Balancing Frugality and Free Time

For Christmas, my family received an electric homemade ice cream maker, an item that was received with great joy by my children. Even though the weather outside has been well below freezing lately, they have been enthusiastically requesting that we make a batch of ice cream in the ice cream maker and Sarah and I obliged them on Sunday.

We ended up making a quart of what I would describe as extremely high quality chocolate ice cream. We used baker’s chocolate (about six squares), sugar (1 cup), cream (2 cups), milk (1 cup), eggs (2), and a bit of vanilla (two teaspoons) according to a recipe that came with the mixer. Our total ingredients for that quart of ice cream added up to about $4.25, according to our math.

Let’s stop and do some price comparisons. A pint of Ben and Jerry’s ice cream, which is really good, costs about $4 locally, so a quart of that ice cream would cost about $8. Clearly, our ice cream was less expensive than that, at least for the ingredients.

However, if we buy the discount ice cream at the warehouse club, we can buy 1.25 gallons of ice cream for $5.98. In comparison, our homemade ice cream would cost about $21 to make that much ice cream.

The ice cream we made at home was incredibly good. I would definitely put it on par with Ben and Jerry’s ice cream, if not better. It isn’t even in the same league as “jumbo bucket” ice cream.

How would I make that “jumbo bucket” ice cream? I could buy a gallon of milk, for starters, and then add a few cups of granulated sugar (the cheapest I could find) and some additional vanilla. With those moves, I could easily get the price per quart lower for homemade ice cream, but neither would be good quality.

What did I learn from all of this? I can roughly approximate different qualities of store-purchased ice cream at home in my ice cream maker and save 30-60% per quart. However, every quart I make requires about 10 minutes of effort, all told.

In other words, I think it’s worth it if I want to make a quart of really good “premium” ice cream. After all, that ten minutes of effort equates to saving about $5 over the store price for a similar amount of high quality ice cream. However, to beat a gallon of cheap ice cream, I’d have to make four quart-sized batches at 10 minutes each, which would take 40 minutes, and I would only save a couple of dollars. I don’t think it’s worth the time if I just want a large quantity of low-quality ice cream.

Thus, for me, it makes sense to make my own ice cream if I want high-quality stuff, but if I don’t mind lower-quality ice cream and want it in volume, I’m better off buying it because I don’t save much money for the time I’d have to spend making it.

The same phenomenon repeats itself when it comes to making pasta at home. I can make some of the best pasta I’ve ever had using my hand-crank pasta press and it actually costs less than the pasta at the store (and far less than the handmade pasta from the food co-op), but it also takes about an hour to make a batch of it. The time investment is worth it if I’m trying to make an amazing dinner, but for an ordinary night, the extra dollar I spend on a box of our usual pasta saves me a hour of time.

(Yes, yes, I know that there are great automatic pasta makers out there. I also know that the truly reliable ones are really expensive and thus out of my realistic price range.)

So, what’s the value of all of this? For me, it’s a clear-cut example of how my time has a certain value on it. If I’m spending that time doing something that I don’t enjoy or don’t want to be doing, I should be receiving something of reasonable value in exchange for that time.

One place to start looking at this is a concept I’ve discussed before on The Simple Dollar, the “true hourly wage.”

The True Hourly Wage Revisited

YMOYLFor those unfamiliar, the “true hourly wage” is a concept that was introduced to me by the wonderful book Your Money or Your Life. In a nutshell, your true hourly wage is how much you actually get to keep from each hour you devote to work. Note that’s different than how much you earn for an hour on the job, and that difference is key.

Let’s say you make $40,000 per year working at a job 40 hours a week for 50 weeks a year. That equates to $20 an hour or $800 per week for pay, at least on the surface, right?

Well, let’s say it takes an extra half an hour to drive to work and another half an hour to drive home each day. That turns your time devoted to work to 45 hours per week.

Let’s say that you also spend an hour each day on a lunch break and most of the time you eat with coworkers. That turns the 45 hours per week into 50 hours per week, plus you’re also spending $25 per week on extra food (assuming your work lunch is $5 per meal more than a normal lunch at home would be). That means you’re keeping $775 per week.

