
We don’t buy things with money, we buy them with hours from our life.
Or, as Henry David Thoreau put it, “The price of anything is the amount of life you exchange for it.”
This is a life-changing principle. When we begin to see our purchases through the lens of exchanging life, rather than dollar bills, we can better appreciate the weight of our purchases and understand their full cost.
For that reason, I thought it might be helpful to take a hard look at how much life some of our purchases actually cost us.
For the sake of conversation, let’s use the median US household income. In 2017, that number was $61,400. For simplicity sake, let’s round down to $60,000 annual income.
If your household income is $60,000, working a typical 40-hour workweek, here is how many hours of work are needed for the following purchases:
Grande Starbucks Cappuccino ($4.00) = 8 minutes of work
Pair of Wrangler Jeans ($24.99) = 50 minutes of work
Coach Brand Purse ($119.99) = 1/2 day of work
55″ FlatScreen TV ($711.00) = 3 days of work
256GB iPhone XS ($1,249) = 1 week + 2 hours of work
Dinner at a restaurant for your family of four ($80.00) = 1/3 day of work
Dinner at home for your family of four ($17.00) = 1/2 hour of work
New Living Room Furniture Set ($1,983.94) = 1 week + 3.5 days of work
2019 Ford Fusion SE Hybrid ($26,550) = 5 months + 10 days of work
2,500 square foot house (10% down payment, 30-year mortgage of monthly payments, $303,000 purchase price) = 11 years + 6 months of work
1,600 square foot house (15% down payment, 30-year mortgage of monthly payments, $196,000 purchase price) = 7 years + 2 months
Keep in mind, the amount of work needed for the items above is based on an annual salary of $60,000. If your annual salary is $30,000, the work time will be doubled. If you make $120,000/year, the measurements should be halved.
Of course, there are alternatives to exchanging our hours and lives for material possessions…
It takes just 10 minutes to tell your child a bedtime story.
45 minutes for an evening walk with your spouse.
60 minutes to help your son/daughter with homework.
Or 2 hours/month to volunteer at your local soup kitchen.
The money we earn is ours to keep and we can spend it as we wish. But it can be a helpful exercise to realize how many hours of our lives go into each purchase we make.
And it is always wise to remember we can spend our hours pursuing items of far greater value than material possessions.
You should re-do your calculations so that they reflect post-tax dollars. If your household income is $60K, you likely only bring home $45K. If your household income is $120K, you likely only bring home $90K. The actual number of hours that you are trading for the possessions that you choose to own is much worse than you are already estimating.
Except that your tax dollars are a legitimate expense that result in many of the things you use each day. It would just be another item on the list (Taxes: $xx = __ days of work), not something to separate out before doing the computations.
Imagine if all of us started doing it.. Life would become more meaningful if not for all but for many of us.
Next, add in the time you spend shopping / researching for that purchase. It gets more expensive again.
To add to the analysis, some purchases are just an initial outlay with a mortgage on future time and financial resources. Though I love sailing, it is important to realize sailboats need significant loving care requiring time and money as well as the time and money needed to enjoy using the sailboat. Though most love the experiences gained from their investment, marinas are full of ignored and decaying vessels who owners didn’t consider the after purchase commitment of time and money. Many other types of “toys” and hobbies have a similar future time and money commitment.
Point being – consider not only the cost to purchase, but future costs and the hours you’ll need to work in the future to maintain the purchase.
This of course gets even more expensive when you consider that out of that $60,000 per year you have to pay taxes and then you need to apply the ‘so called “cost of doing business”‘ items like clothing for work, transport to and from work, medical, etc that without, you simply would not see the income…..
Encouraging proper perspective
Very well stated
Love this article! Sharing
The FIRE movement (Financial Independence Retire Early) is based on. Leave below your means, invest and live the life you are passionate about.
Great article. Thank you!
This is why investing is important. The premise here is only true if you only earn money by working. Reducing what you spend and saving more let’s your money work for you instead of the other way around.
You’re not getting the point of the article. What we do when we have the capabilities of technology and technical abundance is a waste of human time.
The main takeaway is that we should aspire to become a Star Trek Society.
No, that’s only how you buy things with other people’s time… in a capitalist corporate system.
Excellent article.
Add interest paid on the loan and calculate taxes paid too.
I was going to add that interest on a Homeland adds up to way more than the price of the house especially in a 30 year repayment plan. It’s like twice the amount.
This realization is the reason I gave up all my earthly possessions and began so seek out adventure, travel and spending more time with the people in my life who are important to me. The material world is of no value to me and it’s true what they say, you can’t take it with you.
Exactly.
So, how do you survive day to day? If you do not have anything but time to spend with friends….do you expect friends and family to support YOUR lifestyle?
If you follow the FIRE movement, you would live by the Trinity Study which states that if you save 25x your annual expenses invested in an index fund or comparable investment and use a 4% withdrawal rate, theoretically you will never run out of money.
It’s what the FIRE movement is based on a lot of people are using it to quit corporate america and living a life they are passionate about.
Turns out, your ability to quit working is based on your savings rate. The more you are able to save, the sooner you can quite working. If you were able to save 50% of your income, you could quit working in 17.5 years. If you were able to save 75% of your income, you could quit working in 7.5 years.
Most people who do this become debt free first (many pay off mortgages as well), live frugally and pick up a side hustle. That is how they are able to save 50% of their income.
It’s not easy but it’s well worth it. I followed the FIRE movement and I am now semi retire with 3 rental properties. I quit my 93k a year job and now only work 3-6 months a year. Between rental income, consulting income and investment income, there is no need for me to work in corporate america any longer and quit almost 15 years before my planned retirement date in my 60s. And to think there are people doing what I am doing in their 30s.
