Is DIY worth it? The Math Behind Saving Money

People love to debate whether it is actually worth saving money by doing things yourself. Coffee is one of the most common examples.

I recently got into a bit of an odd debate with TheShot regarding their blog post about making coffee at home.

Based on their comments to me and others, I do not expect to change their mind. But the discussion highlighted something that has always bothered me about how people think about saving money.

We used to be a nation of savers. Now we are mostly a nation of spenders and borrowers. The results of that shift are pretty obvious if you look at the economy over the last couple decades.

And the strange part is that many people now argue that saving money is somehow not worth the effort.

Why The “Value of Your Time” Argument Often Fails

One argument people often make is that doing things yourself has a hidden cost. They say you must account for the value of your labor.

In some situations that is absolutely valid. If you are a contractor turning down paid work to paint your own house, the math might favor hiring someone else.

But that logic is often stretched to absurd levels.

Even if we accept that number for the sake of argument, the next question matters more: can you actually monetize those extra fifteen minutes?

• Can you get a job that lets you work 15 minutes a day?
• Can you ask your boss for 15 minutes of overtime?
• Can you realistically earn money during those exact minutes?

Time is not like money. You cannot store small pieces of it in a bank and spend it later.

For most people, that time simply turns into scrolling a phone or watching television.

Saving Money Is Like Getting A Tax-Free Bonus

Another factor people forget is taxes.

When you earn money, you do not keep all of it. A portion goes to federal income tax, Social Security, and sometimes state tax.

When you save money, you keep the full amount.

Using average household income numbers from around 2010, the typical U.S. household earned $49,445 and took home about $43,030 after taxes.

That means every dollar you keep requires earning about $1.15.

This simple adjustment changes the math when comparing make-versus-buy decisions.

How To Decide Whether To Make Or Buy Something

If you want to make smarter financial decisions, you can evaluate purchases using a simple method.

Here is the basic process.

1. Estimate how much money you save by doing something yourself.
2. Estimate how long it takes to complete the task.
3. Divide the savings by the time spent.
4. Multiply by 60 to convert it to dollars per hour.
5. Adjust that number upward to account for taxes avoided.
6. Compare the result to what you could realistically earn in that time.

For example, suppose making pizza at home saves $5 but takes 45 minutes.

$5 divided by 50 minutes multiplied by 60 equals $6 per hour. After adjusting for taxes avoided, that becomes about $6.90 per hour.

If you cannot realistically earn more than that in the same amount of time, making your own pizza may actually be the better financial decision.

Saving Money Making Coffee At Home

This entire discussion started with coffee.

I recently started experimenting with ways to brew your own damn coffee at home while still getting excellent flavor.

My setup was pretty simple:

• $15 coffee maker
• $35 grinder

To be honest, my old automatic drip machine did a decent job. But the upgraded setup produces coffee I actually enjoy more than store-bought coffee.

And it takes almost no time.

When I start my morning routine I begin boiling water and prepare breakfast at the same time. The entire process adds about six minutes to my routine, including drinking the coffee.

Actual preparation time is closer to three minutes.

Interestingly, the average person waits about three minutes to get coffee at a store anyway.

My coffee costs about $0.95 per 16 oz mug using expensive beans priced around $13 per pound.

With cheaper but still good beans, it drops to about $0.65 per mug.

Compared to buying coffee at Starbucks, that is roughly $1.15 saved per cup.

Since I drink coffee every morning, that works out to about $420 saved each year.

Subtract the $50 equipment cost and the first year savings is about $370.

To beat that financially, I would need to find a job that pays over $23 per hour and lets me work exactly three minutes each day while wearing pajamas.

That job probably exists somewhere, but I have not found it yet.

How Much Do I Save Making My Own Muffins?

Another example is baking muffins.

I previously shared my recipe for White Whole Wheat Blueberry Muffins.

Store bought muffins are usually extremely sweet and often contain very little fruit. Some places reportedly do not even use real blueberries.

My homemade muffins cost about $0.30 each when I buy fruit on sale.

Even when using expensive organic flour, they were still under $0.50 per muffin.

Bakery muffins typically cost between $1.25 and $1.65 each.

Since bakery muffins are usually twice the size, I doubled the cost of mine for comparison.

The math still works out strongly in favor of baking at home.

Making muffins takes about 45 minutes total including cleanup.

But only about 15 minutes is active work. The oven handles the rest while I clean the kitchen.

If I factor in the value of that cleaning time based on quotes I received from cleaning services, the effective savings jumps dramatically.

At that point I would need to find a way to earn nearly $60 per hour during those 45 minutes to beat the value of baking them myself.

Plus I like my muffins better. They contain more fruit, less sugar, and fewer calories.

The small amount of extra movement while cooking also contributes to what researchers call NEAT (Non-Exercise Activity Thermogenesis).

Common Mistakes When Evaluating DIY Savings

Key Takeaways

Frequently Asked Questions