This three articles I blogged about has the same underlying theme:
1. Frugality isn't just about saving money
2. Being frugal with your time
3. Of Dragons and Men
Recently, while reading Tools of Titans by Tim Ferriss (I could not recommend that book enough), I came across another interesting framework to use. It's the idea of the marginal utility of an extra minute vs an extra dollar.
The idea is simple: Imagine you want to go to another place, and you can go by either taking a cab or walking there. Taking a cab is definitely faster but more expensive, so you spend money to save time. On the other hand, walking is slower but cheaper, so it allows you to spend time to save money. By comparing the marginal utility of time vs dollar, you can make a rational decision. If the utility of one extra dollar is more than the utility of one extra minute, save the dollar and spend the time i.e. walk there. If the utility of one extra minute is more than the utility of one extra dollar, save the time and spend the dollar i.e take a cab there.
Here's a few more illustrations:
1. In the past I used to go all the way to Pennisular Plaza to get sports shoes. The reason is that because there are a lot of similar shops there, so the greater competition combined with the great variety makes it a cheaper place to shop. However, the savings is probably not much, perhaps only 10-20% only. So to save that few dollars, I would spend the time to go over there, because I have more time than money, so the utility of that extra dollar is more important to me than the utility of that extra minute, hence I spend my time to save the dollar.
2. Until about 5 years ago, I used to go to my student's place for lessons. These days, I would charge a lesser amount if students come over to my place for lessons instead, because I don't have to spend the extra time travelling. Even though I can earn more if I go over, I normally don't do that anymore. The reason is that the utility of an extra minute is now much more than the utility of an extra dollar, hence I would rather spend money to save time by letting students come over to my place instead of the other way.
But please do not treat this as a mathematical model. At best, it's a philosophical concept. If you want, you can valuate your hourly rate, but I think it will be hard to valuate your time. So agar agar (estimate) will do and there's no need for complex computation to derive whether your marginal utility of time is more or less than that of your money.
Because the marginal utility of your time is more valuable than the marginal utility of doing the computation LOL