Calculating the worth of your time is both intriguing and valuable. Financial independence provides you with alternatives and choices. But without time, that is meaningless. Time is a valuable asset that should be used carefully.
However, even if this question is straightforward, coming up with a meaningful answer might be difficult. It won’t assist you much to look up how different individuals value their time because it’s a highly personal estimate.
The outcome will vary greatly based on the type of occupation you perform, where you reside in the world, the amount of money you make, how much you hope to make in the future, and other factors.
I read an interesting fact that if Bill Gates discovers a $100 bill in the middle of a road, he is not going to waste his time picking it up since his time is significantly more valuable than $100. This demonstrates his wealth and more importantly the value of his time.
There is a very typical way for determining the worth of your time. Simply divide the income you make by the number of hours you work to arrive at your hourly compensation. That sounds simple enough, but there are a handful of drawbacks with that technique. You are not compensated for your leisure time. You are only compensated for the time you worked. So perhaps the appropriate question is, “How much is your spare time worth?” The worth of your spare time should be proportional to how much of it you have accessible.
Not all applications of your time are created equal, and this basic notion may make a significant impact in one’s life. It all boils down to how you utilize and prioritize your time, whether you desire more income, more relationships, greater autonomy, or more influence.
Why it is vital to know what your time is worth:
You may dislike your work. Even I dislike my day job (which is why I write blogs to supplement my income!!).
In this blog article, we attempt to determine the value of your time and utilize that knowledge to help you spend it more successfully. Discovering how to make the best use of your time begins with realizing just how much your time is valued.
Your time is a limited resource, and how you manage it has a significant impact on your professional and personal life. Learning how much each hour is valuable can assist you in making the best decisions.
For example, you should know when you should hire a professional video editor for your Youtube video or you should know when you should hire a content creator for your next Marketing project PPT. The worth of your time is an important consideration in making that selection. If you spend 10 hours doing your video editing, and you value your time at Rs. 1,000 an hour, then the cost of doing it yourself is Rs. 10,000. So it makes sense to hire a professional video editor to prepare the video for you, but only if the service costs less than Rs. 10,000.
There is no reasonable way to make such a choice unless you know how much your time is valued. Assessing the worth of your time may also help you determine whether or not to take on extra work and how to prioritise your responsibilities.
Of course, this should not be taken too far. Not each and every thing has a monetary significance in your life. Attending your child’s annual day event may not add much to your monetary range, but that doesn’t mean you should avoid it and put in an extra hour of work. Even the most determined businessman or top executive of a firm has to devote time with his beloved ones, whether it’s resting by the beach or reading a book on your house balcony or watching a movie with your family, etc.
Now let us see how to calculate the ‘Value of Your Time’:
With the foundation set, let us now get to the calculation.
Stage 1:
First and foremost thing, you must determine how much income you make in a certain time period: weekly, monthly, or annually.
If you are paid on a monthly basis (which most companies pay their employees), the monthly amount makes the most logic. If you own a firm, you should probably look at a full year’s worth of information. If you are a self-employed individual and your earnings vary greatly during the year, take a median over an extended period of time. Don’t worry if you’re just starting out a job and don’t have a lot of money—we’ll cover it in the following part.
You should look for your after-tax income—the money you have ready for use in your hand. This figure is quite straightforward to obtain for paid staff and self-employed individuals. It’s a little more complex if you operate a company. You’ll have your pay and any other direct remuneration from the firm, but you’ll also need to include your part of any gain the company produces, even if it isn’t handed out outright to you. Subsequently, this is something you’re getting from the company, and we ought to recognize it as well. So, if your firm had a net profit of Rs. 10 lakhs this year and you own 40% of the company, your portion of the profit is Rs. 4 lakhs. Add it to what you’re paid to get a total.
