Friday, March 4, 2011

Figuring Out Hourly Wages- Part 2

I often put up pictures of my family's meals on Facebook. One time, after doing so, I got a little finger wag when a friend noticed that I was using store bought noodles instead of homemade. I don't bother making homemade noodles in most cases. It's not worth my time.

I gathered a bunch of pine nuts from some trees on a trip one day. It took a long while to gather and shell them, but as they're sold for lots of money in the store, I feel it was worth it. 

I once made a whole bunch of fancy stuffed crepes, and when talking about it to my friend and told her how much money I saved by making my own instead of buying from a creperie, she rolled her eyes and said "Honey, that wasn't saving money. Saving money would have been not making them in the first place."

When it comes to figuring out how much money you actually are saving when doing certain tasks, it's not as simple as it seems.
You first need to ask yourself some important questions.

How much time does it take me to do this money saving task? How much money am I saving during that time?
Is there an alternative?
And, could I be doing anything else during the time I was doing that money saving activity?

I'll expand on these three concepts in a moment, but its important to know that criteria will be different for everyone. Different people have different priorities, which would make some tasks worthwhile for them and other tasks not worthwhile at all, but for other people, it can be the exact opposite.

Part I- How much money does it save me? How much time does it take? 

This question is of utter importance when calculating money being saved. Without knowing these specifics

Take the noodles in the above example.
I'm able to buy a 1 lb package of white flour spaghetti for $0.49. Because I get my white flour for $0.37 a pound,  it would cost me approximately 30 cents to make an equivalent amount of noodles.
Making my own noodles would save me 19 cents per package, and they're not so easy to make. They take lots of time and energy to mix, roll, lay out, cut, and cook the dough; one batch of homemade noodles can easily take me 30 minutes or more, but I'll round it down for greatest ease.
I can make 2 batches of homemade noodles in an hour; each batch saves me 19 cents. 
In essence, making homemade noodles would have an hourly wage of 38 cents per hour. My time is worth more than that. That's why I don't make homemade noodles.

Lasagna noodles where I live are outrageously priced. One small box of noodles costs $3.50 or more! Making lasagna noodles from scratch costs me 30 cents, and because they're much less work than regular noodles, only take about 15 minutes per batch.
I can make 4 batches of lasagna noodles in one hour; each batch saves me $3.20.
Making lasagna noodles at home gives me an hourly wage of $12.80 per hour. My time is definitely worth $12.80 per hour! That's quite a bit more money than I'd be making at even a decently paying job. I refuse to buy store bought lasagna noodles; homemade is the only option here.

Whole wheat noodles cost approximately $2.00 per bag where I live. Because I buy my whole wheat flour in bulk, it costs me approximately 45 cents to make the same amount of whole wheat noodles from scratch and takes me around 30 minutes.
I can make 2 batches of whole wheat noodles in an hour; each batch saves me $1.55.
Making whole wheat noodles at home gives me an hourly wage of $3.10 per hour. Not as much savings as making homemade lasagna noodles, but still more than I'd be making at most jobs. I make homemade whole wheat noodles occasionally, but because it's a large amount of work, for the most part, we do without.

The same basic noodle recipe, depending on what I'm trying to make, saves me different amounts of money. but does it? See part 2 below.

Mayonnaise is something that I make at home. Each jar in the store costs me $2.17. To make it from scratch costs me $0.87. Making mayonnaise takes me 10 minutes.
I can make 6 batches of mayonnaise in an hour; each batch saves me $1.30.
Making mayonnaise at home gives me an hourly wage of $7.80 per hour, definitely a reasonable sum. We only have homemade mayonnaise at home.

I can go on and on about the different things I make from scratch; the list is endless, but you get my drift.

Other money saving methods aren't as obvious or easy to figure out.

I buy food in bulk. The prices for the bulk foods that I bought were at least 50% less than what I'd pay for things in the store, and in some places but 25% of the grocery store prices. Figuring out how much money I save by buying bulk is difficult, but I added up how much I spent on the bulk foods and subtracted that from how much those same foods would have cost me any place else. The difference was a whopping 436!
The total amount of time spent on placing the bulk order, picking it up, and packaging it into manageable containers so I could use it was less than 4 hours, bringing my hourly wage up to over $109 per hour! Yes, buying bulk is absolutely worth my while or anyone else's while! Those were 4 hours well spent!

My shopping method of (until recently) going to a cheaper grocery store a little further out twice a month instead of buying at the local Mom and Pop's grocery store weekly (or more)? Vegetables at that cheap store are a third the price of the Mom and Pops, other things are 25%-50% cheaper. Since I'm spending roughly $180 per month on groceries, a very rough guestimate would say that the same shopping trip would cost me $260 at the Mom and  Pops. It takes me 3 hours total to go there, do my shopping, and come back, and costs me $2.30 in transportation, for a monthly total of 6 hours and $4.60. Going weekly to the Mom and  Pop's would take 3 hours a month and would cost me nothing  in transportation. So for those 3 extra hours a month spent on shopping further out, I'd save $75.4 per month, for an hourly wage of ~$25 per hour.

Canned beans locally cost $1.79 per pound. I cook up the same amount of dry beans for 55 cents and usually cook up 2 pounds at a time. Total active prep time for making the beans is 10 minutes. (I'm not counting the 20 minutes you have to be in the same room while the beans are cooking on the stove.) In 10 minutes, I save $2.48, which makes my hourly wage be $14.88 per hour!

I harvested pine nuts that sell locally for $25 per pound. To gather and shell a pound of pine nuts took 5 hours, bringing my hourly wage to $5 per hour. Not a ton, but more than I'd be making in any job after childcare and transportation fees.

Which brings me to part 2.

