Updated on 02.03.07

Is A Dollar In The Hand Worth Two In The Bush?

Trent Hamm

Following a recent post describing twenty three weekend personal finance projects, a discussion emerged about whether some of the projects were cost-effective given the time investment. 1mil made the following comment:

Wouldn’t it be more worth your time to do something that had the potential to get you more money than you are saving by doing it yourself?

In general, I agree with 1mil: if you have a surefire way to make, say, $50 in an hour, why would you spend that hour saving $20? Obviously, the activity that earns you $50 is more efficient than the activity that earns you $20.

Where the situation becomes more tricky is when you do things that have the potential to make you more money, because at that point it becomes risk assessment. Let’s take a look at an example:

Joey has an hour to burn, but after that his schedule is packed. There’s a Lowe’s down the street and he has heard that you can save about $7 a year per bulb by installing CFLs in your home. He’s decided to buy a couple jumbo packs of CFLs to replace all of the bulbs in his home, which he estimates will save him $150 a year.

On the other hand, Joey runs a small business in his spare time, and he could instead spend that hour doing some business promotional activities, such as placing an ad in the local newspaper or spending forty five minutes handing out flyers on Main Street. It’s impossible to judge how much this activity is worth, but the potential is there to gain a few new customers, which may make Joey more money than the CFLs would.

Which do you choose? It’s not an obvious choice either way. There is a general solution to the problem, however: maximizing the moment.

If it is the middle of the day, there’s likely to be a lot of potential customers wandering along Main Street, so Joey has a much greater likelihood of meeting a potential customer. However, if it is in the late evening, there are going to be a lot fewer people on Main Street, so his time is better used buying and installing the CFLs.

So, to answer 1mil’s question, the answer is sometimes. Most activities that save money can be done whenever it fits into your schedule, so you should find places in your schedule for money-saving activities when your potential money-making activities have a very low potential (like in the evening, in Joey’s case). By maximizing the potential money-making of your activity, you’re minimizing the risk of the time investment you put into it, making it a stronger use of your time.

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  1. Chris says:

    The other thing here is to remember that even though at your job, you are paid 20 bucks an hour or whatever, you can’t just say at 9pm, “I’m going to get paid for this hour”. Your hours at work are worth $20 each, but your hours at home are worth $0 a piece. So saving some money while otherwise you’d be making nothing, you come out ahead.

    Very few people have enough business that they can make money whenever they feel like putting in work. Most of us work hourly or salary wise where extra work on the side isn’t possible or doesn’t help.

  2. David Smith says:

    The myth of the rational actor. It is more likely that Joey will simply do whatever action makes him feel better about himself at the time.

  3. Dave Olson says:

    Another thing is that the potential of certain activities will only ever be potential. In other words it’s just an excuse not to do something.
    If we start doing the things that we know will produce results then we can always do the things with potential later.

  4. Brad Hall says:

    This sort of logic makes sense when someone is going to do something that might take them two weeks of spare time. ie. removing a tree stump that a professional could do in an hour or two. Maybe Joey can think about putting those CFL’s in rather than watching the Biggest Loser this week. Lazy slob. It will save him climbing the ladder at least four times in the life of each bulb and cost him less in energy costs. Much easier to quantify and will give him more time to procrastinate on his ‘home business’.

  5. EMF says:

    And don’t forget that you have to pay taxes on the $2 you get from the bush.

  6. 1mil says:


    You really went all out there didn’t you.

    I guess it’s my turn to make a formal response!

    Alright then wait ’til I get off from work =)

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