In one sense the value of time cannot be measured. After all, your time in this life is the one thing that makes all other things of value possible. But is is also true that you must trade your time for things of value. This is what you do when you go to work to pay the bills. You trade five hours of time working for a month’s worth of electricity, for example (unless you use very little electricity or make a lot of money per hour at work.
Why is it important to measure your time according to the money you can earn with it? Here is one reason: If you can work an extra hour and make enough to pay somebody for some task that would have taken you two hours to do, you just freed up an hour to spend with your kids, read a good book or do whatever is of value to you. The following excerpt from my ebook, Money Saving Secrets will make this a bit clearer.
Know the Value of Your Time
In the end, time is the ultimate limit to what you can do in this world. In that sense, your time is your most valuable asset. However, to make that idea meaningful when it comes to anything involving money, you have to understand the dollar value of your time. Knowing what your time is worth lets you make the right economic decisions.
For example, a few years ago my wife and I went to South America for six weeks. We lived in Michigan at the time, and the tickets were fairly expensive when we checked. However, by playing around with the online ticket sites we noticed that they were very cheap if we left from Miami.
We realized that we could take a bus to Miami, pay for a taxi ride to the airport, and return the same way, for a savings of about $400. I should mention that I could take time from whatever jobs I had as needed, and we considered a two-day bus ride more of an adventure than an ordeal.
How do you make a decision like this? We chose the bus, by the way, and the whole six-week trip cost us a total of $2,200 for everything (and only that much because we had $200 stolen). My reasoning went like this: it cost 3 days extra time, and at that time, I couldn’t make more than about $300 in that amount of time, so it made sense to trade the time for a $400 savings.
Today, we wouldn’t even consider doing it again. Our standards of comfort have changed, but more importantly, I can make more than $400 if I sit at my computer here and work on the next project for three days. The point is that your time has value, and you have to consider that when making decisions about saving money.
If you make $25 per hour at work, should you spend an hour to mow your lawn, just to save the $15 that a neighborhood kid charges for the job? Not unless you really enjoy hard labor. It would make more sense to stay at work for an extra hour if you can. You’ll be $10 further ahead AND have the lawn mowed.
On the other hand, if you work for $10 per hour, and you can fix your broken toilet yourself in two hours, why pay $65 for a plumber? You’d even be better off taking off from work early to get the repairs done.
Some more examples:
– If you make $100,000 per year, you should never waste time clipping coupons.
– If you make minimum wage, you should probably take grocery bags to the store for the 5-cent credit they give you.
– If you make millions per year, you probably shouldn’t take the time to save money on anything that cost less than $100.
– If you are homeless, you should go to Sam’s Club on free sample day.
This is an easy principle to understand, but how often do we think this way consistently? What is your time worth? Put a number on it.
Suppose you just got your auto insurance bill. Should just pay it, or should you spend an hour and a half to call different insurance companies in order to find a less expensive policy? First answer two questions.
1. How much money can you normally produce with that time?
2. How much are you likely to save by doing this?
If the answer to number 1 is higher than number 2, just pay the bill and forget about it.
Of course you have to guess at these things. You can’t always know beforehand how much you will save. The point isn’t to waste even more time analyzing everything to death. The point is to understand and apply the principle involved. Once you consciously think this way for a while, you will develop an intuitive grasp of when – and when not – to trade time for money savings.
Am I am telling you not to use everything that you read in this book? Exactly. Use what works for you. Saving money is not an end in itself. When it serves the purpose of bettering your life, do it. Otherwise, why bother? The value of time is a personal matter and a personal decision.