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Clipping coupons may not yield big savings all at once, but if you saved $5 a week, you're still $260 richer at the end of the year.
updated 3/28/2011 9:47:06 AM ET 2011-03-28T13:47:06

Ever wonder if coupon clipping is worth your time? While it can save extra dollars and cents, it can also cost you time and effort. Some say we should just wait for sales and buy in bulk and we can forego coupon clipping altogether.

Here's a quick guide on how to assess if it's worth your time.

How much do you make per hour?
If you only know your gross salary per year, here's a quick way to figure out how much you make (gross) per hour. Take your salary, $40,000 as an example, and divide it by 2,000 hours to get $20 per hour.

Two-thousand hours is the generally accepted number of working hours in a year, because it takes into account 40 hours a week at 50 weeks a year, accounting for two weeks of vacation, but no holidays, sick days or overtime.

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Many people argue that time is money. With that in mind, if you spend an hour clipping coupons, you should expect at least a savings of $21 to make it worth your time ($20 for your "wage" and $1 to make a "profit".) However, if you've only saved $5, then you've just "lost" $15 in earnings you otherwise could have made.

This time-is-money philosophy can be dangerous, though, because it starts to account for every hour of your day, even the ones where you sleep and can't make any money.

Many people don't necessarily charge overtime either, so whether you work 40 hours or 60, it makes no difference in your hourly wage, in fact it lessens it. Besides, if you already have a full-time job that you work 40 hours a week at, the rest of your time is free time for you to do whatever you please without any economic productivity.

Therefore, if you clip coupons on your free time, you would actually be "earning" extra dollars for each coupon you clip.

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Would you buy it anyway?
Many people see a coupon for an item and decide to buy it because it'd be cheaper than at full retail cost, but in reality, you should look at whether you were going to buy the item to begin with.

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Let's say it was a coupon for a pair of nail clippers. You could get $1 off a $4 pair, for a savings of 25 percent. This is a great deal, but do you really need another pair of nail clippers? If you don't need to replace what you have, then you've just wasted $3 on an unnecessary purchase.

Also, watch out for impulse purchases that are made just because there's a coupon. Savings on an impulse item doesn't necessarily justify the purchase. However, if you were going to buy white vinegar this week, then clipping the coupon only takes a few seconds for quick savings.

Do you need to travel farther to use the coupon?
If the coupon is for a 50-cents savings on an item but has to be used at a store 20 minutes out of your way, it may not be worth your time, or even the gas to get there.

Or even if you need to go to multiple stores to reap all of these savings, it may not be worth the hassle and the traffic, depending on how far apart these stores are, and if the savings are big enough to be worth it.

The bottom line
Watch out for in-store coupons, rebates or sales. Know what staples you need each week so you can scan the list of coupons and quickly pick out what you'd buy and what you wouldn't. You can also keep a coupon binder and clip any coupon you find interesting but don't have a use for right away, but you may use in the future. When it comes time to buy the item, then you can bring out your coupons to score some great deals.

Clipping coupons doesn't have to be a chore, and if you already have idle time (such as when you're in front of the TV), why not clip coupons and save a little cash? It may not yield big savings all at once, but if you saved $5 a week, you're still $260 richer at the end of the year. After all, any money saved is still money that stays in your pocket and saving may become second nature before you know it.

More from Investopedia:

4 coupon sites worth checking out

Mindless ways that we waste money

Learn to manage your credit and debit

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Video: 5 tips for the coupon newbie

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