Part II- Are there any other alternatives?

So, back to my pine nuts. If I got $25 dollars worth of pine nuts free with 5 hours worth of work, did I really make $5 per hour? Can I compare how much money I saved to the over-inflated price of pine nuts, or is there an alternative?
If I didn't have this source of pine nuts, would I have spent $25 dollars at the store on those pine nuts? No. I would have replaced them with walnuts in recipes.
Can you consider something as "saving money" if you never would have spent the money in the first place?
It depends.
How much do pine nuts mean to you? Does it mean a lot to you to be able to have specialty foods and varied goods? I know that for myself, it does. If I didn't have as much variety in the foods available to me, I wouldn't enjoy life as much and I'd start feeling deprived, and then end up spending money on other things. So yes, in my case, money saved by getting pine nuts free is actually saving money.
But, if pine nuts don't mean much to you, then to find out how much money you saved by getting these free pine nuts instead of using your typical walnuts... If walnuts are $5 per pound and it took you 5 hours to get 1 pound of nuts, you might say that the hourly wage in this case was only $1 per hour.

In the above example of the crepes. I made 8 crepes with fillings for approximately $4.50. If we had gone out to eat and ordered 8 crepes at $11 a crepe, that same desert would have cost us $88 dollars. It took 30 minutes to make those crepes. One might say that my hourly wage was $167 per hour, but I know certain people would have a hissy fit about that.
You don't need crepes. If you never would have spent those $88 dollars on crepes, you saved nothing. But as I said, for me, it is worth it. Having something special creates memories and warm feelings so that you can enjoy life and appreciate what you do have.
Perhaps a more accurate comparison would be to compare the cost of homemade crepes to the cost of going out for ice cream.
Ice cream for the family would cost $17 at the store. (Yes, we live in an expensive place.) If the crepes cost $4.50, then my hourly wage would have been $25 per hour.
Of course, you could say that I didn't have to make desert at all and that would have saved me the $4.50 I spent on crepes...

When calculating how much you're saving, you have to also take into account the alternatives. If you got T bone steak on sale for $7 per pound instead of the usual $11 per pound, are you really saving money when you could have served chicken thighs that were on sale for $2 per pound?
If you got chicken breast on sale for $1.50 per pound when it is usually $2.50 per pound, you might have saved $1 per pound on the meat, but if the alternative was to spend $0.50 per pound on beans...

What it boils down to is this- how much does something mean to you? Is it important enough for me to serve my family lasagna that I feel they'd be lacking without it? One thing to consider- if you would have spent the money on something anyhow and now you're spending less, you definitely saved money. If you wouldn't have spent that money but feel its important, your hourly wage is less important than the fact that you feel satisfied with what you got. Who cares how much it actually "saved" or didn't save you; what matters more is if you appreciated the luxuries you got.

Sort of along the same lines of "Latest unnecessary gizmo and gadget on sale for $5000 instead of the usual $7000! Save $2000!" Or not. Save $5000 plus $2000 for not buying it at all!

Part III- What else would you have done with your time?
I'm a stay at home mom. I feel its important for my kids for me to be at home with them. I feel its important for my sanity and emotional wellbeing and for my marriage for me to stay home instead of running out to work every day.
For me, anything I do that saves money is money saved. Anything saved is worth it. Little pennies add up.
If I don't enjoy doing something, or if I find it annoying, I might be less inclined to do it if it didn't save much money, unless I absolutely had to.
But because I have free time, when I spend effort doing something that saves money, the exact hourly wage is less important than the fact that I'm doing it and it saves.

I know that this isn't the case with everyone.
I know someone with a high paying job who works for herself (she's a psychologist). When I mention certain money saving things to her, she says "Why should I bother doing that? If I felt I needed the money, I'd schedule an extra hour's worth of clients, make an extra $100 bucks and use that instead of doing a few things here and there to save a little bit of extra money.
In her case, she might be right.
Not everyone has that option though.
Most people don't have the type of jobs that they can work a little bit extra whenever they want for extra money. They work 9-5, and it doesn't matter whether or not they make mayonnaise at 7 pm for 10 minutes; they wouldn't have the opportunity to earn money at 7 pm, so whatever they save during non work hours is just a bonus in addition to what they earn, not instead.

One last point.
Sometimes, money saving activities can be done at the same time as other things, If you watch a movie to relax and get your needed down time, if it doesn't detract from the quality of your down time, you can do money saving things all the while.
For example, I cracked a bunch of pine nuts while watching a movie. Can I really count all that time I was cracking those nuts as time spent on money saving  activities? I wouldn't include it. It was down time that just happened to be productive.
I go on walks with my kids; I find the air refreshing and the physical exercise terrific. While I'm out, I'm foraging. Would you count that as time spent on money saving activities? I know I wouldn't. I'd just consider it a relaxing afternoon with my kids that just so happened to entail some ways to save money.

So, there you have it. How to figure out your hourly wage for money saving activities.

Do you have the option to work more hours and make more money instead of doing frugal activities? Or are you like most in that you have a set work day and anything you save during your non work hours are just monetary bonuses?
Would you consider pine nuts, lasagna, or crepe making to be the first written hourly wage, or do you think those numbers are inaccurate because you can live without all of those?
What things are important to you that you'd consider them a "savings" even if you wouldn't have have paid full price for the item anyhow (crepes, lasagna noodles, T-bone steaks)?

Linking up to Pennywise Platter Thursday and Frugal Friday

1 comment:

  1. very complete evaluation. I have often calculated my hourly wage on thrifty things to determine if it is worth the time, but sometimes as you said you just gotta do it for the fun of it. found your blog searching pine nuts and I will definately be saving it in my favorites. Thanks for what you do. John.


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