Money for the Rest of Us

On the way home from a recent family vacation I was shopping duty free and found a bottle of a particular vodka for only $7 compared to the $25+ I pay in the States. How could I pass up this savings? I couldn’t and so I bought a bottle.

When I returned to the gate and told my dad about the great deal he thought about it for a minute and said, “It’s not worth it to me.” He explained that the hassle of lugging around a heavy bottle of liquor for another 9 hours wasn’t worth the money he’d save. He said, “If someone offered to pay me $18 to carry their alcohol home for them would I take it? Not a chance.”

I think my dad had an interesting point that can help us figure out how much we value something. We can ask ourselves the question: “How much would someone have to pay me for/to do X?” If, when you calculate the savings, you would take someone up on their offer then you should buy/do whatever it is that you are deciding on.

In the example above I would have gladly taken $18 to carry someone’s liquor home. Thus, it was worth it to me to buy the liquor.

Let’s take another example: House Cleaning. At my apartment we always talk about how nice it would be to have someone clean the house each week. The cost is $60. If I ask myself the question: “If someone offered me $60/week to clean my apartment would I take it?” The answer is yes. Thus, I should do it myself and not hire a housekeeper. But, what if the cost was $20? If someone offered me $20/week to clean my apartment would I take it? Probably not. Thus, assuming I can afford it, I should hire the housekeeper.

Try asking yourself this question next time you are trying to make a financial decision. “How much would someone have to pay me to do X?” The answer may surprise you—and point you in the right direction.