‘Time Is Money’: So How Much Are You Worth?
You know the expression: “Time is money.” Turns out, it’s totally accurate. One of the most valuable assets you have is time — how you choose to spend your time determines how much money you make, your productivity, and your efficiency. When you start to look at time as a valuable resource, it changes the way you think, often allowing you to make better decisions.
Take this example about making the choice between two similar jobs, per Get Rich Slowly. One job, where you’ll make $40,000 a year, is right down the street from your house. The other job is 30 minutes away, but you’ll make $50,000 instead. Which one would you pick?
Many would automatically opt for the $50,000 yearly salary because 30 minutes isn’t that far away, and you’ll earn $10,000 more. But if you break it down by time, your answer may change. Take a look: That commute is going to cause you to spend five hours in the car every week, averaging to about 250 hours you’ll spend in the car every year, which is the equivalent to just more than 10 days.
Your time is valued at $25 per hour, based on your $50,000-per-year salary, meaning that in one year, you’ll spend $6,250 worth of your time commuting. When you factor in gas money, you’re losing even more. Now, jump back to the $40,000-per-year job. After factoring in gas (let’s say $2,493) and the value of your time ($6,250), there is only a $1,257 salary difference between the two jobs. Ask yourself the same question again. Which job would you choose?
Chances are, you’re now leaning toward the one that pays $10,000 less and right down the street. Isn’t it strange how things change when you start to look at your time as a commodity? Consider these four ways you can ensure you’re making the most out of your precious time.
1. Start thinking in tradeoffs
“Every person has an implicit hourly rate of value they create, in business and beyond. Determining that number is tough, but if you don’t have an estimate — you don’t have a framework within which to make decisions,” said SeatGeek founder Jack Groetzinger.
Thinking with a tradeoff mentality can help you scale back on wasting time, which you may not even look at as “wasting time” right now. Here’s an example: Let’s say you’re doing some online shopping and are on the lookout for a new TV. You find one on Tiger Direct for $450, but feel as though there may be a better deal out there.
Before you continue searching, think about the time you’ll spend doing it. First, you need to have put a value on your time. For this example, we’ll say you estimated your time value at $160 per hour. If you continue searching for a TV for another 30 minutes, you now need to find one that is around $360 (you’re docking $80 off for your time searching), to make it worth it.
Will you be able to find a TV that’s cheap enough to make it worth your time? If so, go ahead and proceed. If not, consider purchasing the one for $450 and moving on with your day.
2. Make good use of waiting time
Multitasking is a great way to get the most value for your time. Think about all the time you spend waiting in an extraordinarily long line or are stuck in a waiting room before a dentist or doctor’s appointment. Rather than mindlessly flipping through a magazine, have something handy to work on.
If you have work papers to read, go ahead and do it while you wait. Or perhaps you need to make a few bill payments. Simply do it via your phone while you’re sitting there. Always keep something else to do on hand, so if the opportunity presents itself, you’ll have that to work on. By the end of your appointment or by the time you make it through that line, you should be able to check two things off your to-do list.
3. Consider outsourcing work
Start considering whether doing certain things is worth your time. Emily Oster, an associate professor of economics at the University of Chicago Booth School, writes in a Slate article that she considers whether household chores are a good value of her time.
“Consider grocery shopping. There are really two options: I can order online and have the groceries delivered by a company like FreshDirect or Peapod, or I can go out and spend two hours wandering the aisles at my local supermarket. There’s a delivery fee for the former, maybe a markup also,” Oster writes. She then examines a few questions: Which is the better way to shop? Is the fee plus markup smaller than the value of two hours of my time? If the answer is yes, opt for delivery. If it’s no, head to the store.
When you start thinking with this mindset, you’ll start looking at other outsource possibilities. For example, cleaning. Think about whether scrubbing your house for three hours every week is the best option, of if you should consider hiring someone. Again, look at the opportunity cost: Is it more or less than the hourly rate for the service?
Don’t look at these items as luxuries you shouldn’t be splurging on. Unless you make less than the rate you’d be paying someone to clean your house, it actually makes more sense to outsource the work. This applies to laundry, yard work, shoveling, and any other household chores. It actually doesn’t sound too bad, right?
You don’t have to do this for everything, especially if there is a chore you like doing. But for others, always ask whether you would do this chore for someone else if they paid you the market wage for it. For example, would you go grocery shopping for your friend if she paid you the delivery fee? If your answer is no, you should probably be outsourcing it.
4. Take a look at your availability
There are simple fixes to ensure you’re getting the most bang for your buck when it comes to your time. First, stop saying yes to everything. You don’t need to do everything, and you certainly don’t need to agree to every request that comes your way. If you have things you need to get done, know that it’s OK to tell someone else no.
Second, don’t drop what you’re doing every time you’re interrupted. You don’t always need to be immediately reachable. In fact, if you are one of those people who stops what they’re doing to immediately respond to people, phones, and emails, it’s time to reevaluate. If you focus on always being reachable, which is an unattainable goal, you’re going to neglect the tasks that are in front of you. Focus on those first, and make time for responding later.