Whenever you buy anything you pay for it with money. But there’s an underlying reality. You pay not only with money, but more fundamentally with the hours of toil it took you to earn that money in the first place.
The role your labor plays in spending is easy to forget. Any purchase happens in the present, but the work that makes it possible happens at some other time—in the past or, if you’re going into debt, at some point in the future. On top of this, fast and convenient payment systems make it incredibly easy to part with your money. You simply click a mouse, swipe a card, or arrange for auto-pay. What’s laborious about that?
You might spend money differently if you focused more on the time you barter for purchases instead of looking solely at the amounts disbursed. This represents a profound switch in perspective, and for ages it has formed a key component of the frugal mindset.
In Walden, published in 1854, Henry David Thoreau concluded that the true price paid for anything is the amount of life swapped for it. “The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”
In Your Money or Your Life (YMOYL), published in 1992, Joe Dominguez and Vicki Robin updated Thoreau’s idea for a new age. “Money is something we choose to trade our life energy for. Our life energy is our allotment of time here on earth, the hours of precious life available to us. When we go to our jobs we are trading our life energy for money.”
In the 21st Century, great ideas in books can gain new life as interactive media. With this post, I unleash the Labor Cost Calculator, an online tool that figures the amount of (a) life hours, (b) life energy, or (c) time in toil that it takes you to buy or pay for anything. Instead of just reading about a general truth (“people swap their lives for stuff”), you can use a calculator that shows precisely how this truth affects your life (“if you buy this motorcycle on your salary, you’ll be trading 1,587 working hours for it”).
In addition to giving you precise data about specific purchases, the Labor Cost Calculator can bring you closer to a mindset that values hours over dollars. That’s a very beneficial perspective to have. Indeed, a growing body of behavioral science concludes that people who value time more than money are happier than people who see things the other way around:
“Life frequently presents time versus money trade-offs. [Our research] showed that the way people answer this [hours versus dollars] question predicts their happiness. Although time and money are both valuable resources that give hope for greater happiness, choosing time over money promises a happier life.”
H. Hershfield, C. Mogilner & U. Barnea, People Who Choose Time Over Money Are Happier, http://journals.sagepub.com/doi/abs/10.1177/1948550616649239 (first published 5/25/2016).
To work the Labor Cost Calculator, all you have to do is input six entries. The resulting readout may change your thinking about whether to proceed with a purchase or whether to pursue alternatives that gobble up less of your lifespan.
Line 1: input your annual gross salary before taxes or any amounts withheld for Social Security and Medicare (the calculator figures in the percentage of Social Security/Medicare automatically). Note: the calculator doesn’t accept dollar ($) signs or commas (,), so don’t try to include those in your entry.
Line 2: input your top federal marginal tax rate for the year. If you don’t know it already, here’s a link to the federal tax brackets for 2017. Note: the calculator doesn’t accept percentage (%) signs. Also, if you’re in the 39.6% bracket, to get the correct answer input 39.6 and not .396.
Line 3: input your combined top state and local (if any) tax rate for the year. For a list of the 2017 state tax brackets, click here. Note: the calculator won’t accept percentage (%) signs. Also, if your total rate is 6.93%, input 6.93 and not .0693.
Line 4: input a fair estimate of the hours you spend at work each year.
Line 5: input your estimate of the hours you spend commuting each year. If you want, also include the time you spend getting ready for work in the morning and winding down from work at night. Many reasonably regard this as part of the time their jobs take from their lives.
Line 6: input the total amount of your expenditure whether it’s a recurring expense (mortgage payment, rent, electric bill) or one-time purchase (car, cell phone, skis). Include any sales taxes, if applicable.
Labor Cost Calculator
|1. Your Annual Gross Salary:|
|2. Your Top Marginal Federal Tax Rate (if 39.6%, input 39.6):|
|3. Your Top Marginal State + Local Tax Rate (if 6.93%, input 6.93):|
|4. Your Total Hours Worked Per Year:|
|5. Your Total Hours Commuting Per Year:|
|6. The Total Cost of Your Expenditure (with any sales taxes):|
Once you’ve inputted your numbers, click the button below to see the hours of work (a/k/a life energy, a/k/a agonizing toil) it takes to pay for your expenditure:
Calculate Labor Cost in Working Hours
|Total Labor Cost of Your Expenditure:|
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If you're in the mood to crunch even more numbers, head over to the Frugal Fringe calculators page by clicking here.
Photo of cubicle farm by Tim Patterson