The Value of Time

[debit.servus]

Over the years I have learned to value my time, because time is something most human beings have approximately 80 years of. Being 22, if I live to be 80; I have already lived/spent over 1/4 of my life. Think about it; most people will have approximately 80 summers, 80 New Years, 80 birthdays, 80 holiday seasons. Does it make sense to spend a decent percentage of ones life watching sales, couponing, doing things you don't like to save a buck, pinching pennies etc.?

It's one thing to have little money, necessitating the need to go to great legnths to stretch ones money. It's another thing to have six figures in the bank and still go to great legnths to stretch ones money. Treat finances like a business. Income is revenue, bills are expenses, and surplus after bills and living expenses is profits. Save half of more of those profits for leaner times in fiat currency or what I reccommend, physical silver.

Set a Discount Threshold for little things. My discount threshold is 3%, meaning it's worth my time and effort for a 3% discount on something. Unless one is extremely poor, it doesn't make sense to search for savings on a one-off expense; put that effort to recurring expenses. Little things might add up, however it's easier to lower the cost of biggest expenses (for most peoples that's 3 things: food, energy and housing) versus all those small expenses (dozens to hundreds of things).

Here is the best way I found to monetarily value an hour of your time (comments from http://www.iwillteachyoutoberich.co...ot-yours//RK=0/RS=9nCGBlUeEkVbk2sjurGU3lQOvZM-)

The best way to decide on if one is spending your Dividing your income by 168 hours doesn’t make any sense to determine your time value either, since whether you’re rich or poor you biologically need to sleep 6 – 9 hours every night. Why not round down to 100 (it’s easy division) and use that as the baseline? At $800/week (after taxes) that makes your time a more realistic $8 / hour rather than 4.75. 

Heres another good comment from the linked webpage:

your time is worth what someone would have to pay you to give up doing what you want, and this goes up as your free time gets scarcer. But that’s a justification for charging other people for your time, not for paying stupid amounts of money to save a little of it when you can just as easily wait. I mean, it’s not as though a two-day shipping upgrade actually saves you time, because you’re not going to sit there waiting for whatever you ordered to arrive. At least I hope you’re not! On the other hand, spending a couple hundred bucks to rent a trencher that will save you days of digging trenches with a shovel may be money well spent, because it does give you more real time.

The bold text is an on point example of my philoposhy: unless one doesn't have money to rent a trencher or can't to work 30 hours in a minimum wage job to pull the money to rent the trencher; rent the trencher depending on the size of the job.

 

[GotSmart]

Who wants to spend every waking minute working? :huh:

My time is worth whatever I decide to charge.  To many I will gladly give it away.  When I am working, I have made a honest wage.  The last job I charged $30 an hour.  It was at my terms and pace.  (I turned a $250K money pit into a $300K instant sale for $16K)  If the customer is hard to get along with, I have charged up to $90 an hour, and got it.  

On piece work I have made $50 a service call, which was 10 minutes driving, and 5 minutes tinkering.  ($200 an hour) 

The market (AND YOUR SKILLS) determines what you are paid. 

The best way to decide on if one is spending your Dividing your income by 168 hours doesn’t make any sense to determine your time value either, since whether you’re rich or poor you biologically need to sleep 6 – 9 hours every night. Why not round down to 100 (it’s easy division) and use that as the baseline? At $800/week (after taxes) that makes your time a more realistic $8 / hour rather than 4.75. 

Horse pucky.  

A workweek is 40 hours.  If you want to earn $800 a week, ($1,000 a week before taxes)  You had best be making $25 an hour. 
FIND A NEED AND FILL IT!

 

[WriterMs]

I think the OP's point for figuring a general waking-hours value is that a lot of people fill up their days doing things that they think will save them money -- yet they spend so much time on them that it is not worth the effort (couponing is one he mentions).

There is a current thread for a "Great though-provoking video" -- the video is a man talking about what he and his wife have learned about resources being limited vs unlimited... including the greatest resource of a person's time. He points out that we "spend" our time whether we are doing something we enjoy or trying to keep up with the Joneses. By vandwelling, he is able to have more time for travel and spend more of his time on joyful things.

 

[gcal]

Your time is worth what someone is willing to pay you for it. If you can not get anyone to pay you anything for it, that is what it is worth.

 

[debit.servus]

I think the OP's point for figuring a general waking-hours value is that a lot of people fill up their days doing things that they think will save them money -- yet they spend so much time on them that it is not worth the effort (couponing is one he mentions).

Like if one needs a common hairbrush, it's not worth ones time to search yardsales, second hand stores or watch the side of the street for one; considering a basic and functional hairbrush can be had for $1.11 or less (sales taxes included) at a dollar store. Ofcourse if one is extremly poor with almost no money, then one has to work to save on the hairbrush because spending 1 cent more on the hairbrush could mean having one less can of soup for the month.

Now if one is searching for another car, then it's worth ones time to search Craigslist, used car lots, and autions because the potential savings is huge, many times amounting to thousand$. If one has the storage space to stock up during sales and/or buying in bulk, it makes cents to save in that way, especially making the purchases on shopping trips or errand chains one is going on anyway.

