If your employer gave you the choice of working unpaid overtime of four hours a month in return for a free cappuccino every working day, would you take the deal?
At face value, four hours each month might not seem that much, but over the course of a year you would have sacrificed 48 working hours, or six working days of your life for that daily cappuccino.
This is the view of Costa Economou, convenor of the Retirement Matters Committee of the Actuarial Society of South Africa, who said that while most people will carefully weigh up the benefits when asked to sacrifice their time for free, many do not consider the time it takes to earn the money needed to fund various expenses.
He cited the cost of a daily cup of cappuccino as an example.
If you are earning around R25,000 a month after tax and you work an eight-hour job over 252 working days a year, your hourly earnings rate post-tax is approximately R149, he said.
Translated into time, this means that your daily cappuccino priced at R28 costs you around 11 minutes of work a day. This equates to just under one hour a week or around four hours a month.
According to Economou, consumers who end up in a debt spiral are often those who do not equate the value of money with the value of time.
“You are unlikely to gift your employer two full working days a year for a cup of coffee every day. Yet, you are unwittingly willing to sacrifice those working hours, because you have not attached a financial value to this time.”
In the month of February there are exactly 20 office days, which means 20 cappuccinos.
Economou points out that by the end of the month, you would have spent R560 on those daily cappuccinos for which you worked for four hours. While this may seem insignificant to some, he says this example relates to only one expense.
If you add to that other “nice to have expenses” like take-away pizza, dinner with the family at a restaurant and a pair of expensive jeans, you will have spent 17 hours, or just over two working days, to cover those expenses, he said.
Below are some more examples of how much time you would need to work to pay for certain expenses. These examples are based on a monthly salary of R25 000. If your monthly salary is half that, you need to double the amount of time in the examples.
If you earn double that amount, the number of hours worked needs to be halved.
|#||Expense||Rand value||Approx. time value|
|1||Take-away pizza||R135||54 minutes|
|2||Dinner for a family of four||R700||4.7 hours|
|3||Brand name jeans||R1 000||7 hours|
|4||Smart TV||R7 000||47 hours|
|5||iPhone 11||R15 000||100 hours|
|6||Monthly mobile phone contract over 24 months (iPhone 11 64GB)||R27 600||8 hours (a month)|
|7||Monthly rent||R8 500||57 hours (a month)|
|8||A new entry-level car||R347 084.56*||210 days|
|9||3-bedroom house||R4.1 million**||1 512 days|
* R250,000 financed over 60 months with no deposit and an interest rate of 13%.
** Purchase price of R1.8 million repaid over 20 years (no deposit, 9.75% interest rate)
Read: The most expensive bank accounts in South Africa