I was at an entrepreneurship event a couple weeks ago and among many things learned on the day was a very simple tool for calculating how much 1 hour of your time is worth. ‘Time is money’ is an age long saying and the expression “you are wasting time” is one all of us are familiar with. I once heard someone argue that since time is a continuum; it cannot really be wasted; so it might actually be more accurate to think along the lines of wasting a LIFE than wasting TIME.
But I am talking about time and your money in this piece, I’ll go straight to how the calculation works.
First you have to determine how much money you want to earn in the year; let’s say for arguments sake 100,000; it is independent of currency.
Note that the average number of working hours in one year assuming you don’t work weekends and public holidays and you work 8 hours a day (220 working days X 8 hours)- this means 1760 hours per annum.
To earn 100,000 therefore; you need to earn (100,000/1760)= 56.82 per hour
factor in the assumption that it is not every hour that you spend on work that actually generates money; let’s assume that what generates money is roughly a quarter of the total time spent on work. If we factor in this non-productive time; then take your 56.82 per hour and multiply it by a factor of 4= 227.28. If you want to earn 100k then you should realise that 1 hour of your time needs to be worth 227.28.
I did the sums for myself, won’t be revealing what I hope to earn this year though lol. But the dramatic thing I found was just a greater awareness of the use and management of my time. I found out that the one hour I used at my son’s soccer practice was useful not just for watching him learn to control the ball but for putting down the points for my next blog posts. It has helped me to know how much time I can afford to devote to some activities and what I need to delegate to others that might be involved in my work, and at home.
This valuation of time might make more sense to the self employed individual; but the employed person can also use this to value their time or if they have, as they should, set goals for how much additional income they hope to earn beyond their salary.
What’s 1-hour of your time worth. determine it and LIVE it!
Have a brilliant week!