The Hidden Costs of Earning More Money

Lately I’ve been thinking about the costs that come with earning money, and how they never show up in a budgeting spreadsheet.

When we evaluate a job, we tend to start with the salary.

How much does it pay? What would raises look like? How much more could we save? Could we afford a bigger house? Better vacations? More investments? More breathing room in the budget?

Those are all reasonable questions, but there is another set of questions we don’t ask nearly as often:

How much time will this job take outside of the hours of 9am to 5pm? What will it require from the rest of our household? What does earning this money leave less time for?

It’s easy to calculate what the salary will buy, but it’s a lot harder to calculate what earning it will cost in money and time.

There are two behavioral tendencies that I want to talk about that make humans pay more attention to the money earned than the time spent.

Present bias means that we tend to place greater weight on things that are immediate than things that are farther away in time.

The extra $20K from a new job is easy to imagine. It can become a larger paycheck, a bigger monthly transfer to savings, a debt payment, a vacation, or a renovation.

The time costs of earning that money are usually much less salient.

A 45-minute commute doesn’t immediately show up as 195 hours of lost time per year. Instead, it shows up as 45 minutes on Monday morning.

Then another 45 minutes on Monday afternoon.

And then again Tuesday.

And on Wednesday, Thursday, and Friday.

The same thing happens with an extra hour at work, a late meeting, or a Saturday morning you spend catching up on email.

Each individual time cost can feel small enough to justify, but the cumulative cost can be enormous.

The other problem is that humans often focus on what we gain without equally considering what we give up in the process.

That’s called an opportunity cost.

If you spend an additional 10 hours per week working, those 10 hours cannot also be spent doing something else that you may care about more.

Maybe it would have been…

• time with your children.

• exercise

• seeing a friend

• cooking dinner

• reading

• working on a hobby

• volunteering,

• or simply sitting on the couch doing absolutely nothing.

Because the thing you did not get to do is invisible, it’s easy to leave it out of the calculation entirely.

This is one reason that most conversations about earning more money are incomplete. We are comparing the money we will receive with almost none of the time we will spend to earn it.

If you want to know how much time and money your job actually costs, you must consider everything that surrounds work, such as:

• A longer commute might add several hours to your week.

• A less flexible job might require additional childcare.

• A demanding schedule might mean paying more takeout and grocery delivery.

• Working late might push household chores into the weekend.

• A stressful job might leave you too depleted to exercise, socialize, or do anything enjoyable after work.

This is where a simple salary comparison between jobs can be misleading.

Imagine that one job pays $15K more per year than another.

That sounds like a straightforward comparison, but what if taking the higher-paying job also means:

• 5 additional hours of commuting time each week,

• $8,000 more in childcare each year,

• $2,000 more in transportation costs each year,

• another $200 a month in takeout and convenience spending,

• several evenings a month working late,

• less time available for household responsibilities,

• and substantially less discretionary time.

The question is whether the entire trade-off in money and time is worth it to you and your family.

My husband stepped back from full-time work to stay home with our boys nearly three years ago.

Our household has less money, but he also stopped commuting, he no longer has the stress of a full-time job hanging over the rest of the day, there is less pressure around getting everyone out the door on a particular schedule, there are fewer evenings shaped around work obligations, and, most importantly, we have more time together.

That time now belongs to us. Time for our family to do things together without having to fit them into whatever hours remain after getting home from work.

We gave up some income in exchange for more time. Of course we miss having the extra income, but maximizing income is less important to us than maximizing time.

For one person, an extra $20K may easily be worth the additional time it requires. For another, it may not be worth giving up Saturday mornings.

Someone may happily accept a long commute because the job is deeply meaningful. Someone else may take a lower-paying job because flexibility matters more.

Someone may want to maximize income right now because they have a specific financial goal. Someone else may be in a season of life where time is the scarce resource.

None of those choices is inherently better, but when we only compare salaries, we can make decision based on only one side of the equation.

We are already very good at calculating what our money can buy. We should get equally comfortable calculating what earning that money requires us to give up in the process.

Jenny :)

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