Do You Value Items In Terms Of Hours Worked?

Do You Value Items In Terms Of Hours Worked?Hello everyone! I have an article to share with you today from a fellow blogger. If you are a new reader, please read my about page and my latest online income report – $15,272 in September Online Income.

When I first started taking more interest in personal finance, the learning was very theoretical. I used it all: personal finance blogs, money websites, podcasts, mainstream financial media, books, magazines, etc. Everything I read taught me something new.

All of my learning came down to two main ideas:

  • Save more money
  • Invest that money at a higher rate of return


For the second part, I was provided with many practical techniques to increase my return. Whether in investments in property, shares, or many other asset classes, I discovered many ways to improve my ROI by 1% or 2%. I understood the massive impact that a 1% improvement could have. All good stuff, but something was missing.

What I was lacking was actionable advice related to saving more money. I knew from my research that it was integral to reduce spending. However, the advice which followed was either overly generic, or overly specific:

  • Stop spending as much => too generic
  • Make your own laundry detergent to save $1 a month => too  specific
  • Pay yourself first => too generic
  • How to save money on potatoes in the supermarket => too specific


Therefore, I would like to share with you three simple tips that I actually use to reduce spending on things that I don’t actually NEED. You can start using all of these tips right now, and they apply to all forms of spending.


Tip #1: Value items in terms of hours worked

The first cheat I use is to understand the cost of spending (and earning) in terms of how long I will have to work based on my current wage to afford a certain item. For example, let’s imagine that you are considering going out for a meal tonight, which will cost you £40. How many hours do you need to work to pay for this meal?


1.1 Calculate your hourly take home pay

Your annual wage is currently £26,500.

The first part of this technique is to calculate your hourly take home pay. You may get paid hourly, which makes this easier. If you get paid annually, then you will have to calculate this figure.

For example, perhaps you contribute 5% to an employer pension and you are repaying your student loan.

Your annual take home pay is therefore approximately £18,230.

Assuming we work 230 days in the year, which is approximately the average in the UK, and we work 8 hours per working day (probably an underestimate for most), t our hourly wage is £10 per hour.

You only have to work this out each time that your salary or working hours change.


1.2 How many hours do you have to work to pay for the item

This is the easy part. Simply divide the cost by the hourly wage.

The result:

Before: £40 for the meal, why not?

After: £40 for the meal. I’m not working 4 whole hours (an entire morning at work) to pay for that meal. Get the oven on!!

Voilà, £40 saved!


Tip #2: Future pricing strategy

In my opinion, the second strategy is slightly more complicated, but  even more effective.

The idea is to calculate the cost of something now not at its current price, but instead at its future cost.

Let’s use the meal example again.  Again, we have two choices.

  • Spend £40 on the fancy meal now
  • Not eat out, and instead add £40 to my long-term investments


2.1 Calculate your investment returns

I want the calculation to be easy to perform on the spot. Therefore, I use the rule of 72.

-The rule of 72 says that if you divide your annual interest rate into 72, this is the number of years it will take to double your money.

Based on the historical returns of financial markets, I’m going to assume that I can earn 9% on my investments. If we then consider average inflation of 4% in the long-term, we would obtain a 5% net return.

Therefore, I calculate 72 / 5 to determine that it will take approximately 14 to double my money.


2.2 Work out the number years until a significant date in the future

The most commonly used date (and the data I would suggest using) is a retirement date. I currently use the period between now and my state retirement age (which I estimate will be 70 years old when I reach retirement). Personally, this is 42 years.

I will, therefore, double my money three times before retirement. So, £1 invested today with double three times when I retire – £1 x 2 x 2 x 2 = £8.


2.3 Work out your future cost

When I calculate the cost of something now in future terms, based on my prior calculation, I need to multiply its cost now by 8 (2 x 2 x 2).

Instead of the fancy meal costing £40, the true future cost of that meal is £320!

Suddenly, I’m not so keen to go out tonight!

I said in the title that I used this technique when I wrote this post. Whilst writing this post, I was tempted by some expenditure. We were thinking about ordering a take away curry. It was Sunday night, I was pretty tired, I was VERY hungry. It had seemed that the stars had aligned. I went online and the takeaway special was £25. Not too bad. However, when I then applied this strategy and remembered that this was costing my future self £200, I couldn’t justify spending £200 on a takeaway.

