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In the tradeoff between saving money or time, most of us choose money. Here's why that's a flawed perspective, according to an assistant professor at Harvard Business School.

Ashley Whillans   

In the tradeoff between saving money or time, most of us choose money. Here's why that's a flawed perspective, according to an assistant professor at Harvard Business School.
  • Ashley Whillans is an assistant professor at Harvard Business School and a leading scholar in time and happiness. The following is an excerpt from her book, "Time Smart: How to Reclaim Your Time and Live a Happier Life."
  • In it, she shares how individuals of all ages, educations, and incomes typically choose money when it comes to the tradeoff between money and time.
  • When we do this, Whillans explains we give up things that can benefit us in the long run, including happiness, time, and efficiency.
  • She reminds us to savor daily experiences, outsource for things we don't like to do, take vacations, socialize, and take care of ourselves to better value our time as a resource.

The income equivalent of happiness gains, I like to refer to as happiness dollars. I define happiness dollars as the income equivalent of the amount of happiness produced by a time-related choice. For example, the happiness you'd gain from a $10,000 raise is equivalent to a decision to use your time in a time-affluent way. You will feel as happy by making that choice as you would by gaining a certain amount of income.

To put it into concrete terms, if someone makes $50,000 and receives a $10,000 raise, research suggests that their happiness will, on average, increase by about 0.5 points on a 10-point happiness scale.

Similarly, starting to pay to outsource our most-disliked tasks increases happiness by about 0.5 points on a 10-point happiness scale. By comparing these two numbers, I can assign a dollar value to the amount of happiness that this decision creates: about USD$10,000 of happiness for someone making $50,000 year.

We must acknowledge that this process isn't exact. I have rounded the numbers to keep things simple, and I base my calculations on averages; some people will benefit much more or less.

The boost in happiness that people get from making time-related choices (or from making more money) varies depending on factors like debt levels, monthly expenses, and income. In fact, people who make less money benefit more from making time-related choices. This is because people who are materially constrained also tend to be time poor.

The science behind time accounting is still evolving, but we can start to apply this approach as a way to make time value feel more real.

Going through the exercise of assigning a tangible value to time-related choices and to the happiness that they produce will help you more easily see that giving up money to have more time isn't always the loss it may feel like. Sometimes — more often than you think — funding time results in a happiness gain that is greater than the equivalent cost to your bank account. And in many cases, spending more money than you think you should in order to fund your time is still worth it. Let's look at some of the happiness dollar values I've been able to assign to various time-affluent activities.

Valuing time: $2,200

Based on making $50,000 in household income per year, shifting your mindset from valuing money to valuing time produces the happiness equivalent of making another $2,200 per year; that's $2,200 happiness dollars. Even if you don't change any of your actions, it will help if you simply remind yourself that time (not money) is the most important resource in life.

Savoring: $3,600

Spending more time savoring meals is only one way to savor. Savoring all kinds of daily experiences is a path to greater happiness. Enjoying good weather. Listening to a concert in the park. Watching kids play in the street. Savoring is a form of mindfulness, because it requires you to disconnect from productivity and efficiency and focus on the present.

Savoring also requires you to let go of creating the "perfect experience" in favor of creating a good one. In research we call the former types of people maximizers, and the latter satisfiers. Maximizers stress over which restaurant to go to, what to order, and whether the experience is living up to expectations. In contrast, satisfiers pick a place and a meal without worrying whether they're exactly the right choices. Then they experience the meal without thinking about whether it's what they hoped.

Outsourcing: $18,000

Many people feel that outsourcing chores is a frivolous expense. Why should we pay for something we can do ourselves?

One answer to the question is that the happiness benefits offset the financial costs, to a surprising extent. Outsourcing your most-disliked task (like laundry, cooking, or cleaning) each month is worth $18,000. That's a big boost. What's more, this happiness increase doesn't account for the multiplying effect of spending your newly freed-up time in happier ways.

If grocery shopping took two hours per week, you now have an extra 104 hours — more than four days — to fill with happiness-producing activities like volunteering, exercising, socializing, or engaging in other hobbies. Of course, the trick of these calculations is that you must outsource tasks that you do not like.

You might be thinking you've found a loophole: I will just outsource my most disliked task and spend this free time working and making money while everyone else focuses on free time and happiness. Clever! But not so fast. As it turns out, working more hours than average, even when we like working, comes at a cost to happiness. Spending an additional eight to ten hours per week working, even on activities we enjoy, results in the happiness equivalent of −$2,900.

Chasing deals: $3,300

I've observed that, purely from a time point of view, driving around looking for the cheapest gas is a poor use of time. How poor? My calculations show that chasing deals, in person or over the internet, usually isn't worth the time it takes. We all do it. Nine out of 10 consumers seek bargains when they are shopping online, even for inexpensive purchases like toothpaste. For each purchase, consumers spend an average of 32 minutes researching prices before they follow through.

We drive out of our way to save a few pennies per gallon on gas, and we comparison-shop between stores for items we might save only a few bucks on. This costs us about $3,300 per year.

Vacation: $4,400

Our most egregious misuse of our time is how we treat vacation days. In my research, the average US employee took off nine vacation days per year. If Americans took eight more days off per year (seventeen in total), it would result in a bump of $4,400 per year.

Most working adults — even in the United States, where paid time off isn't mandatory — have two weeks of paid vacation available. These data suggest that all people have to do to increase their time affluence and happiness is to take the paid days off they are entitled to.

Socializing: $5,800 or more

We are social creatures, and we're only beginning to understand the steep costs of social disconnection, which is on the rise. It's hard to overstate the value of socializing for your happiness dollars. In the most extreme case, shifting from (a) working all the time and never seeing your loved ones to (b) spending time each day with friends and family, produces an income increase that is equivalent to making $108,000 more in annual household income.

If all you do is work and you make $100,000, shifting to spending all of your time socializing would do the same for your happiness as doubling your salary would. These are remarkable values. Of course, they're not realistic examples. Most of us — even if we are really busy — spend at least some time with friends and family, and few of us spend all our time working. But the calculation should give you an idea of how much value your free time can have.

Active leisure: $1,800

Active leisure also pays off. Spending thirty minutes more each day on active leisure, such as exercising or volunteering, is worth about $1,800 per year. (Even passive leisure, like watching TV or doing nothing, will give you a modest bump of about $1,000). Living with a partner in a healthy and happy relationship is worth $20,700, which is another reason to prioritize social relationships.

Reprinted by permission of Harvard Business Review Press. Adapted from "Time Smart: How to Reclaim Your Time and Live a Happier Life" by Ashley Whillans. Copyright 2020 Harvard Business School Publishing Corporation. All right reserved.

Ashley Whillans is an assistant professor at Harvard Business School and a leading scholar in the time and happiness research field. She earned her PhD in social psychology from the University of British Columbia. She was twice named a Rising Star of Behavioral Science by the Behavioral Science & Policy Association. In 2016 she cofounded a "nudge unit," namely, the Department of Behavioral Science in the Policy, Innovation, and Engagement division of the British Columbia Public Service Agency. She is part of the Global Happiness Council and the Workplace and Well-Being Initiative at Harvard University, and she advises on workplace and wellbeing strategies for numerous nonprofit and for-profit partners.


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