(FinancialHealth.net) – If “time is money,” how do you determine what your time worth? Knowing the answer to that question will give you the tools you need to make a more educated decision about how you spend your time and what you’re willing to trade for it.
For example, once you know what your time is worth, you might find that $5 or $10 grocery delivery or pick-up fee is a good deal if it frees up an hour or two of your time. Using a value calculator may be the best way to get started on the road to getting what you’re worth.
How to Determine What Your Time Is Worth
While many people think that the value of their time is only what their hourly wage says it is, there are many other factors to consider. There are different value calculators available to choose from, but the basic premise is the same. Here’s how it breaks down.
- First, determine your weekly rate of pay or how much you expect to make if you are unemployed. It might be your actual hourly rate times the hours you get paid for or your weekly salary (if you are paid monthly, divide that amount by 4.2, which is the average number of weeks in a month).
- To that amount, add in any money made from odd jobs or side gigs.
- Next, add to your total working hours the amount of time needed for your commute. This includes dropping off and picking up the kids at daycare, stopping for that morning coffee, etc. Even the time spent getting ready each morning. Also, add in any time spent on the odd jobs and side gigs.
- Now take the total amount of money made each week and divide it by the total hours used for work.
This figure is now more representative of what your time is currently worth. Surprised?
Please note, there are several calculators available and they each work a little differently.
The right one for you to use depends on your situation, like whether you work hourly or salary or are in another unique working situation.
In addition to your hourly wage or annual salary, these things can play a role in what your time is worth:
- How much free time you want and how you use it
- If your job pays benefits, those are important to the bottom line
- If the task in question is enjoyable, boring job vs. career passion
Decisions Your Time Value Might Impact
While the grocery store example is certainly a valid argument for a task that may not be worth your time, there are other areas of your life that might be affected as well.
- Efficiency — If buying or renting a tool, for example, will save you two hours worth of work on a project, is that money well spent? Don’t forget to factor in the cost each time you rent the tool, including drive time to pick up and return it.
- Household tasks — Maybe paying for maid service or for the neighborhood kids to shovel your driveway makes financial sense.
- Travel layovers — Is a non-stop plane ticket worth the extra money if the flight is three hours faster than one with a layover?
- Investing in a business — If this investment will take a significant portion of your time and energy are the expected short- or long-term dividends worth it?
Using a value calculator might not yield the best results for everyone. Special cases like having a variable income or having too low or too high an income can skew the results. You may need to do a monthly or annual calculation to get a better overall picture of your hourly worth.
Consult with a financial advisor who knows your circumstances before making any serious financial decisions based on the results of one of these calculators.
~Here’s to Your Financial Health!
Copyright 2020, FinancialHealth.net