Financial advice, repeated often enough, tends to make its way into the common psyche of the financial community, and by osmosis, into popular belief.
This can be a dangerous process, and thankfully we have bloggers and the community as a whole to keep us in check and challenge the status quo.
One such belief has to do with hiring outside help. The common thinking goes something like this:
If the cost of getting someone else to do something for you is less than the income you could produce in that time period, then it makes financial sense to do it.
While this might make sense for many people, I’d like to poke a couple of big holes in this thinking. First and foremost,
We Get More Efficient
Unless you are completely arrogant and refuse to learn, the more you do something, the better you will get at it. The task will take less time to complete, and it will be done better each time.
Skills you learn doing one thing might help you learn something else much faster. For example, learning how to build a kitchen cabinet uses some of the same basic skills as replacing the patio deck.
With that understanding, think about how most of us who have gone through the exercise of considering help think about new tasks: we make the evaluation with the initial time cost in mind. And can you blame basic human instinct? That’s the only thing we know–that it will take 4 hours to figure out how to change the oil.
We forget that it will take 20 minutes if we actually get efficient at it…
We Assume Constant Production
The kind of analysis we’re talking about assumes that we will actually be making money while our service provider is doing whatever we were supposed to do. Does this work in practice? I’m not so convinced.
More likely, we use the free time as a mini-”vacation” to pursue something we like, or simply sit around on the couch and watch TV. I know I would–I’m not lying to myself.
We Can’t Always Produce More
Again, we assume if we have an additional hour to spare, whether by chance or by purchase, we’ll use that hour to produce income.
For many people, that might not simply be the case. We can’t always dictate our work schedules, or even choose to work overtime whenever we feel like it. Does this only work in the case of professional hourly workers, or freelancers?
And even if we can work more, are we calculating the true hourly rate we are producing (after overhead, travel time, etc.), or simply assuming the full rate?
There’s a lot of fuzzy math going on here!
If I sound like I’m throwing away the idea altogether, that’s not the case. One situation comes to mind where I would consider hiring help, but with the understanding of exactly what I was getting into, and no delusions about offsetting the cost with income.
That situation is simple: more time with family.
In other words, using money to literally buy time. If the money is there to support the decision, why not:
- have someone do your laundry?
- vacuum your house?
- get groceries for dinner?
- answer your emails? (think about how many bloggers have virtual assistants!!)
In return, you get more time to enjoy loved ones and to pursue personal hobbies and passions. But you actually have to do it!
What do you think?
I don’t mean to imply that this is a simple decision. The reasons I’ve talked about are just scratching the surface. So I’m curious to see what you think and expand on this:
- How do you feel about the “traditional” approach to cost-value analysis for hiring outside help? What problems do you see with it?
- Would you hire help, and for what reasons?
- Do you currently hire help, and how has it worked out for you?
- Does hiring help make you “forget” about the true value of hard work?
Photo by malias