Here is an example for store runs. It costs money AND time to go to the store, so chaining the errands and/or minimizing stops helps save time AND money. If one is living in a town or city, pretend like the grocery store is 20 miles away like it is for someone living in the country. For a single person or couple with stable finances, aim for only going for groceries twice a month. Compare the savings of only making two trips a month to the sales/discounts one is missing out on when they're not in the store. Weigh the most common variations/options, using fuzzy math (unless one is an extreme cheapskate), for a recurring expense like this.

Remember, one is never going to eliminate wasted time! One can minimize wasted time. Same for lost or wasted money, one will never eliminate unexpected expenses but can minimize them.

... By vandwelling, he is able to have more time for travel and spend more of his time on joyful things.

This is my goal, to have more time to travel and spend more of my life on joyful things. In my case much more, since I'll spend less time pinching

dollars and see the same life discount as someone who is penny-wise and pound-foolish.

 

[rvpopeye]

I was just going to say basically what gcal did.
If nobody is currently paying you anything for your time and you are not doing anything that creates income. Then your time is what is called "free time" .
If I were you , I'd be leaving planning mode behind and get into doing mode asap (or you will run out of time to achieve your goal .....Canada this summer.... ).

 

[FALCON]

The book "Your Money or Your Life" has, in my opinion, a much better description of calculating hourly time value than the example from Ramit Sethi(Iwillteachyoutoberich).

Here is a short version, from what I can remember about 5 years after reading the book. Note here that this method is primarily meant to be used when weighing potential expenditures. It's not about setting or changing your income rates (though in some cases it may help a lot with that).

- Total up all your post-tax income
- Add up all the costs of commuting to work. (car purchase or depreciation. Gas. Maintenance. (some portion of) registration, insurance, etc) Subtract them from the income
- Add up any money you spend to relieve work-related stress. Subtract from income
- Add up any money you spend on training, certifications, etc. for work. Subtract this
- Add up any money you spend on clothes for work. Subtract this.
- Add in any other costs that you incur related to work. Subtract this.

Now you have a "final" net income value.

Now, for the hours part:
- Add up all the hours you spend working.
- Add up all the time you spend commuting.
- Add up all the time you spend getting ready for work
- Add up any extra time you spend related to work. (Training, reading, talking about it outside of work. Thinking heavily about it outside of work)

Now you have your total work hours.

Divide the final Net income by the working hours. Now you have your true hourly income. This is probably much lower than an hourly rate you may have calculated by taking your Gross Income divided by 40 hours or however much your normal work-week is.

Now, when you think about spending money, do this calculation to convert the price from $ to your own life (time)

($ Price) / (True hourly income) = Hours of your life.

Then, whenever you're weighing an expenditure, you could calculate how many hours of your life you'd have to trade to get whatever you're considering spending the money on. Is that worth it to you?

 

[GotSmart]

I enjoy what I do.  So I have fun and get paid also.  

When I was making 6 figures, I was not having fun.  I was constantly stressed, and life was not worth living. 

I now do what I want.  Having a skill in a field I enjoy, means I play and get paid.  

Either way sitting is not doing, and no value is created.

 

[Mobilesport]

@  debit.servus,,,,,,, good post.

 

[jimindenver]

One thing to consider is some of the things like coupons are often done while there is just nothing else to do or while watching TV.

 

[SoulRaven]

Your time is always worth at least minimum wage, because that is what someone else would pay you for it.

If you're doing something you would have to pay someone else $50/hr to do for you, then that is how much that time is worth. Likewise, that is how much your project is costing you, because if you were spending that time doing the same job for someone else, that is what you would be making.

DIY projects are ALWAYS break even projects at best, the idea that you are saving any money is false, and if it takes you longer than it would a professional, it is actually costing you extra money, and for perhaps an inferior outcome.

The only good case for a DIY project is if you want a superior build quality to what is otherwise available, and you are qualified to do the job. It will still probably cost you more, but the build quality may compensate for the additional cost.

Example: I pay $10-$12 to get my laundry done. I simply drop it off, then pick it up later at my convenience. If I did it myself, it would probably cost me at least an hour of my time, PLUS the cost of the washers & dryers. So if my time is worth minimum wage @ $10/hr while doing laundry, it is actually cheaper to pay to have it done.

 

[jimindenver]

You will know the true value of your time when you look back and see how much of it you have wasted.

 

[Spaceman Spiff]

The value of your time to you is whatever wage you are willing to decline to do something else.

The value of your time to an employer is whatever he determines your labor is worth to him.

-- Spiff

 

[gcal]

What is my time worth?

I just made around $8600 in less than just a few weeks by sitting on my keester and letting it happen. I did this by buying 4000 shares of Ford @ $11.60 back when everyone was running around with their hair on fire panicking about lower demand in China. I collected the 40 cents combined dividend on March 1st and just sold for $13.60 per share.

Of course, I also spent a lot of time getting a Bachelor's Degree with an Economics minor and spent over 20 years working in the financial industry and studying how the economy and the markets work and earning money I could play with. So, what is my time worth?

 

[gcal]

What is my time worth?