If you use this on every purchase, you suddenly stop spending money on everything other than those things that you really need.


Tip #3: The “30 day” rule

This strategy is slightly more common, but it is incredibly effective.

For any major expenditure (my limit is £30), I will not allow myself to purchase an item immediately. Instead, I always wait 30 days.


3.1 Write down your items on a list

Keep one single list. Each time you want to buy something major (whether it is home improvement, a new TV or some new clothing), write it down on the list with 3 things:

  • The name and description of the product
  • The cost
  • The date at which you wanted the product

So, today, I wrote down “New shoes – £40 – 24/02/2014” on the list.


3.2 Choose one thing from your list

Then, after 30 days, if you still really want the item, then buy it. No more instant gratification. You will save money and you will appreciate the product that you have bought so much more.


3.3 Reset your list

This is the part of this technique that I use, that I have never seen written elsewhere. You may have noticed that in 3.1, I said “keep one single list”. This is because I add everything I want onto one single list. Then, when I am about to buy something, I have to choose the item which has been on the list for over 30 days, and I cross everything else off.

I then restart my list.

Therefore, I buy the new shoes, but I don’t buy the ipad and new coat that are also on the list. I decided that the shoes were the most important purchase and the others will have to wait.

I then start a new list and add the ipad back on (but not the coat as I have decided that I don’t really need it after all).

This part of the technique stops me writing down everything I want and giving myself the permission to buy everything 30 days after I have written it down.


I hope these methods help you. Let me know what you think of these methods?  Do you already use any of them? What other methods do you use to help you restrict discretionary spending?


This article was written by Graham from

Moneystepper provides advice on taking small steps every day, which have a much bigger impact over the long-term. Daily posts cover every aspect of money, investing, saving, real estate, taxes & the economy: everything you need to increase your net wealth in the short, medium and long term.




  1. says

    I already value things by how many hours I have to work for them – totally effective! The future value one was new to me, though, and boy, does it work! Just tried it last night when I wanted to pick up a pizza on the way home, and it stopped me in my tracks!

    • says

      Although its the most complicated to work out initially, I find that it is easily the most effective. As soon as you truly start thinking of things as being 8 times more than they say on the price tag (which is the REAL prices of enjoying that thing now instead of at retirement), its amazing the number of things you realize that you don’t actually need.

  2. says

    Nice post Graham (and refreshing to see some £ signs instead of $ signs in a personal finance post 😉

    Personally I uncovered the “value of hours worked” a few years ago and strongly agree with you that it’s made the job of saving money far easier for me. The funny thing is that sometimes an expense *is* worth the hours when I work it out – and then I’m able to spend without guilt.

    However overall, working out how much of my life I’ll have to sacrifice to buy that shiny new item is a very powerful way to keep my wallet firmly in my pocket!

    • says

      Thanks very much. I didn’t really think about the £ signs – glad you liked it though!! :)

      That is the beauty of the technique. When you say: “actually I totally would work 8 hours to enjoy that product / experience”, then you know that you really do want it. Its very easily separates the things you really want vs the passing fancies…
      moneystepper recently posted..What should I invest in? Shares, property or cash?My Profile

  3. says

    I have just started looking at purchases in terms of hours. It can be eye opening, especially if you are using your take home pay instead of gross pay. Delaying big purchases, to take emotion out of the decision, works really REALLY well. It has saved me tens of thousands. I recommend it for ALL

    • says

      Yeah, I noticed that too. I think this is a good thing. For the majority of things, especially when I use method 2, I end us convincing myself out of the purchase. However, in the long-term, this is going to be hugely beneficial for me from a financial perspective!
      moneystepper recently posted..How to save when you like to spendMy Profile

    • says

      Hi Grayson – thanks for the comment.

      Different methods work well for me depending on the size of the purchase. If its something for £2-£3, I usually use tip #2 and think of it as a £16 or £24 purchase.

      However, if its a bigger item where the normal price already has an impact (new laptop, new suit, etc) I tend to look towards tips #1 and #3 – and usually #3…
      moneystepper recently posted..What should I invest in? Shares, property or cash?My Profile

    • says

      Thanks John.

