Everyone has heard the expression “time is money” but when is that really true? And even trickier – how much of one equals how much of the other?
This article is about valuing your time.
When I was getting ready to go to college, one of the many things on the list of supplies to buy was a new computer. Back then even basic computers were still relatively expensive – this was going to be a $1500 to $2000 investment, from my parents, thanks Mom and Dad!
I had my sights set on an AT&T (yep, you read that right – the telephone company) model that had a microphone in one of the speakers and could be used as a giant speakerphone. Why? I just thought that was cool. And the rest of that computer’s specs were comparable to the other 20 or so models my dad and I identified as possibilities, and I believe it was also one of the cheaper ones.
My dad and I created a giant spreadsheet with of all the possible features, different models, prices, etc. We spent literally 20 hours collecting this information, inputting the info to the spreadsheet and then analyzing the best value. In the end, we chose that AT&T model.
I was a little annoyed that we had just spent 40 man-hours to come up with the result that I already felt was the best choice.
Why?
Because time is money.
If I valued my free time and my dad’s at only $10 an hour, we just ‘spent’ $400, which is more than we would have saved even if the spreadsheet had provided some special insight.
Some other examples of time that could be better spent: Doing your own auto maintenance. Yes, you can change your own oil if you want to, but if Jiffy Lube will do it in no-time for $20, is it really worth your time and effort to do it yourself? Probably not, unless you really enjoy working on cars.
Is it worth it to mow your own lawn? Or can’t you just pay the kid down the street $10 and enjoy your weekend, or use your time in some other meaningful way, all while teaching that kid about the value of money and hard work?
Maybe $10 isn’t the right threshold, but the point is you wouldn’t work for an hour to earn or save $1. Your time is worth more than that.
Much of the personal finance culture is about cutting this to save that, and in general that’s great, because people are often wasteful and make plenty of careless choices. But don’t be so extreme that in an effort to save money you end up costing yourself a more valuable asset – time.
-DD
More to come on the Side Hustle movement.
What is your time worth to you?
Read about why you should think of your working time as an important investment
