What is the value of your time?

 

Time is money. An old proverb that tells us we are wasting our time when we are idle because we could be using that time to earn more money.

Yes, time is our most precious resource. Yet, time is not equal to money. Time is much more valuable than money.

Talk to a person who is terminally ill and ask them which is more valuable to them – time or money? I can almost bet, without a doubt, they would value time with friends and family more than any amount of money.

Need a reminder of how precious your own time is? The Death Test is a little quiz that will tell you at what age you will die. Obviously this is a guess at your life expectancy according to your current age and health. Some may find this to be a bit morbid, but it is a good reminder that our time is finite and we should cherish what we have left.

We trade our time for money

Money is an abstract concept. In a physical sense, a dollar bill is simply just a piece of paper with no value. You can’t really do anything with a dollar bill except trade it for something else. You can’t eat it or use it as shelter. Money is a simply a unit of measurement and a medium of exchange.

Looking at it this way, it’s easy to see why we tend to separate our money from the actual time spent earning it.

Many of us work the good ol’ 9 to 5, complete with commute, which consumes a good deal of our precious time. We then proceed to spend this hard earned money on cars, houses, clothes, restaurants, or whatever it is that we spend money on.

When we buy that dinner out, we don’t tend to think about how many hours of our life we had to trade to pay for that dinner out.

I didn’t used to think about it either, but when I did, it changed the way I spent money. I spent less on clothes. My husband and I evaluated how often we purchased new cars (too often!). We stopped going out so much. But we did continue to spend money to travel each summer with our kids because it was worth the exchange of time.

In Your Money or Your Life by Joe Dominguez and Vicki Robin, the authors bluntly state,

All our false notions about money thus far have one common flaw – they all identify money as something external to ourselves. It is something we all too often don’t have, which we struggle to get, and on which we pin our hopes of power, happiness, security, acceptance, success, fulfillment, achievement and personal worth. Money is the master and we are the slaves.”

The authors provide a formula in the book for figuring your true hourly wage. The true hourly wage takes into consideration how much time and money one spends to keep up their work life – commuting, clothing, food, and other expenses related to decompressing after a long day at work. The true hourly wage ends up being much less than the amount of money earned per hour.

The important take away here is to make that connection between your money and your time. Studies have shown that those who value their time more than their money had higher levels of happiness in life.

What is your time worth?

 Stop making money an abstract concept in your life and start relating it to the value of your “life energy”. When you make a purchase, ask yourself how many hours you had to work to buy the items you’re purchasing.

If you make $50,000/year and you buy a $40,000 car, is it worth working almost an entire year to buy that car? If you make $15/hour, is it worth working four hours to buy that new pair of jeans?

I’m not passing judgement here. You have to make choices according to how you value your time. If you feel it is worth working the amount of time necessary to make your purchase, then go for it – you are spending according to your values.

If you find it difficult to calculate purchases relative to hours worked, try using all cash instead of plastic when you make purchases. When you get to the checkout counter with that pair of jeans and count out your cash on the counter, take a look at the jeans and then take a look at the pile of cash. Ask yourself if it’s worth it to trade that pile of cash for those jeans.

Another method is to take something that you absolutely love and compare the cost to what you are considering as a purchase. Let’s say you absolutely love traveling. You are considering buying a newer, more expensive house. Figure up how many vacations you could take with the additional money you would be plunking down on that new house.

Respect the time you have left in this life by making that connection between your spending and your precious time. Ask yourself, “Is it worth it?”.

How do you “spend” your time?

 

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