Personal Finance

What Is Your Time Really Worth?

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We are all busy. Everyone is looking to save both time and money. The big question is when it’s worth it to swap one for the other.

A few years ago, I found myself very busy at work. During my precious hours at home I wanted to be able to relax. While I had always enjoyed the satisfaction of cleaning, it was starting to become a hated chore. So I found a cleaning company to come to my apartment once a month. At first I thought it was great — after working my four eight-hour shifts over two days I loved coming home to see the carpet freshly vacuumed and the bathroom sparkling. But soon I began to resent the money I was spending.

I had to spend time de-cluttering before the cleaners came and often found myself re-cleaning areas not done to my (admittedly neurotic) standards. I wasn’t spending my added time with friends or sleeping — I was mostly watching mindless TV on the couch. Plus, it turns out vacuuming can be a good stress-reliever that I was actually missing. I resumed cleaning my apartment and used the money savings to fund a future weekend getaway. The added bonus was I had something to look forward to and dream about during those long work shifts!

Some people consider it a huge waste of money to pay someone to clean your home when you could do it yourself. Others feel the time they gain to spend on family, friends, work or hobbies makes the expense worth it. For me, it wasn’t worth it. But for someone else, it might be.

What’s Your Time Worth? One Method

The average adult earns $42,700 per year. That’s about $21 an hour if you crunch the numbers. Depending on where you live, your education and your profession, you may make more or less. So, one way to figure out whether a convenience is worth it is to calculate your hourly wage and price out the cost of doing certain activities. Now, assume that’s what your time is worth (after all that’s what you are valuing your time at by accepting that salary).

When a Bargain Is a Bargain

Be sure to factor in the value of your time when assessing whether something is a bargain. For example, people often try to find the cheapest gas station to fill up their tank. But sometimes it’s just not worth it.

Consider that a gas station close to your house is charging 15 cents less per gallon than one 10 minutes away. If you have a 15-gallon tank you are saving $2.25. But you also spent 20 minutes — and some gas — driving to and from the gas station. If your time is valued at $21 per hour, 20 minutes is worth $7. That easily erases the $2.25 in savings. In fact, it’s as if you are paying 31 cents more per gallon than you would at the closer gas station (this example also assumes you could be earning instead of going to the gas station).

A bargain should be where you think you are getting a good deal even when you consider what your time is worth. So it might be worth it to go to that gas station if it is on the way to or from work or if you have other errands in the area.

The important thing is to consider all of the factors that go into the cost of an item, including your time. Not all efforts to save money are created equal. You have to figure out which ones are worth it to you…and when it’s time to pick that vacuum cleaner back up.

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Image: iStock

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