“Savings Per Hour” and the Power of Frugal Intuition

Whenever I go beyond intuition and try to evaluate the exact savings found in a particular frugality method, the first thing I do is figure out exactly how much that method saves me regardless of how long it takes. Is this method providing a big savings or a little savings?

For me, the tactics that just save a few cents aren’t really worthwhile unless they are extremely quick. If a tactic only saves me two or three cents, it better not take more than a few seconds to execute or it’s not reasonable.

It’s the equivalent of bending over to pick up a penny. If I’m walking down the sidewalk and I see a penny on the ground, should I bend over and pick it up? I instinctively do so out of pure habit, but at the same time, I completely understand why someone would say that it’s not worth the effort. It’s simply a conversion of a few seconds of time into one cent.

The real question is how quick does something have to be to make it worthwhile if it only saves you five cents? You can substitute ten cents or a quarter or whatever small amount of money you want to use here.

There’s a threshold for each of us where a money-saving tactic becomes worthwhile. For some people, something that only saves five cents is never worth it. For others, it’s worth it if it takes only a few seconds. For still others, it’s worthwhile if it takes twenty or thirty seconds because of the principle of the matter. (I tend to fall into that middle group.) If a task meets that threshold, then it’s worthwhile for me to do it. The more it saves me, the more worthwhile it is.

Of course, in my day-to-day life, I’ve done this enough that I can usually assess if some task is worthwhile for the time involved purely through intuition – my mind will tell me pretty much instantaneously whether it’s worth it or not. I don’t pull out the calculator every five minutes – that’s not realistic. Instead, I rely on past calculations and past experiences to assess almost every choice like this almost immediately.

Anyway, since I don’t know precisely what that threshold (between “worth it” and “not worth it”) is for each person (or even for me, sometimes), one thing I can do is to simply convert that savings into an hourly rate. To do that, I need to figure out how much a particular tactic saves me as well as how long it takes me, then just do a bit of arithmetic.

Doing that lets me compare the usefulness of that task to other tasks. It provides at least some sort of standard unit of measure for frugality.

Of course, like any contrived unit of measure, it has flaws.

The big one is that you can’t simply repeat the same task over and over and over for an hour and see that hourly savings appear. It doesn’t work like that. Instead, you’re looking at these short little slices of time spread out over months or even years. If I have a tactic I can do every week that takes five seconds and saves me a nickel, I’ll have to do it every time for sixty years to actually save that “savings per hour” amount. That’s not realistic for anyone.

Another flaw is that it doesn’t take into account personal values. Some people get more intrinsic value out of doing things that reduce the amount of trash they throw into landfills or reduces their carbon footprint through lower energy use. You can’t express those things in terms of dollars and cents on a monthly budget, but they can certainly have considerable value. These types of values generally encourage people toward choosing the frugal path even if it isn’t a big money saver but, again, it’s hard to assess these things because the value is so intensely personal as it’s tied to a person’s beliefs.

Yet another flaw is that you almost always have to make some assumptions when figuring the time it takes to do something as well as how much it costs. If an item was bought on sale, the amount you save by squeezing the last bit of the bottle goes down. At the same time, some people are more dexterous than others (I’m pretty sure 99% of the population has better fine motor skills than I do) and everyone has a different life routine. You can’t account for all of those differences in any reasonably simple fashion. You can get fairly close with some reasonable assumptions, but perfection is impossible.

Even with all of those flaws, I still think savings per hour plays an important role in one key aspect of frugality – efficiency.

I think this discussion about the usefulness of little frugal tactics really comes down to one key question. Is that little bit of time it takes for some short tasks really relevant to our larger day? In other words, does five seconds added to our morning bathroom routine really matter? I think this is a huge question in terms of deciding how useful many frugal tactics really are.

From my perspective, those little bits of time do matter, simply because of the abundance of opportunity. My morning bathroom routine has at least a dozen little things I can think of off of the top of my head that could add a bit of time to the routine but probably save me money. If I carefully use just two drops of shampoo, it’s going to take me longer than just squirting a glob on my hand, for example. I could make a nice healthy list of these decision points. If you thought about it for a while, I’m sure you could make a similar list. In fact, you’ll probably think of a few that I didn’t think of and vice versa.