You’re also required to dress a certain way for work, so you spend an average of $10 per week on your work wardrobe (adding up to $500 per year). You’re keeping $765 per week.

Maybe you spend five hours per week answering emails and doing more work from home, taking your hourly work time up to 55 hours per week.

You might also spend some time traveling or doing extra work a few times each year. Those trips or extra things add up to another 5 hours per week on average, bringing your total to 60 hours per week.

Overall, you’re likely to owe somewhere around $4,000 in taxes, which adds up to about $80 per week. That brings your take-home income down to $685 per week.

Remember that you commute for work. You put about 40 miles on your car each day. The AAA estimates that this costs you about 60 cents per mile, which adds up to a cost of $140 per week. This includes all the costs related to the car – the gas, the oil, the other maintenance, the insurance, the average cost of the repairs you might have to make, the registration, and the cost of the car itself. Thus, your take home money goes down to $545 per week.

We’ll stop there – you’re getting the idea. The truth is that you’re keeping $545 per week while committing an average of 60 hours per week to your job. Your real hourly wage is $9.08 per hour, not $20.

The truth is that working people constantly sell their time for a lot less than they think that they do. We devote more time to work than we realize and receive less take-home compensation, too.

So what does this have to do with free time and frugality?

Valuing Free Time Differently

Here’s the interesting thing – if you offered that person $9.08 in cash to give up an hour of their free time, that person would say no. They’d probably say no for more than $9.08 an hour, though there is some number that would get them to change their mind.

Why is that the case? There are two major reasons why.

First, our free time is a fairly rare commodity. Time we don’t have to spend on keeping up our own lives or on our professional endeavors is valuable to most of us. I know that I value my free time a lot and to give up an hour of my free time for something that I view as “work,” I’d want more money than what my true hourly wage is. Of course, part of the reason that free time is fairly rare is because we devote so much time to things like personal care, sleep, and work, leaving us without too much time left over.

Second, our actual job is a consistent route to that hourly wage. That’s why we’re willing to accept a lower true hourly wage that we might like, because we can rely on quite a few hours per week at that lower wage. If we knew we could rely on a motley crew of tasks to each earn a higher true hourly wage in a week, we’d do that, but it’s not reliable and consistent.

Overall, we accept a lower true wage from our work because it’s consistent, but with our remaining free time, we expect more value to give it up.

So why on earth would we ever spend some of our free time being frugal? Yes, there are some frugal tasks that return enough that I would do them anyway – things like installing LED bulbs come to mind – but those tasks aren’t rare. What would possess me to do something like make homemade pasta or make homemade ice cream if the return on that was at or below my true hourly wage from my job?

The Value of Fun

The truth is that I choose to do some of the frugal things that I do because I find those things to be fun as well as frugal. I really enjoy the time I spend with my kids making ice cream; the fact that it saves a small amount of money is just an additional perk. I also enjoy making homemade pasta when I take the time to actually get out all of the equipment, as I love the taste of fresh pasta and all of the little tweaks I can make to it. Cooking things like that is a joyful experience for me, and the fact that I can save a little money doing it is a nice perk.

For me, at least, frugality requires that I’m either devoting very little time to it (meaning it’s replacing something I’m already doing for something with a lower cost), offering me a huge return for my time, or it’s something that I find fun or get some other kind of joy out of. Obviously, a mix of multiple factors can really push me in favor of something or help me decide between options.

There are still a few wrinkles worth mentioning.

I really enjoy trying new things. That, to me, is a fun way to spend my time. I enjoy seeing if a new way of doing something is worthwhile or better than my old methods and I don’t mind spending my free time that way. That often gets frugal experiments done for me whereas others would not bother with it. (It also ends up supplying a lot of the material I write about here on The Simple Dollar.)

I have a lot of hobbies that are fairly cheap. Part of trying lots of new things means that I end up getting exposed to lots of different ways to spend my free time, and some of them really click with me and stick around. I tend to find that I’m much more likely to stick with a cheap hobby than an expensive one, as I consider the “expensive” factor to be a pretty big turnoff. (For example, I’m actually spending $0 this year on my top hobby.)

