Wednesday, October 24, 2007

How Costly Are Your Savings?

How Costly Are Your SavingsIn the quest to save that penny do you sometimes end up spending more time, effort and maybe even money? I know that I do. I had a $10 gift card from Lowe’s which was about to expire. To use that $10 card I made a trip to the hardware store. Since I did not have anything specific to buy – I ended up exploring the aisles for a few hours. I eventually picked up some flower bed fencing which cost $15. When I reached home and tried out the fence – it did not fit the flower bed. I rolled up the fence and tucked it in the garage hoping to use it for some other project.

So at the end of this venture which should have saved me $10, what I ended up with was
- A garden product which cost me $5 (after the $10 saving)
- Lost two hours of prime weekend time
- Gas expense for the trip to Lowe’s
- More stuff in the garage (which I will have to spend time cleaning out someday)

Time and effort both have value. They can translate into financial value also. Two hours spent researching a stock or investing in a side business may reap more rewards than chasing a $10 saving at Lowe’s. Sometimes hiring professionals not only saves you time but also ensures a quality product. To understand the true cost (or savings) of a home improvement project you should consider time investment, tool costs, experience requirements, quality considerations and project complexity. When planning to visit 3 stores to do groceries (to get the best deals) consider your time investment.

The point is that smart savings make a difference. And smart saving requires considering the cost of the saving before pursuing the elusive penny.

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