How to Calculate How Much Money Your Free Time Is Worth

Image for article titled How to calculate how much money your free time is worth

photo: Antoniodiaz (Shutterstock)

Time is money, they say. But how much is your actually worth the time? When deciding what to do with your free time, it can be helpful to put a price tag on it to see what compromises you’re really making.

Find out what your working hours are worth to you

The traditional way to value your time in dollars is to consider how much money you make each year and divide by the number of hours it takes you to make that money. If you want to get into the details of this calculation, James Clear wrote about it for Lifehacker in 2015. He advises you to think about it Everyone the hours you spend striving to make money, including time commuting to and from daycare. Then simply divide your earnings by the total number of hours you’ve counted. (Most people, he says, invest about 2,500 hours a year in a full-time job.)

According to this calculation, if you make $62,455/year (the median earnings for men in the US at the time he wrote this article), your time is worth $24.98/hour. So you would be wasting your time if you spend an hour making or saving less than $25. And that’s a helpful math when it comes to comparing jobs: for example, if you’re looking for a gig that pays more than your current one but has a long commute, it might not be worth the switch.

But I don’t think that’s the right way to look at your free time. If you spend an hour shopping at a flea market and save $20 on something you were going to buy anyway, it’s not like throwing away $5. Your free time is at your disposal as you see fit, and you are earned Your free time by working during working hours.

Compare your free time with what you could earn through work

Another way to look at this is to ask yourself what you could be doing with your time now. If you freelance like I used to do, any Hour could possibly be a working hour.

For this example, let’s say you have a side job that pays $20/hour. If you spend an hour poking around to save $12 on something you need to buy, you might as well pay the extra $12 and work that hour instead. You will come out $8 richer than when you started.

The problem with this method is that you might not want to work all the time. If you have a choice to spend money or spend time on a chore — say grocery shopping — you might be tempted to pay the delivery fee so you can buy yourself a no-obligation hour. It’s not about what job you would like to do during that time, but what you would pay if you weren’t working at all.

Add surge prices

Ultimately, the value of an hour is from actually free time is one you need to judge rather than calculate. The way I see it, I only have so many hours in the day that I’m willing to put into work (be it paid work or unpaid work, like childcare or household chores). When I’m so busy that I only have, say, two hours to myself, you just can’t pay me enough to give up one of those hours.

With that in mind, I think a more logical approach would be to variably value the hours of your day using an accrual price model. Under price increase, The more something is in demand, the more you have to pay for it. In this case, your hours are in high demand from youand any potential gain must be weighed against it.

This is what such a model would look like in practice:

  • The price of your working time is your income divided by the total number of hours you spend to earn that income (including commute time, etc.)
  • The price for a limited number of “free time” hours is the income you could earn during this period if you wanted to work. This is based on the rate you earn from your side job, which may be different than the rate you earn from your main job. (You can also calculate these hours per month or week instead of per day.)
  • The price of the remaining hours of free time is determined by you, depending on how much it would cost you to free yourself from your family and hobbies. Sky’s the limit here: if you really turned down $200 to get an extra hour of sleep on a Saturday morning, that hour’s value is over $200.

With this model she You can decide how many “free” hours are available at the price paid by your side job and how many hours are available for the price increase. If you have a stressful life or a chronic illness, this number could be zero and your time may just be “priceless.” When it comes to money, you spendthis may mean that you are happy to pay an extra $200 to get home early from vacation and have time to relax.

Of course, money decisions also depend on how much money you have to have, not just how much money you want to spend. If you just can’t afford to have your home professionally painted but have the next few weekends free, you have a choice of either spending your time painting your home or living with peeling paint. If you don’t have the money, no money comes in.

Life is complicated. Just knowing that money and time are related doesn’t mean you can always trade one for the other at a rate of your choosing. And speaking from experience as a former freelancer looking at every hour of your day through the lens of “what.” could Am I making money now?” is a quick route to burnout.

Read  How to Make a Last-Minute Presentation Deck

Leave a Comment

Your email address will not be published. Required fields are marked *