Opportunity Cost and Time
Opportunity cost is a concept that generally urges someone to consider what opportunity they are giving up when doing something new. If the lost opportunity (a cost) is greater than the new opportunity (a gain), then the status quo should remain intact.
When evaluating what you are willing to pay for an outsourced task, you shouldn’t think about the difficulty of the task. Instead, you should consider what opportunity you are giving up when you do that task.
If you can be investing in skills or a hobby that could benefit you by adding a hundred dollars to your salary or giving you new income, then it may make sense to pay someone $10-$20 per hour of time saved. Even if that task is mowing your lawn and you are willing to do it yourself, the incremental value of that hour may justify finding someone else to cut the grass.
What to Outsource
When I discuss outsourcing, I’m not referring to shipping all your duties overseas (though that is a possibility). Most of the time these tasks can and will require you to invest in your local community. There are some tasks, though, that may best be served by someone around the world. Either way, you are creating jobs for others while improving your ability to contribute to and benefit from others.
Here are some simple examples tasks that anyone can outsource. Consider which ones may best help you and come up with your own that best fit your situation.
- Home Cleaning – it may seem like something you’re supposed to do, but if that time is worth more to you then consider giving it up.
- Lawn Care – people who live in apartments already outsource this. Consider giving it up if you don’t love getting outside every week to keep things green.
- Personal Secretary – it’s not just for corporate managers anymore. Some people have found it worthwhile to outsource time consuming tasks like email to personal agents in India. Check out the 4-Hour Work Week blog for more crazy ideas.
Finally, don’t just weigh the amount of time a task takes you. There are always those tasks that provide us with a break from everything else in life or a chance to do something just for fun without worrying about money. Until you find the career that provides you with this enjoyment, don’t give these hobbies up.
Next week I’ll lay out some ways to use your free time as an investment in your future. For now, I’m considering giving up home cleaning or lawn care to have more time to invest in my skills and revenue generating hobbies. What could you consider giving up?
Why and How to Buy Time is featured in the Festival of Frugality at My Personal Finance Journey.
