How to Calculate the Value of Your Time

You’ve probably heard people say they won’t do X or Y because the value of their time is worth more than whatever benefit X or Y has to offer. It seems simple enough to just plug in whatever the hourly rate your employer pays you and have that be the value of your time but that method doesn’t stand up to scrutiny.

Your employer only pays you for the time that you’re on the clock, so unless the activity in question would cause you to have to take unpaid time off work you’re not losing your hourly rate. Instead you are losing the opportunity to do something else, which might or might net you money or it might cost money out of pocket.

So, the cash value of your time will vary depending on what you could be doing with your time at that particular moment and what the costs for each activity will be. Costs in this case are not only cash out of pocket but the consequences for missing out on other activities.

When it comes to the question of money versus time you will have to do a simple cost/benefit analysis and choose whatever gives you the most advantage at a cost you can afford. For example when it comes to laundry, let’s say you could choose to do it yourself and that it takes about 3 hours of hands on time each week to wash, fold and sort your family’s laundry.

Or, you could take it to the laundry service around the corner on your way to and from work and get it done for $30 and about 30 minutes of your time to drop off, pick up and put away the clothes once you are home. To determine if it’s worth it, you’d need to ask yourself:

●     What would I be doing with that extra 2.5 hours a week?

●     Is the value of that activity worth $30 to me?

●     Is there another task I like doing less than laundry that I would rather outsource instead?

●     Do I really have $30 that I can spare?

Not all money saving activities are going to be worth the time you spend on them and there is value in spending time on activities like relaxing with family. Similarly not all time saving activities are worth cash out of pocket. Sometimes it is obvious that time spent saving a few dollars could be used more productively on an activity that nets more cash, as I wrote about when discussing if coupons are worth it but often you’ll have to weigh less tangible factors to see if a decision makes sense for you.

Some people enjoy participating in things like going out early for Black Friday deals while others hate crowds and the savings aren’t worth it for them at all. Others are handy with needle and thread and enjoy sewing so mending things at home and making alterations is a great way to save while others have no skill or patience with that sort of work and it makes sense to send it out.

The important thing is to remember that the value of your time can not just be a strict how many dollars per hour are saved/earned proposition; you have to take into account other factors as well, including making sure you have time to simply enjoy life. Your idea of what is worth your time can be fluid and change depending on your needs and situation so be sure to periodically reassess how you spend your time and investigate what money savings activities can be added or dropped.

Remember money is just one piece of the equation. Your time is also a resource that should be carefully managed.

Tracy O’Connor is the mother of 5 boys and a ghostwriter who also writes a personal humor blog.

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