Let’s talk about Return on Investment (ROI)
ROI should not be this mythical beast, used only by big business to assess their willingness to approve a project or investment, it should be part of your everyday life.
Hear me out.
You have resources. Most of them are limited in some fashion.
Take time for instance. Not only do you have a finite number of hours available to you, you don’t even know what that number is. Your time is your most precious resource. And it is the one you cannot regain or replace. Curate this resource carefully and jealously.
Effort is another fixed resource. You may feel like you can keep going forever, but you can’t. At some point your body will fail you and you will have to stop and at least rest.
For most of us, money is in limited supply, and it’s the one thing we usually consider when making a decision.
I sometimes forget the emotional labor required for a given task, but this, too, is finite. Everyone has a breaking point, and finding it is absolutely no fun.
This is where you ask me what all of this has to do with ROI.
I’ll use a real life example, I’ll not go into too much detail, that is another post:
Premise: Your car needs an oil change.
You know how to do an oil change, and that it will take you approximately 3 hours, including the time to shop for the supplies and to dispose of the used materials appropriately. We’ll ignore the cost of driving to and from, assuming that you are integrating that into your regular shopping.
Material cost (using my small cars requirements) is about $35 to $40 (4 qts of oil, oil filter, disposal fee)
Assumed hourly income (talking actual dollars into your account here) is $12, so that’s about $36.
An oil change at your local mechanics costs us $45, including materials and disposal fee, it’s between $30 and $50 at Walmart, ours would be the $30 one, but we like our mechanic, we trust him and he checks the car over when he does any maintenance task, totally worth it to us.
Taking the car to the mechanics shop and picking it back up/ waiting: about an hour, so we’ll call it $12.
Here’s the math:
I do it: $35 for materials, plus $36 for my time: $71
I take it in: $12 for my time, plus $45 for the job: $57
So basically, I not only save $14 by taking it in, I am not filthy (I always get filthy), it’s done right, and I’ve had professional eyes on my car.
What does it have to do with ROI?
When most people do this calculation, they do not consider their time.
But wait!, you say, your income is higher/ lower than $12 per hour.
Let’s leave out the hourly wage part of the equation and just count the hours:
I do it: $35 for materials and around 3 hours of time
I take it in: $45 and about an hour
That’s a savings of $10, with an expenditure of 2 of your precious hours.
If you are still here, doing the math, that’s $5 an hour. Or you are passing along the skill of how to do an oil change (YAY, definitely do that) and look at that time expenditure as a gain, in that case, by all means, do your own oil change. I certainly am glad I learned how to do it. If only to know what I am getting.
But for the purposes of this post, let’s say that you are doing the ROI calculation and are now looking at 2 hours of your time, for a savings of $5 per hour. And please, do your own calculations here, this number will be different for everyone. I am slow when I do any work on my car, you might be a whiz who can zip right through this without being covered in oil, a broken nail or two and a complete lack of swearing like a sailor.
How much is your time worth to you? I don’t mean how much do you get paid, I mean how much is YOUR time worth to YOU?
Would you give up two hours and spend them sitting around a campfire with friends? For $10?
Would you give those same two hours, spent holding someones hand, up for that price?
This is not a decision anyone else can make for you. Maybe you do the oil change to get out of doing the dishes… WORTH IT! (ymmv)
Maybe you really like working on your car? WORTH IT?
Calculate your ROI. Your personal ROI. Is the task worth doing to you? Would you rather do something else? Are your resources aligned to make it worth it?
For us, there are a lot of evenings where the temptation to go out to dinner or order take out is strong, we both work full time jobs and then there is the endless “what do you want” decision. What keeps us from succumbing to the siren call of “Food someone else cooked on plates someone else washes” is that we both have food sensitivities and picking a place is not actually any easier or less time consuming than making dinner. Most of the time. Again, personal ROI.
That is really where I am trying to go with this. Consider all of the costs associated with what you are doing.
How many times have you spend money, time, and/or effort on something and had, for lack of a better term, buyers remorse because it did not meet your required ROI? It’s OK to take a moment and consider if something meets your ROI needs. Figure out what you want out of what you are doing, and then decide if it is worth it TO YOU. Just because something is worth it to someone else doesn’t mean it will meet your needs, nor should it.
I still do not do this with everything in life, because sometimes you just gotta do what you gotta do, but I find that for my personal wellbeing and happiness, having a positive ROI is very important. I don’t like feeling buyers remorse or wishing I hadn’t done something, and I just bet you don’t either.
Just keep in mind that part of that ROI is also ‘does it make me happy to do it?” and you’ll do fine. Your personal break even isn’t just about Dollars and Minutes.
And more importantly, and this is really the point of this rather long post (thanks for sticking with me), if you do not spend your precious resources on things that do not meet your ROI needs, you can allocate them for things that do. You’ll be happier for it, I promise.
