Convert consumption into labor when evaluating purchases
When contemplating a purchase, how many times have you asked yourself, "Is it worth it?" Weighing the price tag against your hard work is one way to make that evaluation.
"Converting consumption into labor can help you put spending habits into perspective," said Laura Connerly, assistant professor for the University of Arkansas System Division of Agriculture.
Here's how the principle can be used to make spending decisions.
"Let's say that someone clears about $10 per hour and is considering buying a $60 concert ticket. Would the concert be worth working for six hours?" Connerly said.
"This isn't something that consumers would use for every spending decision, but it can be helpful in making decisions," she said--for example, deciding between a new car and the less expensive used car.
Here's how to convert consumer goods and services into labor.
Identify the cost of the item by shopping, browsing online, and looking at catalogs.
Calculate your hourly wage. If you receive a weekly or monthly salary, you'll need to divide it out to determine how much you earn per hour. Determine the number of hours you would need to work to pay for the item.
Decide if it's worth the labor.
"Converting consumption into labor may make you think twice about your spending habits," Connerly said.