We’ve all heard the expression, “Time is money.” Still, most of us don’t think of our time in terms of a dollar value, and we should.
Think about independent contractors. Whether it’s certified professional accounting or housekeeping, contractors know exactly what their time is worth because they charge by the hour for their services. Figuring out what your time is worth is an exercise that everyone should go through, whether employee, independent contractor or business owner. Sometimes we give our time to make money and sometimes we sacrifice time to save money, but we all trade time for money in one form or another.
Assigning a dollar amount to your time will help you make smarter decisions on how to spend both your time and your money.
Here are some examples of simple calculations that you can make once you know what your time is worth:
- Should you hire someone for repairs, cleaning, remodeling, etc. or do it yourself?
- Should you cook at home or do pick-up/delivery?
- Should you spend the time and gas to return something to the store?
- Is buying online and paying shipping costs worth the time you save going to the store?
- Is the money saved on a flight with a layover worth the extra time traveling?
- Does public transportation cost you more time than it saves you money?
- Should you take on additional part-time work, and at what rate?
- How long you should wait in line for a doorbuster discount?
Some calculations are not so straightforward, but are still well-served by understanding the value of your time. For example, if you are building a business, you may spend time upfront with little immediate return, but earn a big payoff in your personal worth down the road. Other activities like education and personal and professional development will pay dividends in the future by improving your time-for-dollar value. Spending time reading this blog and calculating your time-money ratio, for example, could lead to better decisions that improve your finances.
Likewise, some activities have no direct dollar compensation, but make our earning time more productive or enhance our quality of life. A vacation costs time and money, but is important for being refreshed when you’re back to work. Exercise can increase focus, energy and health in all areas of life. Quality time spent with family and friends doesn’t produce a dollar return, but is infinitely rewarding nonetheless.
Most of us are conscious of wasting money, but don’t give a second thought to wasting time. Did you know that the average American spends 5 hours per day watching TV? 60 percent of American adults spend at least 10 hours per week playing video games on a computer, phone or game console. Thinking of your time in terms of money will help you to place more value on your time and waste less of it doing things with no discernible return.
Read to assign a dollar value to your time?
Use this in-depth calculator developed by Clearer Thinking. The tool will ask a series of questions to help you estimate how much money each hour is worth to you, so that you can make wiser decisions about how to spend that time. It’ll also provide you with a customized report based on your results that highlights any inconsistencies in your answers and makes concrete suggestions for applying your newfound knowledge in your daily life.
If you want a less accurate, but faster estimate, use this quick calculator from LearnVe$t.