I just made around $8600 in less than just a few weeks by sitting on my keester and letting it happen. I did this by buying 4000 shares of Ford @ $11.60 back when everyone was running around with their hair on fire panicking about lower demand in China. I collected the 40 cents combined dividend on March 1st and just sold for $13.60 per share.

Of course, I also spent a lot of time getting a Bachelor's Degree with an Economics minor and spent over 20 years working in the financial industry and studying how the economy and the markets work and earning money I could play with. So, what i

Typo alert. Sell price was $13.50, not $13.60.

 

[gcal]

same life discount as someone who is penny-wise and pound-foolish.

Two afternoons of analyzing trends and financial statements just netted us $8600 for Ford stock and a similar combined total on several other stocks ( CMI, GM, DE, CAT, and T). I did this by spending the necessary time getting the training and experience to make my time that valuable and saving the money to be able to do it. I got my Business degree with a minor in Economics in my 40's while working fulltime and worked like a dog for two decades to learn about how the market and the economy work. I would say that I was being both penny wise and pound wise. Our lives are good. Most of us build our own lives with the choices we make. We all have to pay our dues, and we don't always get to pick the currency we pay them in.

 

[Every Road Leads Home]

I've read a lot of your posts, you're still very young, but I think in ten years you'll have a better grasp on how the world works. You have a lot of ideas, and ideas can be great things, but don't let those ideas consume you. If you really want to expand your mind, take any job you can find, minimum wage on up for six months. Take that money and travel for six months and I promise you'll come home with a mind more opened than any amount of internet searching, idea scheming, or forum visiting will ever get you. Best part is you can still play around with all your ideas while on the road, kill two birds with one stone. It will answer a lot of your own questions as well.

 

[Wanderer]

Interesting. I know (From speaking with others) about some people who repair computers and then sell them. Many of them have little else to do (Being as they are crippled enough to get disability) but they occasionally want some "Extra" in their lives.

So they will repair a computer they paid $20-$50 for and sell it for $100 (Depending on parts cost) they don't make much, $20-$30 profit for 5-6 hours of work, but they have nothing else to do but sit and watch tv otherwise.

So while they don't make a lot, they make enough to be happy. Isn't that the key to this?

 

[debit.servus]

Your time is always worth at least minimum wage, because that is what someone else would pay you for it.

If you're doing something you would have to pay someone else $50/hr to do for you, then that is how much that time is worth.  Likewise, that is how much your project is costing you, because if you were spending that time doing the same job for someone else, that is what you would be making.

DIY projects are ALWAYS break even projects at best, the idea that you are saving any money is false, and if it takes you longer than it would a professional, it is actually costing you extra money, and for perhaps an inferior outcome.

The only good case for a DIY project is if you want a superior build quality to what is otherwise available, and you are qualified to do the job.  It will still probably cost you more, but the build quality may compensate for the additional cost.
...

If one is unable to land despite best efforts or can't work more hours at their minimum wage job, then their time is worth less than minimum wage.

Like a ready made van with the same features in the one I have would cost at least $50,000 (new or used). If I were to hire a professional to mod the van, their labor rate is $100 an hour (business rate, sure one could hire their friend for less; don't deflect here).

DIY to save money in the sense of less than the cost buying a ready made version of what one is building(money and possibly time cost). I bought a "bike mechanics special" electric tricycle and the parts to make it operational at a parts cost of $130, then spent 10 hours of work to the point it was operational. At that time, I valued my time at $6 an hour ($130 parts cost + $60 time cost = 190; there were other nickles and dimes too so lets say $200). A used operational electric propelled trike of similar specs & quality would cost AT LEAST $700 through craigslist. A NEW ready made & operational trike goes for at least $1000. Boutique electric trike goes for $2000+. There is also the benefit that one can pick any of their free hours to spend on the DIY build plus add anything to the build provided ones has the money/time/tools/skill for the addition(s).

" and if it takes you longer than it would a professional, it is actually costing you extra money, and for perhaps an inferior outcome." This is thinking in an utopian world, this is assuming the one DIYing could work for a wage matches the professional the labor rate or higher wage, and how one defines "an inferior result". Being a poor boi, the finances do not support the option to take the van to the shop; so I NEED to DIY (this might change due to my pedicab gig).

The estimate to build a breastpump (gathering parts, designing around the parts, extensive internet research, flak from people telling me to just buy a breastpump) is 200+ hours time cost. A NEW base model breastpump costs $100. So if it takes more than 15 hours total to build a breastpump from scratch it's costing one money because one could work 15 hours at minimum wage to pull the money needed to buy a $100 breastpump with sales tax included. Remember not everybody can land a minimum wage job, or are so poor as to make it a hardship to sell something else to buy a breastpump.

A prime example would be most of the people in 2nd and 3rd world countries, they do things that are unheard of in the 1st world due to the fact that their time is valued at pennies.

 

[TMG51]

Like a ready made van with the same features in the one I have would cost at least $50,000 (new or used).

Because it has an A/C, microwave and extension cord? :huh:

For $50k I think most buyers would expect a working transmission and an un-scortched instrument panel.