Understanding The Value of Your Time.
In high school when I landed my first job, I had important lessons to learn about the value of money. While making just a little over $5.15 an hour at a local retailer, planning out how to effectively use my paycheck was critical.
A T.V. commercial I remember during the same time was promoting $0.99 Jr. Bacon Cheeseburgers at Wendys. They ran this promo typically once a year, and the commercial’s point was to compare everything to the cost of the burger.
“Oh that TV over there? Oh well that is $350 Jr. Bacon Cheeseburgers”
Brilliant advertising. To this day I often compare things I’m considering spending money on to how many cheeseburgers that would equal. That baseline established the value of my money, so when I started feeling overwhelmed with my schedule later in life I used the same tactic. I needed a baseline for the value of my time.
“Time is what we want most but use worst” — William Penn
The first step to understanding the value of your time is to find the cost of a small increment like an hour. Freelancers & consultants think this way on a daily basis for monetary purposes, why shouldn’t you? The difference is that they are using this information as well as market factors to inform a consulting rate, and you are using this information to determine which things are worth your time & potential trade offs.
The general formula for time & value is (Income Made from Doing Work) divided by (Time spent doing the work). Yes this can get nuanced but if you want to cover all of your bases I recommend using this time value calculator from James Clear.
So, let’s say I make $2000 a week, I am working 40 hours (2000/40 = $50) I might say my time is worth $50 an hour give or take taxes and savings obligations.
Once you have this liberating number, you can start weighing all of the actions in your life against it. That might sound depressing at first. If you are like me you immediately just thought about the amount of TV you watched this week.
“If I sit on the couch for 30 minutes to relax after work did I just waste $25, $50, $100 dollars?”
As a mental health advocate and somebody who desperately needs “mindless” downtime. I encourage you to do what you need to do so that you can recharge. When I get into this mindset I always try to remember this quote that is the only thing that helps me ENJOY downtime as a person obsessed with productivity.
“Time you Enjoy Wasting is Not Wasted Time” — John Lennon
Now let’s discuss how to back value based decisions about how you use your time. You should expect the following 5 factors to play a role
- Your Age: The older you get the more finite the reality of your remaining time becomes, this adding additional emphasis on its value regardless of income.
- Your ability to focus: The amount of time you personally can be productive in a given day.
- Your likes and dislikes: If you hate doing something, you might place a higher value on having somebody else to that task, even if you could do it for less. As you start to realize the value of your time you can think about what other things you could do with that time back. (For me this is laundry. I hate it. I can assure you I’d rather pay $10 an hour for somebody to do it than be paid $10 an hour to do it myself.)
- Knowledge gained: The value of time spent learning will go up, especially if that knowledge will help you save time in the future
- Investments in yourself: Similar to the value of time spent learning, time spent investing in yourself, networking for example, increase in value as they bring additional tangible benefits to your life.
An example of making a value based decision about your time would be the following:
You’ve been keeping an eye on a new set of headphones that you really want. They are $100. Through a friend you hear that today only, the headphones are on sale in the store across town for 15% off. They NEVER go on sale, this is amazing! That is $15 off those headphones. $85 feels better than $100.
You had plans to vacuum, finish your laundry and meet a friend for coffee but you can’t do that and make the time to drive across town to get your discount on those Knowing that the drive across town will take you 30 minutes both ways, you’ll need at least 10 minutes to grab the item and checkout you are looking at spending a minimum an hour of your time if not more.
In the above example, we identified that our time is worth about $50 per hour. Now you can make the decision about whether you want to use that time to get a $15 savings. Additionally because you know the value of your time you can now determine the trade-off of not spending the time to get the laundry done. Maybe this means you’ll spend an extra five minutes each morning digging through your clean clothes pile which could have been saved etc.
Could the headphones still be worth it to you? Of course. Maybe the value of having those headphones to listen to music and drown out distractions during the work day is actually a huge time saver!
The goal is not to always pick the cheaper option, but to be armed with the right information to help make better value based decisions about how you use your time. Now you are prepared to make those decisions.
Originally Posted on LaurenSelley.com
