Contribution Margin to Cover Life's Overhead

<p>In the world of cost accounting, there's a concept known as contribution margin. Basically, it's how much you make on a product or service after you consider how much it cost to make that thing. The formula is revenue less the <em>variable costs</em> that go into making the product. Contribution margin is an important metric for businesses because it tells you whether you are making a profit on the things you sell. After all, it would do no good to sell a bunch of t-shirts for $18 a piece, if each of them costs you $20 to make!</p> <p> </p> <p>Now, Jesse asks, what if we apply this concept to our life? We have jobs that earn us revenue. What do they cost to do? Time, obviously, but perhaps also driving/commuting, stress? The point is, the things that earn us money have a non-zero cost associated with them, and it's wise to keep track of that cost and make sure, at the end of the day, that we are using our time in a profitable manner.</p> <p> </p> <p>Sign up for a free 34-day trial of YNAB at <a href= "http://www.youneedabudget.com/">www.youneedabudget.com</a></p>