web analytics

Opportunity Cost Is Not Just About Money

November 1, 2011 · 85 comments

in Personal Finance

When life is busy, there just isn’t time for getting everything done I want to.

One thing that I have not taken the time to do lately is clip coupons or really pay attention when grocery shopping.  I have mostly been just stopping at the store on the way home from work each day  and picking up whatever ingredients I need for dinner that night.  No meal planning, no maximizing sales, nothing.

Today, I actually had time to do a full grocery shopping trip.   I made a list since there were many items that needed to be purchased since I have been so neglectful about shopping.   As I shopped, I cringed while I put full-price items in my cart from my list.  To make it worse, many were items that I almost always have a coupon for.  I am sure that doesn’t sound like a big deal to most of you, but psychologically, paying more money than I have to just eats away at me.

It reinforced my opinion that opportunity cost is not just about money…

I Know I Could Make More Money Working Than I Would Save By Cutting Coupons and Planning Meals (Probably)

One reason many people do not clip coupons is because they know that the hourly payoff might not be very high.  Of course, that point may not even matter for those who are salaried workers, but actually in my case, I am an hourly contractor.  I can actually work as many hours as I want, and work at any time of day I choose.

So, I recognize that the time I take to plan meals and save on groceries could be used to generate income.  (That is true of any activity I do though- reading a book, watching a show, going out to eat, etc.  In general, every non-work activity I do has opportunity cost. )  But, in the past I almost never ran out of staple items and bought things only when they were on sale.  After shopping that way year after year, it was very difficult for me to grocery shop in a way that does not maximize my hard earned dollar today.  It was one thing when I had to shop at the last second and didn’t have time to plan.  But today I finally had the opportunity to take my time to shop, but since my pantry was so bare, I just had to buy certain items, regardless of price.

I hated it.

Opportunity Cost Can Be Quantified In Dollars and Sanity

When evaluating the opportunity cost of spending my time ‘saving money’ vs.  spending time making money, I realize it is not comparing apples to apples.  This is because  the making money part of the equation needs to be balanced with the money I save plus my ‘happiness factor’.  Obviously, happiness cannot be quantified, but it is important.  Just like how I plan on paying off my mortgage many years before the loan is due.  I know mortgage rates are ridiculously low, but peace of mind from not having a mortgage also has value.  It isn’t as easy as looking at 2 different investment vehicles and comparing the rate of return on each.  I may be holding myself back somewhat financially by including my happiness factor when making financial decisions.   However, I am willing to trade off some extra money for happiness and contentment, whether that is saving money when I should be or earning a lower rate of return than I could.

Do emotions play into your spending and investing at all?  Or, are you able to look at different options and make a decision based solely on expected performance?





If you enjoyed this post, please leave a comment or subscribe to the RSS feed to have future articles delivered to your feed reader. Thanks for visiting!!!

{ 24 comments… read them below or add one }

Moneycone November 1, 2011 at 8:09 am

Always maintain a good balance! For those into extreme couponing, I wonder how do you find time for other things? 🙂


Kris November 2, 2011 at 8:51 am

I don’t think they do find time for other things,and it almost becomes an obsession. Many say they wake up in the morning and think about their coupons. I think about chocolate…


Roshawn @ Watson Inc November 1, 2011 at 8:42 am

“The making money part of the equation needs to be balanced with the money I save plus my ‘happiness factor’.”

What an interesting observation! I don’t think you are holding yourself back financially because you have adopted a strategy that is congruent with how you work, at least that’s what the most recent research I have read found. You have to be authentic to you!


Kris November 2, 2011 at 8:51 am

Thanks Shawn. I have really found that peace matters tremendously to me because I do tend to worry a bit. So, if I have to sacrifice some possible capital gains, that is ok with me if I feel more comfortable.


First gen american November 1, 2011 at 8:56 am

Yes. It’s all about your personal values. I feel the same way about food as you do. I don’t skimp on quality or nutrition to save a buck so I try to shop sales instead. Plus food is my #1 biggest expense.
Another time money example is Craigslist. It may not make sense for everyone to drive to places to get deals but to me there are side benefits not related to money. The stuff has a story, I am keeping it out of a landfill am
ANd helping someone make a few bucks. That has non monetary value to me.


Kris November 2, 2011 at 8:50 am

I too love when someone else can reuse my items. I have a giant playset that I need to get rid of and I am trying to figure out the best thing to do. I will wait until spring because the market will be hotter for a playset, and I will be so happy if other kids get some enjoyment out of the set as opposed to just dismantling it and tossing it.