I want to know which of these options is really worthwhile and which ones are not because if I always take the “cheap” path, I actually do begin to add significant time to my bathroom routine. Let’s say that there are two dozen decision points (the dozen I thought of off the top of my head and a dozen more I haven’t), each one potentially adding ten seconds to my bathroom routine.

If I choose the “frugal” but more time-intensive path for each of those decisions, I’m adding four minutes to my morning routine each and every morning. When I get to the kitchen and face making breakfast for my kids or brewing coffee, more little decisions appear, and if I take the long path, it’s eating up more and more of my time. This same challenge happens throughout the day for almost anyone who is busy. If you keep choosing the “frugal but time intensive” option over and over again, you’ll end up losing a lot of time over a given day.

It is really valuable for me to know which frugal tasks are actually saving me a lot of money for my time, even if we’re talking about little slivers of time. If I can figure out which six frugal tasks in my bathroom routine save me the most money, I can incorporate those into my routine, adding only one minute (on average) to my morning bathroom routine, and discard the rest of the frugal tips that aren’t nearly as worthwhile.

It’s all about efficiency. If I just choose the most financially efficient quick tasks and discard the rest, that one extra minute I can afford during a crazy morning routine with three children getting ready for school and two adults getting ready for a work day can save me the most possible money.

Aside from intuition, the only real way I have to compare those options fairly is by figuring out which are the most efficient tactics of the lot … and for that, the only metric that really makes sense is savings per hour. That’s what savings per hour does – it estimates the efficiency of a frugal task in a way that lets you compare options easily. Even through its flaws, savings per hour addresses that question of efficiency really well.

Again, if you do this very much, it becomes intuitive. You don’t have to stop and run the numbers on every little thing you do; in fact, I usually only run the numbers in detail for the purposes of an article, which is usually borne from a question I had in my own head or from a question a reader sent in. I trust my intuition because it’s far more efficient than running the numbers each and every time.

However, running the numbers every once in a while when you have a question about efficiency helps tune that intuition. Sometimes you find things that surprise you and that go against your intuition and those things are really valuable because knowing them makes your intuition better. You become more accurate at assessing very quickly which things are worth doing and which things aren’t worth doing in terms of saving money. The more accurate you are, the better your decisions will be and the more time and money you’ll naturally save as you wander through life.

That’s why I write articles about some specific bit of frugality. It’s something I’ve been doing purely based on intuition (or something a reader has been doing) and I’m wondering if it’s really as worthwhile as I think it is. Sometimes, my intuition was right. At other times, my intuition was way off base. In either case, running the numbers hones my intuition and I hope it also hones yours.

I don’t expect anyone will ever run to their calculators when they read an article figuring out if something that takes five seconds saves them five cents. But when I convert that to dollars per hour – $36, in that case – I do hope it helps mold their intuition a bit during their routine.

If spending a few minutes reading an article alters your intuition during a few decision points a day and moves them toward saving you more money or using your time more effectively, then that article was really worthwhile, in my view. It’s why I, like many other people, find it worthwhile to read frugality blogs during downtime. Honing my frugal intuition is going to make every day a little more cost-effective and time-effective, which is simply a victory in anyone’s busy life.

If you have a question about your own frugal intuition that’s been bugging you, please feel free to send it my way and, if it makes sense, I’ll try to turn it into an article. Yes, I’ll probably do my best to convert it into savings per hour. Sure, that conversion probably won’t be perfect for everyone’s life, but it hopefully will be close enough to be useful. In the end, it will probably alter that frugal intuition a little bit for many readers and over time, that improved intuition adds up in terms of both time and money.

Will the revelation that some bathroom task actually saves ten cents rather than five cents truly change your life? No. Will spending a few minutes figuring out which tasks make the most financial sense when you’re getting ready in the morning not only help you with a more efficient morning routine, but also help you with your frugal intuition in other situations? Absolutely.

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