It can be done, just research the FIRE movement.
You say you can’t take it with you but the reality is that you can’t live without it. I don’t know your background but say if your father turned you out at 18. No financial help of any kind. What would you do? How would you make it in the world with just a HS diploma or even less. Tell me how you would do it.
These prices must be coming from lower cost areas of the country. Here in California you could get a shack for $300,000 and to feed 4 people for $80 you’re not going anywhere nicer than denny’s…and you probably didn’t tip your server.
That being said, I always enjoy making the most of my time, buying high quality and long lasting products. Or buying tools to help me do more things for myself.
That’s what I was thinking when I read it too – dinner out for my family of 4 in california is a minimum of 80 with tax and tip.
Those additional costs are due almost entirely to “Regulations,” which are the direct responsibility of voters. That they weren’t taught that that in school is yet another feature of those voting decisions.
I have done this before–for example, I know I need to work three hours for a full tank of gas. Not sure where you’re living, but half of my paycheck is taken out in taxes, retirement, and insurance. Those figures you gave need to be multiplied by 4 in my case.
I agree. The calculation of how much it costs in hours needs to be
Income
Minus set expenses like annual housing, electricity etc
THEN that number is what the author should use to figure out hourly cost.
Median house price in my city is over $1M for a year down shack, then cost of electricity, etc on top.
Very true. But not everyone belongs in this “we”. There are also those who buy stuff with the life time of others.
Who?
Those who make money of our labour, that’s who.
I like this perspective. It came to me as I continued the multi-year process of decluttering my parents’ house (ongoing process with a sibling who’s a great declutterer). We have opted to donate as much as possible, in part because the number of hours it would take to sell the sellable stuff brings the net gain of these sales way down (in some cases below $0) and in part because there are organizations in our area that can accept and reuse a lot of the stuff. As a formerly self-employed person, I think the idea of how much something is worth in hours worked can streamline a decision-making process and give us a way to assess value.
I’ve always had this approach. At 13 i got my first job paying $3.15 per hour (in New Zealand). At that time you could only buy branded jeans in my town, which cost $110, so basically 3 Saturday’s of working from 3 to 11pm to buy a single pair of jeans. (These days my teenage nieces earn the minimum wage of about $16 and can buy a pair of jeans for $20 – and they think they are hard done by!).
As a result i’ve always been careful with money, because it was so hard earned in those days. I’ve had to do the opposite and learn to spend on things i actually need!
I went became self employed at 30, sick of working for a salary doing something i didn’t like for 30-50 hours per week. Since then (15years), I’ve done something i still don’t like much but for only about 20 hours per week (and some years I have 6 months off) and at 3 x the hourly rate. Bought my house without a mortgage ($500k in NZ for a basic house). Never feel like i’ve gone without. I think it all goes back to that first job and learning the value of money…
Good stuff. In economics, we call this “opportunity costs” as is primarily how we model how people make decisions.
In Business Management when I was in college, I called this “Financial Euphoria”, I reàd a good book on it. It will always be perceived differently because of the Euphoric state it will always be in our lives or society.
Those numbers are highly indulgent. My wage is significantly less than $30,000. Couple that with zero wages for 11 months this last year being out with an illness. And yet I’m still not behind on my bills. Your ideas are cute. I’ll bet most people dont have the discipline to live a minimalistic lidestyle. BTW, my car isn’t working right so I started taking public transportation when I went back to work. I’m still part time but doing ok because it takes sasrifices. The reward is freedom.
How are you feeding a family of four for $17? Pasta and tomato sauce?
Here are 98 ideas for under $5.
You can with $ 10
if you cook and be smart when you shop
you did not even include 30% taxes. so increase all those times by another 30%
Our culture has become stagnant…Our society has become separate of reality for those living within the denomination of currency.
…A separation of humanity created by the money driven caste system as a byproduct of world governments inability to actually do anything that helps people out of the stagnation or cruelty put onto them by the free market society,
…a system that uses freewill to its advantage to create disadvantages for those that come to the future generations.
Whenever I read articles like this, reminds me of a movie, if you haven’t seen it, that is dystopian yes, but makes you think. It’s called “In Time.” What if you were paid in hours, not money? I know it’s a little far fetched, but always makes me think of how really money buys us the things we use or do in life, and we have so many life hours to use them….. As I said, it is a movie, but I thought it was quite thought provoking…..PS. I read “Your money or your Life” many many years ago and it shocked me into what the value of things really are. It’s sad so many of us go through the “gotta have stuff” to only realize it was such a waste and we end up just giving it away and think of the hours really wasted on “stuff.” Oh yes, and everyone should watch the George Carlin clip on “stuff.” Google it…..It’s thought provoking too!!
Totally agree! I read ” Your Money , Your Life” years ago and it changed how I view my purhases.
Thankyou for the reminder. Some years ago I read Low Cost Living by John Harrison -it changed my life. He makes the point in the money section that with less working hours you can do some of the services you pay for. He also talks about the real rate you get paided per hour if you add in staying late at work, getting there early, work related e-mails and calls-it all add up and is hidden x
The book already sounds very interesting. I will buy one.
We buy too often for the wrong reasons, for things that won’t last. Let’s focus on the experience and the momentum instead. Bonus: this long lasting feeling of happiness can even be free!
Thank you for this article, Joshua. This perspective is super helpful.
This is a more concrete way for me to make decisions about purchases.
Did you gross or net income for your calculations?
Gross income.
The cost of buying and maintaining stuff goes up as time progresses, apart from the time it takes to compare and buy stuff. What more joy can one have with the reverse – giving away what you dont need / sharing with others !