Jacq November 1, 2011 at 12:57 pm

When we were traveling this summer, I (obviously) couldn’t take my pantry with me and no coupons either (not that we really have any anyway). I would guess our food budget was maybe only $50 higher than at home (taking into account the lower cost where we were traveling to begin with).

I’m re-thinking my mortgage strategy if I stay in this house and go back to work. But there’s a limit to my pre-paying abilities there. I’ve just always been fearful of having a whole bunch of equity tied up in the house and not having access to a lot of free cash. It’s not like I even use it, but it makes me feel like everything will be okay by having quite a huge emergency fund – even if it’s only earning 1%.


Kris November 2, 2011 at 8:48 am

It is hard to decide how much to pay down a mortgage. I guess it depends on your level of risk and how much you want in your emergency fund. I think about the money we have invested in mutual funds, retirement funds, etc and I probably am ‘under’ invested in real estate relative to my other assets. (Assuming you want to invest in real estate in the first place.) Not that my house is an investment, but I would be more hesitant if I owned a bunch of rental properties and had less money in the stock/bond markets.


Krantcents November 1, 2011 at 2:03 pm

Extreme anything is very difficult to maintain. I tend to focus on the goal or outcome. For us, meal planning is an efficient method for shopping. The outcome is getting the shopping done as quickly as possible avoiding the pitfalls of overspending. We use coupons, but only buy the things we need.


Kris November 2, 2011 at 8:45 am

KC, I find we eat much healthier when I plan our meals too. Much less chance of us eating out, and a lot more fresh vegetables and such.


Jeff @ Sustainable Life Blog November 1, 2011 at 3:30 pm

I totally agree with this – opportunity cost sometimes is in sanity, and that’s one of the few things that I’m not willing to sacrifice over a 42 cent coupon.


Kris November 2, 2011 at 8:45 am

I do treasure my sanity, and it can be expensive when you lose it! 🙂


YFS November 2, 2011 at 1:06 am

Fortunately I am able to spend and invest without emotion. But, I am like you I could not and never will clip coupons. Hell.. I won’t even spend he time cutting my own grass lol


Kris November 2, 2011 at 8:44 am

Actually, I do clip coupons, and I felt cheated when I didn’t use them!


Matt Wegner @ Financial Excellence November 2, 2011 at 9:19 am

I totally agree on the peace of mind thing. Sometimes it’s better to have less stress and less money, if that makes sense. We feel pretty rotten when we have to pay full price for something we know will be on sale in a few days.


Kris November 2, 2011 at 7:53 pm

Oh I will literally waffle in a store about buying something if I think I can get it somewhere cheaper later in the weak. It will be in my hand, back on the shelf, in my cart, back on the shelf… Just this past Sunday, I put 3 things back that were in my card and it did pay off as I got the items much cheaper during a routine stop the next day.


Miss T @ Prairie Eco-Thrifter November 2, 2011 at 1:57 pm

I have never been a huge fan of extreme couponing. Not only does it take a ton of time but I really wonder if they actually use all of what they buy or if they are just becoming hoarders.


Kris November 2, 2011 at 7:52 pm

I think it is an addiction in a lot of ways. One of the good things is that it probably does help stock some food pantries. It seems so exhausting though.


Christa November 2, 2011 at 2:23 pm

i completely relate. I have always shopped sales and compared prices, so when I was working a ton of hours a while ago, it killed me to shell out full price on groceries.


Kris November 2, 2011 at 7:51 pm

Isn’t it funny how once you are in the habit of buying things on sale, it feels just awful to pay full price?


Barb Friedberg November 2, 2011 at 8:33 pm

I resonate to this article on every level, well almost. I have always been a really bad coupon user. But the part about time vs. money is an issue I wrestle with daily! BTW, love the new site!


Kris November 2, 2011 at 8:52 pm

Oh thank you Barb! I am really wrestling with time and money thoughts at the moment and trying to find the best place to be…


Ashley November 11, 2011 at 5:25 am

I too spend time looking for sale items to ensure I get the best deal like you used to, however I end up spending a ridiculous amount of time in the shop exploring every aisle for a good offer. I also go to multiple shops to make sure that I’m not missing opportunities to get items for cheap. I’m not sure whether the time spent is worth the saving, especially since I don’t track how much I save, I guess it just makes me feel better knowing I got a good deal.


Kris November 15, 2011 at 9:11 am

Ashley, I used to even check prices after the sale and would live with buyer’s remorse. I have stopped that at least and I just move on after I buy it. (Except with airline tickets where you can actually get a refund if the price goes down within a certain period of time after the initial sale.)


Cancel reply

Leave a Comment

{ 4 trackbacks }

Previous post:

Next post: