Comments on: Your time’s worth HOW much?

By: Shawn Chong

Shawn Chong — Mon, 31 Dec 2007 03:45:18 +0000

I totally agree with the above analysis. Time is MUCH more valuable than money. “Time is money” is such a ridiculous saying; it makes young people all over the world think of their lives in terms of hourly wages! Don’t we all realize that calculating someone’s worth based on hourly work was invented by capitalists?! They use this tool to enslave their fellow person and have done well by it. So… I refuse to put a dollar worth on my time!

By: Taylor

Taylor — Sun, 30 Dec 2007 17:05:54 +0000

You’re actually supposed to divide by 2000, not 4000.

(40 hr/week x 50 weeks/yr = 2000)

By: Honest Dollar

Honest Dollar — Sun, 30 Dec 2007 01:36:01 +0000

Actually, the assumption that time equals money is not only a good one, but one critical to economics, finance, and investing. The idea behind the ubiquitous phrase “time value of money” is why interest rates are charged on debt, why coupons are paid on bonds, and why savings accounts beats out burying money in the backyard. Simply put, $1 today is worth more than $1 tomorrow, and worth even more than $1 a year from now.

Of course, when you’re talking about critical moments in life, there are other factors that may increase the value of your time. However, from a basic economic perspective, time is money.

By: Chris

Chris — Sat, 29 Dec 2007 20:13:32 +0000

I’ve done a seat of the pants calculation like this for years. But I consider another factor. Do I get some pleasure out of the money saving activity or is it something I find to be drudgery? I enjoy walking to run errands or to someone’s house nearby. I chat with the neighbors, notice the birds and who is doing what to their house etc. So I don’t need to save as much as if I’m doing something that I don’t enjoy – like cutting out coupons. And I mostly calculate my worth based on how willing I’d be to give up free time to earn more rather than what I actually make. When my son was young and time was quite tight, I might need to save more even though money was tighter then and I made less – because I knew he’d only be a child for a short time and I’d never regain that time.

Some things don’t take a lot of time and save enormous amounts of money – like calling around to get a lower mortgage rate. You’ll save tens of thousands of dollars for a few hours time – even if it is something you don’t enjoy. Well worth it. When evaluating money saving strategies I would make a three column chart with headings for time involved, savings involved, and pleasure/displeasure of the activity. Punny Money is right, time isn’t infinite.

By: Mrs. Micah

Mrs. Micah — Sat, 29 Dec 2007 18:45:40 +0000

I think the value of my time would have a lot to do with what I was doing. For example, leisure time is highly valuable (like Nick pointed out about overtime). But I also don’t sell it, unless it’s for a high sum. I might pay a smaller amount to keep it when I don’t have a choice that the thing needs to be done (like groceries).

I do give it away to friends, family, bloggers. But that’s ok.

By: mbhunter

mbhunter — Sat, 29 Dec 2007 04:54:41 +0000

@Sam: Interesting point, but with something like cable TV I’m paying for the right to watch the cable channels. I can make one hour watched per month cost $30.00, or one hundred hours cost $0.30 each. How much I watch is up to me.

@Punny: Well hey, I’m glad I came up to DC when Nickel was in town. That was some pretty expensive time of yours I was taking advantage of. You got Jim for less, and you got me at a bargain. (But then again, I’m the Mighty Bargain Hunter, so it’s a propos.) I can kinda sorta see where you’re coming from, but if you work overtime typing up some TPS reports on Saturday and you earn 1.5 X for your time, how does that increase the value of your time per hour? Benefits, yes, I forgot those. Overtime, yes, I forgot that. But you’re working longer hours for more money, which means your rate per hour should go up only incrementally. $_overtime goes up substantially above $_regular, but d$/dt is small when you’re working overtime. (And there you have it — the first PERL-like comment in a personal finance blog!)

By: Punny Money

Punny Money — Sat, 29 Dec 2007 04:15:40 +0000

I’ll offer the opinion that you’re both waaaay undervaluing your time. When I compute the value of my free time, I use my fully-loaded hourly wage equivalent which includes an estimate for company-paid benefits and other extras. Then I either multiply that figure by 1.5 or even 2 since anything beyond my 40-hour work week is MY time, and if someone wants me to do work during it (or wastes my time), then it’s OVERTIME. So while my basic hourly wage is X, I value my time at roughly 2.5 times X.

Sure, I may not get 2.5 times X for my free time from anyone (I sure don’t get it blogging), and I certainly don’t charge friends 2.5 times X to help them move furniture or paint a house. But if someone, say, screws up some paperwork and I have to spend an hour of my time straightening it out, you better believe that in the back of my mind, I feel they owe me 2.5 times X.

If life was infinite or much, much longer than it is, I might understand using your base hourly wage or even half of it for the value of your time. But as long as people are only living 70-100 years max, I’ll value every second like it’s worth a million bucks. Or at least a few cents.

By: Sam

Sam — Sat, 29 Dec 2007 03:59:56 +0000

I think Jim did it right the first time. Think of it this way, when you buy insurance for your car, you don’t tell the insurance company to bill you only for the drive time you use your car so if you’re paying money for something that you are not using then inversely, the non-working non-earning hours you worked have to be calculated on the same basis as you earn.

If you have cable TV, you don’t pay only for the view time.
If you have cell phone, you typically don’t pay for only use time (unless it’s prepaid cellular).
If you have a mortgage, you don’t pay only for the time you live in the house, you pay the full mortgage.

So, technically, while you don’t get paid for the non-working hours you work, they do have the same VALUE as the working hours just like your cell phone, mortgage, car insurance, cable TV, etc.