3 Questions to Consider when Valuing Your Time has been published on Minimalist Finance
You know what they say: Time is Money. This is a completely true adage, especially if you get good at your business. Many efficient and effective business owners could end up making thousands of dollars an hour with their time, if they could free it up to do more effective activities.
The problem is, many people don’t know how to value their time. Undervaluing your time could put you in a hamster wheel, or on a treadmill, where you are never making enough money or spinning your wheels doing something ineffective.
Everybody should have a number – ie “My time is valued at this much per hour” that they can have in the back of their heads when considering a proposal or even just an activity.
Here are three tips to help you value your time:
Level of Expertise
If you are in a expertise based business or field, then the level of your expertise will play a role in determining your time value.
If you’ve built a business around an expertise, and your clients are paying to get your consultancy on the subject matter but you just started learning about it, your time is not as valuable as the people who have learned and worked in the field for 20 years.
What is Your Point of Savings?
A great time value exercise is to consider this:
If you were at the store buying something for $50, and there was the exact same item across town (a 30 minute drive away) for $7, would you go buy it from that store instead? Gas would cost you $3, meaning your savings would be $4.
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If you said yes, you value your time currently at $8/hour.
If you said no, I suggest you continue to increase the amount of savings (try $20, etc) until you find a number where you would go get it from the cheaper store despite the time to drive to the store.
It Can Always Increase
Your time value can always increase, even if you start lower. Sure, you may only value your time at $20/hour right now, because you haven’t established yourself in your field or you really can’t be picky with how you make or save money. But that doesn’t mean it will always be this way.