 an hour on a gift. Or $2 per serving on a meal. Or $16 by not going to the first-run movie and buying a $5 bag of popcorn and $4 cola on top of the $7 ticket, instead of waiting to borrow it from the library when it comes out on DVD.

A penny saved really is penny earned. Being frugal is more than just a way to live within your means. It's also a ticket to how the rest of your life pans out. I know I'd rather save that money now, while I can, then be looking at needing supervised care when I'm 85 and not having the money to cover it, all because I was "worth more" when I was young. My future is worth more than that.