      I’ve never really thought about being employed and self-employed for this goal. #1 if effective in both instances in my opinion. Either you would yourself “Do I really want to work for the man for X hours to enjoy this thing?” or “Do I want to bust my ass off all day in order to buy this thing that I probably don’t even really want?”. Both work I think… 😉
      moneystepper recently posted..Work out your Moneystepper Personal Finance Score (MPF) todayMy Profile

  4. says

    Sounds like a solid strategy. When I worked hourly I used to think of everything in terms of hours worked. If I wanted a cd or something else that was close to my hourly wage I always thought to myself “is this REALLY worth an hour of work at Pizza Hut?” It definitely helped save me some time and money!

    • says

      For smaller purchases, I don’t tend to use this method as I work out that I only have to work 10 minutes to earn something. However, by picking a more poorly paid job, I could alternative ask myself “would I want to clean up sewage for 30 mintues to earn that”?

      Or, so you don’t have to think about sewage, perhaps use tips #2 or #3… :)
      moneystepper recently posted..2014 Goals – February update of my 2014 goalsMy Profile

    • says

      That’s what the tips are all really designed to do – determine what is an impulse buy and what we really really want or need. I’m not suggesting that people don’t buy the things that they want – just to stop the purchases that aren’t really worth it.
      moneystepper recently posted..How to save when you like to spendMy Profile

  5. Kathy says

    I do a version of what you describe. Whenever I’d receive extra money via overtime or some other source, I’d immediately think about what I could pay with that. Maybe that would pay the utility bill. Or it would cover the current credit card bill. Now that I’m completely debt free, and all other bills are nicely covered by income, I instantly tuck that extra money into a savings account. Love watching that balance just keep on going up!

  6. says

    Great methods! I do too break down my income into how many hours I’ve worked so I can see things in detail and see if I’m fairly compensated. For the spending though, sometimes if I really want something I ‘forget’ about the calculation once in a while :)

  7. says

    Haha, its tempting. I often am tempted to calculate all three and use the one that is most likely to say that I can buy it. However, as time has gone on, I have got much better at sticking to the calculations. Yesterday, we had an option to eat out for £20 each or take a picnic for £3 each. When I used the tip to show that the meal was costing us £160 each in future wealth, it was easy to make the right decision!!
    moneystepper recently posted..Investing my ISA allowance. Should I invest it all at once?My Profile

  8. says

    I think these tips are interesting. I definitely delay gratification on purchases to make sure that I really want to buy what I’m buying.
    For instance, my computer is slowly dying.
    I’ve been shopping for a replacement for months. I bought one, then returned in because I didn’t like Windows 8.1. Now, I’m comparing prices again.
    I’m ready and willing to buy, but only when it’s necessary.
    Mortgage Free Mike recently posted..Things I Wish I Knew Before Buying a HomeMy Profile

  9. says

    Thanks for the post. You make it simple and straightforward. I like and use all three tips and hopefully this post will have helped many others start to implement these powerful tactics toward tackling the “mysterious world of personal finance”. Bottom line: they WORK!

  10. says

    Very useful! I’m going to try using all of these as debt fighting weapons!
    I really like the future value of today’s money. That means a lot to me as I’m trying to get ready for retirement.
    Even the number of hours I need to work today to pay for something also gives a compelling reason for avoidance.

  11. SuziSaver says

    In my poorest days budgeted with envelopes. Cashed check for only the amount of money allowed that month, then into the envelopes. Some items broken into weekly envelopes- food, gas. Food was budgeted on gov’t cheapest food plan. 20 years ago that was $3 a day, 21 a week in envelope. When gone it was gone. If going out for dinner had to have already saved for it.
    Once out with friends for a meal and a gal mentioned she had the basic cable TV showing she was frugal. I explained how I’d run the numbers and at that time would need $18,000 in some kind of investment to pay the cable bill for a year. Numbers were something like 8% investment growth yearly, 2% of that growth for taxes, 4% to stay and grow with 20K to cover next yrs inflation of bill and the last 2% of the 20K to pay the yearly cable bill. Do that with every bill you have to see what you will need in retirement to continue those items. Oh… the gal went home and the next day cancelled her cable.


  1. […] I don’t need it, do I truly want it? My favorite method for determining this is based upon three tests: a) Would it add significant value to my life? b) […]

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