If you were asked to sum up the frugal lifestyle, you might describe it as a procession of projects great and small—all of them working to build your wealth.
For example, you might spend a day to paint a spare bedroom (this project costs much less than hiring a professional painter). Next, you might take a few minutes to complete a rebate form (this project lowers the price of your new computer). Later, you might use a weekend to shop for a used Toyota (this project saves you thousands on a new car).
With each frugal project, you trade a bit of time for a bit of money.
But are the savings really worth the effort?
A good way to answer this important question is to compute your “Frugality Salary.” That’s the implied wage you earn whenever you spend time on a frugal pursuit.
To help you test the merits of all your frugal efforts, today’s post introduces a new calculator: “What’s My Frugality Salary?” (WMFS, for short). WMFS lets you compare your salary at work to the salary you earn from any frugal project. If a given project pays better than your day job, then it’s worth pursing and you don’t have to worry about wasting your time.
WMFS delivers big advantages.
First, it’s a great motivator. If you know you’ll earn 4.5 times your salary when you spend a few hours building a rock wall, you become a very enthused landscaper.
Second, WMFS shuts down scoffers. If friends sneer when they see you selling a car instead of trading it in, they might cheer once they learn this minor hassle earns you $557 per hour.
Third, WMFS makes you more efficient. If you know the Frugality Salaries for your various projects, you can abandon low-paying ones and pursue those that deliver higher returns.
WMFS covers just about any frugal project you can think of, so maybe the best way to explore it is to review some examples.
Case Study No. 1: John Dough Launches a Lunch
John questions whether it’s worth his time to prepare a brown bag lunch. He figures he can make a sandwich in about 6½ minutes. The brown bag ingredients cost $2 whereas dining out costs $12.50, so his net savings are $10.50. John makes $81,200 per year, which places him in the 28 percent federal tax bracket and in the 4.63 percent bracket for his state (his city doesn’t levy income taxes).
Should John bag his own sandwich—or should he bag this frugal project altogether?
WMFS issues a clear verdict for the brown bags. In 6½ minutes making lunch, John earns 3.48 times more than 6½ minutes spent at work. Without question, this use of John’s time is profitable.
Case Study No. 2: Jane Dough Considers Low-Flow Aerators
Jane wonders about the benefits of installing three faucet aerators. She earns $350,000 per year, so she doubts this small project will pay nearly as much as her job. She figures it will take about one hour and 15 minutes to buy and install the aerators. She calculates that over the next decade they will save her about $60 per year in water fees, wastewater charges, and water heating costs (for more on these savings click here). Using an online calculator, she determines that the present value of this ten-year income stream is about $483 (after netting out the aerators’ cost).
Should this big-time wage earner pursue such small-time frugality?
WMFS loves aerators! Jane’s 1.25 hours of effort will earn her 3.24 times more than she could earn at her lucrative job. Bottom line: Jane can pursue this project knowing that she’s not wasting her time.
Case Study No. 3: Mark Mooney Questions Coupon Clipping
Mark is an avid couponer who wonders about its profitability (his friends are enthusiastic scoffers). He earns $122,000 per year. He spends 45 minutes each week cutting coupons, gathering them together, and presenting them at checkout counters. He figures all this effort saves him about $2.50 per week.
Should Mark continue his weekly clippings?
According to WMFS, clipping coupons earns Mark only $4.59 per hour, which is far below the minimum wage.
Does this prove that Mark should abandon his coupon ritual?
Certainly Mark could earn more fixing lunches or installing aerators. But if he truly enjoys couponing, he should continue at his current clip. The $4.59 per hour doesn’t provide a living wage, but it’s still more than he earns watching ESPN.
Having reviewed some case studies, you’re ready for the calculator.
Use WMFS early and often to test the worthiness of any frugal project great or small—whether you’re doing your own taxes, changing the car’s oil, or picking up sidewalk pennies. For extra motivation, print the results and post them on the fridge—or you can even show them to your most ardent scoffers.
1. To expand WMFS into a full-sized spreadsheet, click the icon that appears in its lower right hand corner.
2. When inputing line 3, be sure to enter your net savings. If the local shop charges $65 for an oil change, you don’t save $65 doing it yourself because you still have to buy oil and a filter. If these items cost $20, your net savings are $45.
3. When entering your salary on line 4, don’t include investment gains. WMFS computes the value of your time, not the value of passive income streams.
4. WMFS asks for your tax brackets. This lets WMFS convert your post-tax frugality savings into pre-tax wages that can be compared to your current salary. For a list of 2015 federal tax brackets, click here. For a list of 2015 state tax brackets, click here.
5. To review WMFS’s inner workings, go to the lower part of the calculator and click the tab marked “WMFS Detail.”
6. Pursuant to current law, WMFS computes Social Security withholding at 6.2 percent for salaries up to $118,500. At higher salary levels, the withholding is zero.
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If you’d like to explore other Frugal Fringe calculators, click any of the following:
- yFIRECalc 1.0: The Retirement Calculator that Shows Why You Should Retire Early
- Frugalometer: Compare Your Spending and Saving to Others Who Earn the Same Income
- 2015 Obamacare Premium Tax Credit Calculator
- 2016 Obamacare Premium Tax Credit Calculator
- How to Compare Your Income to Others (Without Being Rude) [Using 2013 Census Data]
- How to Compare Your Income to Others (Without Being Rude) [Using 2014 Census Data]
- Compare Your Adjusted Gross Income to Others by Age and Filing Status [Using 2011 IRS Data]
- Compare Your Adjusted Gross Income to Others by Age and Filing Status [Using 2012 IRS Data]
- Compare Your Adjusted Gross Income to Others by Age and Filing Status [Using 2013 IRS Data]
- Compare Your Student Loan Debt to National Studies [Using 2012 Federal Reserve Data]
- Compare Your Student Loan Debt to National Studies [Using 2014 Federal Reserve Data]
- Worthometer: Compare Your Net Worth to National Surveys
- Worthometer Canada: Compare Your Net Worth to Others (Without Being Rude)
Photo by Matthew Hunt taken outside the Village of Frugality, Cambria County, Pennsylvania. It must be a sign! 🙂
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