What does an hour of your time cost?
While every dollar has the same value, every hour does not. An hour at 10:00 in the morning may be of much more value as a working hour than 11:00 at night. On the other hand an hour at your child”s bedside when he is sick is worth more than an hour at the office catching up on your filing.
However, most of us recognize that an hour at work is an hour at work and if you will be there for eight or 12 hours you want those hours to be used productively so they don”t become extra hours catching up to missed deadlines or preventing you from spending time with your family.
There are two methods for determining the value of your time.
What Does an Hour Cost Your Employer?
If you work for someone you must realize that the activities you do cost the business more than just your hourly wage. You need to account for the cost of overhead and the percentage of income that you are responsible to provide for.
If you are a salaried employee you can take your salary (month or year) and add the cost of the office space, equipment or other costs as you presume them to be. Divide this number by the amount of hours you would work in an average month or year.
A month gives you approximately 20 working days. A year has about 240.
The resulting figure is what an hour costs. Now when you are deciding to do an activity you can determine if the task at hand is worth that amount of resources to the business — your time and physical resources. You might be surprised.
Don”t think your time is worth that much? Don”t base it purely on what others have valued it at — raise your value and you will reap the rewards. Work like you are paid more and you will surely stand out from the crowd. You will be more productive and waste less time. What if you cost your business $5/minute instead of $5/hour. Or $10/minute instead of $10/hour. How much would time be worth now? Would you hang around an office waiting room or stay on hold on the telephone? Or would you confirm appointments and leave messages. Raising your value will improve how you view your time and will help you spend your time productively.
What Does an Hour Cost YOU?
Are you self-employed or on contract? This makes it more imperative that you spend your time wisely in that it can have an immediate impact on your income.
How much is your time worth (billing hour)? Now create a list of activities that are not directly related to creating income such as bookkeeping, website maintenance, cleaning etc. Based on the previous month, how many hours were spent doing each task?
If you bill $30/hour for your service and you spend 15 hours per month maintaining your website it has cost you $450 that month. It may also have cost you 15 more hours away from your family and friends or impeded on actual production time. If having an up-to-date website is crucial to your business (but is not the actual business) then perhaps you would do better to pay someone to maintain it for you. It will give you more time for important tasks and may be accomplished in less time if the person is more skilled than yourself.
The Value of Your Time – Beyond Money
Time management goes beyond knowing the monetary value of your time — your personal time also has value.
Unlike money, each hour of your day does not have the same value. You cannot always use money or profits as a factor when determining how much your time is worth. Your life is made up of people, interests and caring for yourself and others. Basing your time merely on the amount of money you will make or save is missing the big picture.
Have you ever heard someone answer the question “if you had 6 months to live, what would you do” with the answer “make more money”? Unless they had nagging financial concerns about their family most people would acknowledge that time spent bettering oneself, spent with family and showing interest in others has greater value.
When your child has a school event he wants you to attend or you haven”t spent one evening all week to rest up and relax you need to determine the value of your time in the context of living a productive life — not just making money.
Working For Yourself — Drawing the Line
If you are self-employed or tend to take a lot of work home with you it is important to ask yourself if the time you spend on certain tasks is worth the sacrifice of time doing other things.
While it can be difficult to make decisions for how you use your time when you feel the pressure to perform many tasks, it”s not impossible. Take the time to assess your goals and make decisions that reflect them.
While being reliable is important you may find new strategies that make better use of your time. You can identify areas where you should be delegating instead of doing things yourself. You might try reorganizing your day so your schedule includes the most important tasks you need to accomplish while fitting less important tasks around it.
Taking the time to understand the value of your time now is going to save you frustration in the future.