Stage 2:
The next thing to do is to calculate how many hours you worked throughout that time period. Include not only hours spent in the workplace, but also time spent commuting, checking emails at home, and working on weekends (if you fall into that category – I surely do not!) and so forth. Ideally, you’ll have some precise numbers to work with from simple apps available nowadays. You may also do it on your phone’s ‘Notes’ section, or with a paper and pen, by simply scribbling down the stuff on which you put your time.
If you don’t currently keep track of your time, I suggest you start doing so for at least a week or two to get a sense of where your time goes. When I evaluated where my time was going (in fact flying away!), the results were just astounding for me, and they should be for you as well (my time was mostly spent scrolling around social media, and I don’t want to divulge too much about it, since it was a staggering number for me to comprehend!).
If you don’t want to do that, just make your best guess by going through your calendar for a regular week. Add up all the time you spend on work-related activities—the total will most likely be substantially greater than your formal working hours, or “billable hours” – which is the colloquial word used in software companies.
Stage 3:
Now here’s the formula:
Value of time = Total net earnings / Number of hours worked
So if you work 200 hours a month and earn Rs. 80,000 per month, the value of your time is Rs. 80,000 / 200 = Rs. 400 an hour.
You may ask a question here that if this formula was what we are trying to arrive at, then it would have been easy if I had mentioned this formula at the beginning of this blog-post and finish the blog? But the real reason me writing this article is to make the readers to understand why it is important for us to know how much is our time worth, and how effectively we can put it into progressive use.
Adjust the above mentioned calculation:
We must keep in mind that the above-mentioned formula is only a rough estimate and may not appear correct to everybody. We will attempt to make this more suitable for all types of individuals.
The math above provides a starting point. It may be sufficiently precise for some people as is, but it may need to be tweaked for others.
If you’re a new employee, your income may be modest at first, but you can assume that the time you invest mastering the work now will pay off later. This is also true for young enterprises, as the activities you take now will contribute to future progress. You may possibly be employed but anticipate being promoted or a work move in a short while.
You could make some changes in such case. Your present net earnings might be increased by your predicted yearly growth rate. You can just try to play around in the numbers that you key-in based on your own scenarios.
Even if your income is quite consistent and anticipated, you might consider asking yourself some questions to help you fine-tune and confirm the amount you reached at in the previous section. For instance, how much would you compensate someone to perform something you already do? What is the current rate in your field for that sort of work? Do you believe that working one extra hour might enhance your salary by the sum you’ve valued your time?
Basically, take the results of earlier calculations as a place to begin, but don’t be hesitant to make changes until you reach at an estimate that’s sensible for your specific situation.
Given you have done this calculation, now what next?
You now have an idea of how much one hour of your time is worth. What can you do with this insight?
Make an exact hourly summary of the chores you complete in a normal week. Now research yourself (by doing some peer comparisons with somebody similar in your field) that whether you will be paying that much money for an hour of work that you do. Then you can sit back and try to figure if you are working effectively for earning that money or you are a slow earner or you are earning more than the peers in the industry.
This is simply a self-assessment technique to determine the worth of your one hour. Now its upto you to decide whether to increase your per hour income by adding some side hustles or any other business so that you can increase your net earnings per month. Or, you may like to finish the tasks in your hand at a faster pace and relax the remaining time, or you can try to use the additional time in something effective for your life, like some charity or community services.
If you are doing a business, then you can hire someone to perform your tasks for less than your own time is worth, and it’s obviously termed as a good investment. You can also apply the same principle to any new one-off tasks that come up in the future.
Conclusion:
You learned how to calculate the worth of your time in this blog article. You understand how to put a rupee value to each hour and how to apply that knowledge to make better life choices.
With due respect, I acknowledge that there may be non-financial factors that come into play—perhaps the task you’re evaluating will make you happy, contribute to a good cause, etc. Those can be intangible, but add more sense and purpose to your life. You can still take those things into account when you’re deciding what to do. Despite having no monetary value, those are also important to you.
