Wake up and smell the coffee — will you work overtime for a cappuccino?
People drowning in debt sometimes don’t equate the value of money with that of time
You probably would reject the offer if your boss offered you a free coffee every working day in exchange for four hours of unpaid overtime a month.
While you may be reluctant to give away your time, you probably don’t consider the time it takes you to earn the money that pays your expenses.
Costa Economou, the convener of the Retirement Matters Committee of the Actuarial Society of SA, says people who end up in debt don’t always equate the value of money with the value of time.
If you’re earning about R25,000 a month after tax and work an eight-hour job over 252 working days a year, your hourly earnings rate after tax is about R149.
Translated into time, Economou says this means your R28 daily cappuccino costs you about 11 minutes of work a day. This equates to just under one hour a week or about four hours a month.
He says at face value four hours a month might not seem that much, but over a year you would have sacrificed 48 working hours or six working days of your life for that daily cappuccino.
“You’re unlikely to gift your employer two full working days a year for a cup of coffee every day. Yet, you’re unwittingly willing to sacrifice those working hours, because you haven’t attached a financial value to this time,” he adds.
In February there were 20 office days, which means 20 cappuccinos. By end-February, you would have spent R560 on those daily cappuccinos for which you worked for four hours.
If, in addition to the daily cappuccino you add to that other nice-to-have expenses such as takeaway pizza, a family dinner at a restaurant and a pair of expensive jeans, you will have spent 17 hours, or just over two working days, to pay for these expenses.
Economou says working hours spent on earning the money required to fund your expenses take on even more value if you consider what you could have done with this time, like spending it with a loved one, doing a sport that you enjoy, reading a book, watching a movie with the family, or learning a new skill.
While swapping time for money is unavoidable if you need to earn an income, being more aware of just how much of your valuable time you exchange for various expenses will hopefully encourage you to become more discerning in your spending choices.
“If that daily cappuccino is what you need to make you more productive and you’re willing to sacrifice the time, have that cup a day. But make an informed decision,” he says.
Economou says hours worked to fund a home, an education, a family holiday and ultimately a financially secure retirement are most likely worth the sacrifice. But, he adds, the hours you work to make your credit card repayments and other costly short-term loans are rarely worth your valuable time.