Opportunity Cost and Time vs Money

By Kyle Rice | Reading time: ~3 minutes

The other day I was reminded of a phrase I heard years ago that has always stuck with me: "A professional is expensive but an amateur is a fortune."

DIY or Use a Professional?

You'll understand this phrase well if you hear stories from professionals called to fix some DIY hack job. Ask anybody with a trade job and see how many times they have spent hours fixing something the homeowner or shade-tree mechanic flubbed because they consulted a YouTube video and suddenly thought they could take on the world.

YouTube tutorials can certainly come in handy. A few years ago my furnace kept failing, since I too always try to do my own DIY hack job on the cheap before consulting a professional I took to YouTube and found a couple videos of an HVAC tech going through the top ten reasons furnaces fail. It was essentially a crash course in troubleshooting that led me to figuring out the ignitor head needed to be cleaned. It worked and I had heat restored on a frigid winter day, no service call needed!

The same series of videos helped me about two years later one February morning when I woke up to a 40 degree house. I opened up the furnace panel and took a look, now I knew I was out of my depth. I called an HVAC service and felt confident I could believe what they said about the fan going out because I had a very basic foundational knowledge from watching the videos (this could have also been the Dunning-Kruger effect). Putting money into the old furnace would have been like putting a new engine in a 96 Toyota Camry, not really a sensible decision. I ended up purchasing a new furnace, had it installed, and now am able to sleep soundly with a 10 year warranty!

Another time my then wife and I sold a house on contract (my advice - don't do this!) We discussed downloading a basic contract sale form online and sealing the deal the cheap way, but thought better of it and spent three or four hundred dollars to have an attorney draft one for us. They did a much more thorough job AND included a clause we would have never even thought of that charged the buyer a $75 late fee if they paid over 3 days late.

Over the course of the contract the buyers were late quite frequently (again - don't sell a house on contract), thankfully they always ended up paying the late fee and the back payment. By the end of the contract period the money collected in late fees exceeded the amount we spent on the attorney thus paying for itself.

These examples aren't to say don't attempt anything substantive on your own. Of course you should! But it helps to be smart and selective about it.

What's Your Time Actually Worth?

Part of the smart and selective part is calculating the value of your own time, this factor seems to frequently get forgotten when people are trying to save money.

It makes sense to spend time saving money, for instance, researching around to find a new car. You want to figure out what model you want, what features, etc. And you also of course want to find the cheapest option that meets your criteria. This all makes sense on a high-dollar purchase that could save you thousands of dollars!

Now let's say you want to buy a new pair of boots. If you are one of those people who are constantly searching for the greatest deal, doing hours of research, shopping different sites, and comparison shopping you may be doing yourself a disservice. Let's say your three hours of searching saves you $30 from what you would have spent with a few minutes of googling or nowadays having an AI agent look for you. Do you value your time at $10/hour? How does that compare to your hourly wage? If someone else paid you $10 an hour to shop online for boots would you do it?

The Bottom Line

It totally makes sense to be thrifty and find the best value, but don't go overboard with the time commitment, you could really be selling yourself short!

Time and money are the two resources we're all trying to spend wisely. We can't help you manage your time, but we can help you manage your money. Try Zoninga free

Kyle Rice has 17 years of experience managing public funds totaling over $3 billion. He built Zoninga to give everyday people access to the same analytical tools that professional finance teams use.