This is not a post about how much money you’ll save by staying away from the sweets.  This is about what your diet can teach you about money. I’ll explain.

I’ve been trying to lose 10 pounds for about as many years.  It’s frustrating but as of this morning I have hope.

I re-realized that when I down a Ding Dong, it’s going to cost me 30 minutes on the treadmill to work off.  Is 15 seconds of sugar-induced delight worth 30 minutes on the treadmill?  Not when I think about it.   If I keep the idea of “time cost” uppermost in my mind, I hope I’ll be more successful with my eating habits.

What’s all this “Twinkie Talk” got to do with money?  Plenty.

You can apply these same “cost” principles to make smarter spending decisions.

Let’s say you want to go Vegas for 4 days. You calculate that the total cost will be $1500 – including gambling.  Let’s calculate how much time this fun excursion is going to cost you.

1.  Determine what you earn each day.

If you are retired, take your pension, social security and interest earnings and divide that number by 30. So if you have a net (after tax) income of $4000 per month, you earn $133 per day.

If you have a job you probably work 20 days each month so divide your take home pay by 20.  If you bring home $4000 each month, you earn $200 each day you work.

2. Calculate the number of days it will take you to earn the money you want to spend.

Using the example above,  if you earn $200/day, you will have to work for 7.5 days to earn enough money to go to Las Vegas. That’s about a week and a half.  If you go to Las Vegas, you spend a day traveling (back and forth) and you sleep 8 hours a night for 3 nights (24 hours).  Your net “play time” is 2 days. Are two days play worth a week and half at the grind? Maybe.  That’s up to you.

But when you think about the “time cost” trade-off, it’s easier to make good decisions.

This isn’t the only way to approach spending.  It may not be the best way for you.  But its an additional tool you now have.   My experience tells me that when I want to do (or eat) something, thinking about the “time cost” may just be the thing that saves me.

What is your approach to making decisions like these?  Have you used the “time cost” analysis to make decisions about food or money? What have you learned in other aspects of your life that you apply to your finances?

I’ve got a lot more questions but I have to go now….its lunch time!

Like this article? You will love getting my free brilliant financial updates! No spam, and I won't give your email address to any other person or company.That's a personal promise. Neal Frankle, Certified Financial Planner, Los Angeles, California

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