Tuesday, August 23, 2011

The Premium Paid for Convenience

In the end, it all comes down to our time versus our money. At least it did for me last night.

Last night, I had a hankering for a mixed drink with a name that is unwritable (unlinkable even!) on this PG rated blog. After checking my stash, I realized that I was missing two key ingredients for this Drink That Must Not Be Named (DTMNBN). After discussing dinner plans with my wife, we decided that I would go and pick up food and bring it back home. The only convenient place to purchase the ingredients in the vicinity of the restaurant was a convenience store that I am not fond of, as I believe their prices are high and they charge a fee for debit/credit transactions.

After considering how much time I had available, convenience won out, and I paid a premium for that convenience. While similarly sized portions would have cost, probably, $20 at the grocery store, I ended up paying north of $40 at the convenience store.

That’s gross, right? It cost me twice as much to get items I wanted just because the store was more convenient.* What kind of a personal finance blogger am I anyhow?

As a justification, all I knew is that I had a limited amount of time to get food (it was ordered before I left the house) and stopping at the grocery store would have added an extra ten or fifteen minutes round trip. I didn’t want to spend my time in that manner, so I chose to spend my money to save time. A general set of equations that can be seen from this are:

Time saved = extra money spent, and
Money saved = extra time spent.

As you can see, there is a tradeoff that can easily occur between our time and our money. This was a good reminder to think seriously about overvaluing convenience in our day to day lives. Some other areas that fall under this category are:

ATM Fees—Sure, it may seem like a good idea to take money out from an ATM that isn’t affiliated with your bank (if you need to split a check at a restaurant, for instance), but those $2 or $3 fees add up over time. It’s worth taking the time to get money out from your own bank for free.
Eating Out or Eating Takeout—It can be oh so nice not to have to cook, but you are definitely paying extra for the benefit (to say nothing of the nebulous world of tipping on takeout).
Paying for Parking—I live in San Diego, and anybody can tell you that the parking situation in any big city can get pretty hairy, especially on a weekend night. It can be tedious searching for street parking only to find a spot eight blocks away (if at all), but when the parking garage next door to where you’re trying to get is charging $20 for the night, I’ll gladly talk the walk.
Buying on Impulse—This has happened to all of us: we’re out shopping, and we find something that we can’t live without, and so we buy it without a second thought. A better option would be to either sleep on it to see if we really need the item, or, if we decide that the item is necessary, to spend some time comparison shopping online (where the price will almost certainly be better).

How about you? Are there items in your life that you’ll gladly sacrifice a few extra bucks for because the convenience is worth that much to you? Or, to look at it in the opposite way, in what ways do you consider your money to be more valuable than your time? Let me know in the comments.

*For what it’s worth (zing!), the DTMNBN was delicious.

*Update 9/5/2011:  This post was featured in the Carnival of Personal Finance.*


Paula @ Afford Anything said...

DTMNBN -- hahaha, that's hilarious. Now I'm really wondering what drink it was.

You're right -- there's a fine balance between valuing your time and your money. Many people go too far in either direction: some spend an hour clipping coupons that will save them $4, while others pay a hefty 'convenience' premium.

Anonymous said...

All the time!

Currently considering hiring cleaning people... it is going to be a very busy year for us.