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I found myself faced with several expensive yet low-stakes financial decisions over the last few weeks. One was fully voluntary, while the other two were reactions to unfortunate events. In total, I spent $5,000 more than I thought I was going to spend heading into the new year.
Each of the scenarios offered me the chance to spend significantly less than I spent, but each time I chose a much more expensive option. I noticed this trend in retrospect, and I’m reflecting on why I did what I did.
Once I dug in a bit, I discovered I would have likely made similar decisions 20 years ago; however, 20 years ago, those decisions would have been wrong, whereas at the tail end of 2023, they were right. As it turns out, right isn’t right when it comes to money. Two people, or one person spaced 20 years apart, can be faced with the same financial decision, yet be on the opposite sides of right with the same binary choice.
How? Why?
I believe it has something to do with our relationship and understanding of convenience. I’ve always considered convenience to be the exchange of money for time. For instance, if you don’t have time to mow your lawn, you can spend money to save yourself the time required to mow the grass. The decision to hire someone to complete this task is considered wise if you have more money than time, and it’s considered foolish if you have more time than money.
Understanding convenience is vital to making affordability decisions. Typically, people neglect to consider their supply of money and time when making buying decisions.
The complicated nature of this comparison is that our supply of money and time are measured differently—with different metrics. So much so, that time is finite, while money is not. You have only 168 hours per week to accomplish what you’re trying to accomplish. And you have only as much money as you have or are willing to borrow.
When you have more time than money, it’s generally a bad idea to spend money to save time. Your time should be leveraged to save money, or even to make money. For what it’s worth, I just described my 20s. I once spent six weekend days in a row fully landscaping my house. The idea of doing that today is laughable at best, and not just because I wouldn’t be able to move for the following six weeks. At this stage of my life, my time is at a premium. I can’t afford to spend that many days on something that can be solved with money.
I hope the nuance has started to hit you.
If I had made the decision to pay thousands and thousands of dollars for landscaping when I was in my 20s, I would have shifted the dynamics of affordability for decades to come. Did I have thousands and thousands of dollars in my 20s? Eh, maybe. But spending the money, or even going into debt to fund the landscaping, would have been a terrible financial decision based on the amount of surplus time I had.
When you get into the habit of using convenience (spending money to save time) when you have more time than money, you will create a scenario in which you will eventually have very little money and very little time.
One decision I made in the last couple of weeks involved choosing option B over option A. Option B cost just under $2,400, while option A cost just under $280. I chose B. The funny thing is, I’ve faced this exact same decision at least five other times over the last 10 years, and this is only the second time I’ve chosen the more expensive option. When discussing the decision with Mrs. Planner, the idea of convenience came up over and over again.
It would be a little too quaint to suggest that you have to earn the right to deploy the tool of convenience. But if you don’t choose saving money over time early, you won’t be able to choose saving money over time later.
Here’s the convenience cheat sheet:
When you have more time than money, spend time.
When you have more money than time, spend money.
When you have plenty of both, don’t always choose money.
When you have neither, spend what you do have trying to reset the dynamic.•
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Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to askpete@petetheplanner.com.
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What about different phases of life? Is it better to use today’s time to make more money today and have more time later, or is it better to make less money today and have to use more time later to make more money to fill in deficits?