Poker's Life Lessons: Hourly Rate
Barry Carter once again shows how poker has changed his day-to-day decisions, today sharing a way he uses it to manage his finances.
As previously mentioned in these features, maths had never been my strong point in life but poker helped to bring it up to a reasonable level. One of the key ways that it helped in my day-to-day life was the way I thought about managing my finances.
Most notably how I would think in terms of my ‘hourly rate’ in general transactions. In poker we often talk about our ‘hourly rate’ because it is a much more reliable and reassuring way to think about the work we put in at the tables, because the swings are so huge.
You might win $200 one day, lose $300 the next, win $150 the next and so on. None of these individual figures are reliable (even more so when you are a tournament player) so we use the average hourly amount we make over a massive sample of hands to determine what our time is worth.
Time is money, money is time
Obviously when you have a regular job that often includes a literal hourly rate which doesn’t change, however that is not how I have applied it in my own life. Instead I use the idea of an hourly rate when I am looking at how much I spend and save, as well as whether doing something is worth my time.
For example, I hate shopping and I am afraid I am one of those guys who often doesn’t bother trying clothes in the store. Last year I bought a belt for £12 which I needed to match a suit for a wedding. The typical dumb man that I am I didn’t try it on and it didn’t fit. As you can imagine if I couldn’t be bothered trying the thing on I would be equally loathed to take it back and get a refund. And for years that is what I would tend to do.
However, since poker my attitude has changed. In this case I worked out that the whole refund process would take me 20 minutes from getting in my car to getting back home. 20 minutes is a third of an hour and £12 is what I would be getting back, which would be an hourly rate of £36 if I were somehow able to repeat this over and over again. I would be very happy to earn £36 in an hour doing this mundande task as a job, so it was a snap call for me to go and get the refund.
What is your time worth?
I use the same logic when it comes to shopping around for good deals, especially when there is a big discount involved. There once was a time where if I was buying an item for £500 and I could get a £50 discount for getting it from somewhere an 60 minute drive away, I still wouldn’t bother because it was inconvenient and I’d have the attitude of ‘it costs so much anyway it doesn’t make a difference’. Now I always look at the discount in terms of what it would cost me in time as well as money, and if the saving was also worth me wasting a bit of time, I will usually go the extra mile.
One of the most common ways I do this now is using cashback websites and cashback credit cards before making purchases. Previously I would not think they were worth the hassle of registering, clearing cookies, signing contracts, waiting months for payments etc. Now I think about how I would happily do a job where I have to go through the process of using cashback websites and it seems a very easy way to get money back.
Now whenever I look at a cost saving I also look at how much time and effort I’d be prepared to do working to earn that differential. Of course you do not want to go too far down this particular rabbit hole (same goes for any poker life lesson) because it can make you tight fisted if you are not careful. If you start thinking about your hourly rate when deciding what dessert to order in a restaurant or buying gifts for loved ones, you miss the point of getting good with your finances in the first place.
Do you use poker concepts when managing personal finances? Let us know what you do in the comments.
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