It's true that frugality can help you reach your wealth goals. Yet there are times when penny pinching can actually cost more than you save.
There are those that insist that penny pinching is the way to wealth and financial freedom. While frugality can certainly help you reach your goals, it is important to approach your efforts at saving money with some careful thought. After all, you might find that you are wasting more than just your time if your obsession with penny pinching gets out of hand.
Sometimes, the time and effort that you have to go through in order to save a few cents really isn't worth it. As this clever comic from XKCD.com points out, driving out of your way to save a little bit of money can actually cost you more than it's worth. (The comic doesn't address the extra fuel you use driving out of your way, on top of the time you might be wasting.)
This principle can also apply to other penny-pinching behavior. How much are you really saving when you drive to a different store to save a couple of bucks on a specific item? By the time you drive over to a store you might not have been planning to visit, pay for the extra gas, plus factor in impulse buys that you might make at the store, you could actually end up spending much more than you would have if you had just paid the extra $1.50 on that grocery item and gone home.
Sometimes, frugal living is about looking at true costs and not just focusing on penny pinching.
How Much Is Your Time Worth?
You also need to consider the value of your time. Some extreme couponers claim that they "make" the equivalent of between $35 and $50 an hour, since they can save hundreds -- or thousands -- of dollars a week for spending between 15 and 25 hours of their time.
That might be worth it in some cases. But, if you make more than that at your regular job, and then spend more time on top of it, what happens? Are you spending the time you want to spend with your family? In the end, you can't ever get that time back. If quality time doing something you enjoy, or quality time with friends and family, is important then you need to consider the cost. You can't really put a price on that, and paying a little bit extra so that you have more time might be a fair trade.
A less extreme example might include performing different tasks, such as mowing your lawn or performing some of the mundane appointment scheduling tasks that a virtual assistant could perform for your business. Think about how much time you spend on some of these activities. Yes, I could learn to change my own oil. But it would take me longer to do it, and be more of a pain, than just paying $30 and taking it in.
Plus, I can work while the mechanic is working on my car. Since I make more than $30 an hour, it's not worth it for me to spend that time that I could be earning money changing my oil. I'm ahead to work while someone else changes my oil.
Business owners might find a similar issue with some tasks. Bookkeeping, social media functions, scheduling, and other tasks might cost less if you just do them yourself. However, are you taking time away from substantial activities that could grow your business more effectively?
It might be worth it to hire a part-time virtual assistant at $15 an hour if it frees you up to focus on growing your business. The increase in your revenue, when you aren't bogged down by tasks that you could easily delegate, could more than make up for what you are paying.
Before you get too carried away with penny pinching, take a step back. In some cases, penny pinching makes sense. Doing your best to save electricity and water can help you come out ahead, and it doesn't cost you extra. However, waiting in line for two hours to get a free four-dollar chicken sandwich might actually cost you more than you are saving. Carefully weigh whether or not pinching a few pennies is worth it; you might find that it's not.