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Recently I was reading Naked Economics, authored by Charles Wheelan. On page 202, the author shared the below quote that got me thinking how spending can be measured from a time perspective.

“Making money takes time, so when we shop, we’re really spending time. The real cost of living isn’t measured in dollars and cents but in the hours and minutes we must work to live. “

Officials at the Dallas Fed

Previously, whenever I come across images as shown below, I quickly conclude the enemy of our purchasing power is inflation. Some will argue the real enemy is slower income growth compared to the inflation rate. While all of these are true, I have never seen anyone equating spending to time. So, I thought of performing the same checks as the author did in his book, but in Malaysia’s context.     

Average Wage, Milo, and Gardenia Bread – 2013 and 2019

200ml Box of Milo

A 200ml box of Milo cost RM1.70 in 2013, while the average wage at that time was RM0.19 per minute. Therefore, the real cost was 9 minutes (RM1.70/RM0.19). The same box of Milo in 2019 cost more expensive at RM2.10. However, the average wage was higher too at 0.30 per minute, which makes the real cost of 7 minutes only (RM2.10/RM0.30). We managed to save 2 minutes of our work time.

400g loaf of Gardenia bread

Now, let’s compare the real cost for a 400g loaf of Gardenia bread in 2013 and 2019. In 2013, the loaf of bread cost RM2.40. So, the real cost was 13 minutes. The same loaf of bread in 2019 costs slightly expensive at RM2.50 but the average wage was higher too at 0.30 per minute, which makes the real cost of 8 minutes. In this case, we managed to save 5 minutes of our work time.

Total Minutes Saved

In total we saved 7 minutes of work time. The differences in minutes may appear insignificant but try looking at it from an hourly perspective. In 2013, with an average wage of RM11.66 per hour, one can purchase 6.8 boxes of Milo (RM11.66/RM1.70) and 4.8 loafs of Gardenia bread. In 2019 though, with a higher average wage per hour of RM18.32, we now can purchase 8.7 boxes of Milo and 7.3 loafs of bread. That gives us an extra of 1.9 boxes of Milo and 2.5 loafs of bread.

Yay!!! We worked for lesser minutes but managed to buy more. But before we celebrate further, I’m sure some party pooper will say “Do the same for education and medical cost”. And it’s true, the inflation rate for certain essential products grew faster than our income rate. But the point of this post was not to argue about inflation or income, it’s how we can equate spending to time.

Spending and Time

There are three variables in this post: inflation, income, and spending. Inflation is out of our control as it totally depends on how the economy grows. Income on the other hand is slightly under our control, depending on job availability and skills we have to offer. But we know that during a market downturn, one can lose part or all of their income. Only spending is within our control.

Nowadays, whenever I want (not need) to make an expensive purchase, I convert the price of the spending to my hourly salary to justify if the purchase is worth my working time. I can safely say almost all my future expensive “want” items are not worth my working time. I find it easier to justify my purchases in this manner. Indirectly it helps me to control my spending.

You may do the same. See if it helps your decision making when it comes to spending.

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