There’s a stereotype of people trying to live a cost-conscious nomadic life. It’s the grungy backpacker who bathes in the ocean so they can save a dollar by booking a room with no access to bathing facilities. The traveler who walks for an hour in order to save fifty cents on bus fare. The nomad who spends two hours searching for the absolute cheapest meal and finds the place where they can get dinner for $3 instead of $4.
Every single thing listed has saved you money, but you’ve lost something else: your time. And time isn’t a renewable resource. Think of an hourglass where the sand is trickling from top to bottom. That’s your life. How much of it is worth spending in order to save money?
This isn’t to send you to the other extreme. I knew a guy who moved to Bangkok and decided that saving time was the most important thing he could do. He ordered every meal in, had a maid in every day to clean his house and do his laundry and hired a personal assistant to take care of all his minor issues. Within three months, he’d not only spent his bankroll, but was $15,000 in debt. And even worse, he was coming close to a nervous breakdown every time he had to do something like stand in line, because he wasn’t using his time in a “high-value way.”
Obviously, that’s no good either. But how do you decide when it’s more valuable to save your time instead of your money?
There’s two criteria you need to consider.
How much is an hour of your time worth?
If you want to determine if that time-saving hack you’ve found is worth it, you need to calculate what your time is worth. If you’re working while nomading, you can start by using whatever you get paid for hour as a basis. Don’t do what Bangkok Guy did and calculate it off your ideal rate (which in his case was $200/hour), or you could wind up making some bad choices! Use the actual rate you’re earning as a starting point.
However, remember that there’s a lot of the day you aren’t being paid for, such as the hours you’re sleeping (unless you’re in a sleep study) and the hours you’re doing other things. Think about how your hourly rate gets spread across the day.
Maybe you’ve found a money-saving hack will take an hour and save you £10. If you could have been working and earning £15 during that hour, then you haven’t saved £10; you’ve lost £5. If it was an hour of non-work time, then maybe the time spent is worth saving £10.
On the other hand, perhaps you’re looking at taking the bus vs. taking a cab in London. The bus will get you to your destination in 40 minutes for £1.50, while the cab will get you there in 20 minutes for £20. By taking the bus, you’re saving £18.50 and spending 20 minutes. If we use that £15/hour earning in the paragraph above as our basis, it is clearly worth your time to take the bus; your 20 minutes is worth £5 and you’re saving more than three times that.
You can do a similar calculation with airfare. Perhaps you’ve found a dirt-cheap airfare from Los Angeles to France, but it involves three connections and 28 hours in transit, versus another fare that’s $30 more but goes nonstop in 13 hours. If you take the cheaper fare, you’ve just valued your time at $2 per hour.
There may be situations where the math gets a little more complicated. One example is calculating train fare vs. airfare. The train may take 2 hours longer than the flight, and only save you $20. However, trains typically go from downtown to downtown, and in addition you don’t have to go through all the checkin and security rigamarole. If you calculate the time it takes to get to the airport, check in and so forth, you may find that the time spent is about equal.
Let’s increase the complexity. You’re traveling from Glasgow to London. You can fly in 90 minutes for £50 (including baggage), or you can take the train overnight in 8 hours for £52. That seems like a no-brainer…until you realize that the £52 fare includes both the transportation and a sleeper car berth. It’s unlikely you’ll find a hostel bed in London for £2. Therefore, the train is a better value.
Once you start figuring out how much you’re saving per hour, it becomes easier to make these decisions. And certain things become very clear. There’s no way on earth that it’s worth spending an hour to save 50 cents. Or is there?
How much do you enjoy the money-saving activity that is consuming your time?
I’m in Scotland right now, an area absolutely loaded with gorgeous views. I can take a bus to town in 10 minutes for £2.50, or walk an hour and save that £2.50. The calculus is clear, right?
You’d think so. However, the bus to town goes on fairly dull suburban roads. The walk to downtown is along one of those rails-to-trails paths with a jaw-dropping view around every curve. And one of my favorite activities is walking. The walk into downtown is glorious, and the fact that I don’t have to spend £2.50 is just icing on the cake.
Similarly, we could save time and probably break even money-wise by going to McDonalds to eat rather than spending an hour at home cooking. But Mike and I really enjoy cooking, so it’s worth it to us to spend the time.
Just as you shouldn’t sacrifice your time to save minimal amounts of money, you also shouldn’t give up things you really love in order to save time. Take Bangkok Guy as an example. He loved cooking, but since he could get meals delivered cheaply, he decided to sacrifice something he enjoyed in order to save time – but he never actually spent that time on things he enjoyed as much as cooking.
Savings: It’s about quantity and quality
I’ve read posts by backpackers in Southeast Asia proudly proclaiming that they saved money on food by scavenging coconuts off the beach. In a locale where you can literally buy a meal at a street food stall for $1 or less, you’re clearly placing an incredibly low value on your time. If you really like coconuts, adore foraging or get a huge thrill out of saving money, however, maybe foraging for coconuts makes sense.
The first step to determining whether a cost-saving measure is worth it is to set a financial value on your time. In most cases, once you do the time vs. money calculation it will be very clear if your savings is truly worth it. But your personal joy is an important part of the equation.
You probably became a nomad because travel is key to your happiness. Let that commitment inform your choices when it comes to savings. If you can’t decide whether the cost savings is worth the time sacrifice, or vice versa, ask yourself: which decision will give me the most joy?