How to calculate how much money your spare time is worth

Image of the article entitled How to Calculate How Much Your Free Time Is Worth

picture: Anthonydiaz (stock struggle)

Time is money, or so they say. but how much is it for you Is the time really worth it? When you’re deciding what you’ll be doing in your spare time, it can be helpful to put a price tag on it to determine what trade-offs you’re really making.

Find out what your working hours are worth

The traditional way to put a dollar value on your time is to think of how much money you earn each year, and divide it by the number of hours it takes you to earn that money. If you want to go into the details of this account, James Clear wrote about it for Lifehacker in 2015. He advises you to think All The hours you spend striving to make money, including commute time and time to leave for daycare. Then, simply divide your income by the total number of hours you have calculated. (He says most people spend about 2,500 hours a year in a full-time job.)

By this calculation, if you were making $62,455 a year (the median income for men in the US when he wrote that article), your time equals $24.98 an hour. So you will waste your time if you spend an hour trying to earn or save anything under $25. And this is a useful math when it comes to comparing jobs: if you’re looking for a job that pays more than your current job but takes a long time to navigate, for example, it might not be worth switching.

But I don’t think this is the right way to look at your free time. If you spend an hour shopping at a flea market and save $20 on something you would have bought anyway, it’s not like you’re throwing away five dollars. Your free time is your free time to use as you see fit, and you really are happened Your free time by working during working hours.

Compare your free time with what you can earn by working

Another way to look at this is to ask yourself what you could do with your time right now. If you are self-employed, as I used to, Which The working hour is likely to be a working hour.

In this example, let’s say you have a side business that pays $20 an hour. If you’re going to spend an hour shopping to save $12 on something you need to buy, you can also pay an extra $12 and spend that hour working instead. You’ll come out $8 richer than you started with.

The problem with this method is that you probably don’t. Wants to work all the time. If you have a choice between spending money or spending time doing a chore — let’s say grocery shopping — you may be tempted to pay delivery fees so you can buy a watch with no obligations. It’s not about what job you’d like to work at during that time, but rather what you’ll pay for not working at all.

Add surprise pricing

In the end, the value of an hour Actually free time She is one that you need to judge, not count. The way I see it, I only have so many hours in the day that I’m willing to use at work (whether that’s paid work or unpaid work, like childcare or household chores). If I’m so busy that I only have two hours left, for example, you simply can’t pay me enough to give up one of those hours.

In that sense, I think the most sensible approach is to variably evaluate the hours of your day using the boom pricing model. Under sudden pricing, The more demand for something, the more you pay for it. In this case, the demand for your working hours increases by youand any potential gain must be weighed against it.

Here’s what such a model would look like in practice:

  • The price of your working hours It is your income divided by the total number of hours you spend to earn that income (including commute time, etc.)
  • Price for a limited number of “free time” hours It is the income that you can earn during that period if you are interested in working. This depends on the rate you get for your side hustle, which may be a different rate than what you earn in your day job. (Feel free to count these hours by month or week rather than by day.)
  • The price of any remaining hours of free time is determined by you, depending on how long it will take to get you away from your family and your hobbies. Sky’s cap is here: If you want to really cut $200 to be able to sleep in an extra hour on a Saturday morning, that hour is worth over $200.

Using this form, You are Decide how many “free time” hours are available at the price your side hustle pays, and how many hours are available to price the hike. If your life is stressful or you suffer from a chronic illness, this number may be zero, and your time may simply be ‘unpurchasable’. When it comes to money you spendThis could mean you’d gladly pay an extra $200 to get home from your vacation early to have time to de-stress.

Of course, monetary decisions also depend on how much money you get You haveAnd not just how much money you want to spend. If you can’t afford to paint your house professionally, but you have the next weekend for free, your choices are to either spend your time painting your house or live with peeling paint. When you don’t have money, money doesn’t get into it.

Life is complicated. Just knowing that money and time are linked doesn’t mean you can always exchange one for the other at a price of your choosing. And speaking from experience as a former freelancer, looking at every hour of your day through the lens of “what could I earn now? “A quick way to get tired.

Leave a Comment