I love being involved in community groups. Writing for a living can be a pretty solitary endeavor, so I’ve come to enjoy social events in the evenings whenever I can find them. I’ve joined a number of community groups and social organizations and become heavily involved in a couple of them. None of them require any expense on my behalf, though some do ask for freewill donations to help keep the lights on.

I love finding things I can do with my children, especially ones that engage them and end up saving us even a little money. That’s why I think the ice cream maker might have some legs. Each of my children has made a list of kinds of ice cream that they want to make and I’ve pledged to make all of them this year with them. Some of them are simple (a batch of “double vanilla”) and others are… um… different (carrot mango banana). But they’ve been enthusiastically making these lists and we’ll probably make a batch a week. It’s not cheap, of course, but it’s a lot cheaper than buying premium ice cream at the store, as I explained above.

Added together, those things describe how I spend a lot of my free time – almost all of it, in fact. Almost all of those things are frugal – they have very little financial cost. Almost all of those things are deeply enjoyable to me. Sure, there might be things that I would find more enjoyable in an environment where money doesn’t matter, but a big price tag quickly puts a damper on whatever it is that I’m working on.

The Rules Aren’t Hard and Fast – And They Shouldn’t Be

The point of thinking about one’s free time like this isn’t to create a bunch of rules to live by. One could easily transform these kinds of thoughts into a set of strict rules to abide by, leaving a person with guilt or some sort of penalty for violating one, but that’s not why I find such thinking useful.

I find it useful because it hones the instinctive daily choices that I make. I find that the more I think about the choices I make every day and whether or not those choices are good or bad for me, the more likely I am to instinctively make better choices.

For example, when I think about how I spent my free time in the last week, I’m likely to think about some of the things I did in a very positive light, some in a little less positive light, and some in a negative light. I often end up thinking of computer games that I play by myself in a negative light, for example, because that experience was fairly anti-social and, aside from an occasional peak experience, I didn’t get much out of it, either. On the other hand, I generally think of reading books in a positive light, especially ones that challenged or stretched my thinking, and I almost always think of things I did with other people in a positive light provided they didn’t come paired with an outpouring of money.

Those thoughts subtly inform how I choose to use my time going forward. Over the last few years, my computer game playing time has slowly dwindled and it’s been replaced by board gaming and more reading, not because of some active choice, but because of my continuous realization that I don’t get as much out of electronic games as I do out of reading and out of tabletop games and my other hobbies. I don’t actively decide not to play computer games; instead, I gradually feel less and less compelled to do so and that’s partially due to my thinking on the subject.

Final Thoughts

So, what are the take home messages here?

First, you already sell your time for less than you think. Many people often reject frugality right out because they only “make” a few dollars per hour, but many people only make a few dollars per hour for themselves when they’re working no matter what their actual salary is. I find this to be a very useful realization when it comes to looking at how I spend money and time.

Second, the ways in which you spend your spare time are not created equal, but expensive ways are generally problematic. If you can have a lot of fun doing something that’s free, doing something that costs $50 an hour better be extremely compelling or it makes no sense. An expensive option for spending your free time cuts back on your other options in life.

Remember, you’re not actually keeping as much as you think from your work. You might be earning $20 per hour on paper, but you’re only keeping $8 per hour (as per the example above). Making expensive choices with your spare time means that you’ve just burnt a lot of work hours, plus you’ve lost the opportunity to spend that money on other things. For me, that expensive thing had better be incredible or else I’d simply rather read a book or play a board game or engage in one of my other low cost hobbies that I enjoy.

Third, it’s worth spending some of your spare time – like when you’re commuting – thinking about how you use your free time (and extra money). Are the things you spend your free time on actually fulfilling? Can you even really remember the hours you’ve spent recently watching television or surfing the web? Was that $100 golf outing really worth that $100, especially when you consider you only actually keep $8 an hour (your true hourly wage)? If you can’t remember or justify these things, are those worthwhile things to be doing? The goal isn’t to beat yourself up over bad choices, but to inform your future ones.

For me, these thoughts constantly provide a slight pressure to explore my low-cost hobbies more than my expensive hobbies as well as a slight pressure to move away from less personally fulfilling ways to spend my free time. Over time, that adds up to leisure time that’s spent on lower-cost things that are deeply fulfilling to me – and that, in my eyes, is the most frugal way to use your free time.

Good luck!

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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