What Is Your Time Worth?
I find myself wondering sometimes if I should be paying someone to do something that I typically do on my own. Others may completely be on the other side of the fence, wondering to themselves, “Why do I pay people to do things when I could easily do them myself?” This is a post about quality of life as much as it is about financial management.
First off, let’s calculate what our time is worth. Now, you might feel as though your time is more valuable than what you’re compensated for at work, but for the sake of ease and argument, let's start with your approximate hourly income as a baseline. Let’s say you’re a software engineer, 10 years out of college, making a solid $85,000 a year. Your name is Steve. Steve Gates. A good figure for the number of hours one works in a year is roughly 2000. Certain (Many) fields work in excess of 40 hours per week, but let’s just go with 40 for now.
Steve, the middle aged engineer, got lucky and only puts in 8 hours a day, 5 days a week. So he makes 42.50 per hour (gross). Not bad. But Steve Gates is alive for 168 hours a week. So let’s divide what he makes not by how much he works, but what he receives to live his life on, per hour. Since he makes 42.50$/hr * 40hr = 1700$ a week, and 1700$/168hr = 10.11$/hr, he makes that much every hour of his life, averaged out between time spent working and time spent doing other things (sleeping, cooking, eating, kicking ass, taking names). $10.11 is what his time is worth, according to his salary at work. Any activity he performs, he should be asking himself if he could pay someone else $10.11 or less per hour to perform the task for him. Instantly several things come to mind –cooking and cleaning. Just what does it cost to have a maid come and keep your place clean, every day, so that you never have to worry about it? What kind of time investment does Steve Gates need to make each week or each day in order to justify and offset that incurred cost?
When you begin monitoring exactly how much time each week you spend cooking and cleaning, the numbers add up fast. I took a stopwatch and did it myself for 7 days. The results of my experiment are below.
A total of almost 14 hours of those activities combined. What if I could gain those 13.5 hours spent cooking and cleaning, and spend them doing other things? What would that be worth to me? Based on my personal average, one will assume a normal human could easily allocate about 2 hours a day to cooking and cleaning, so I feel my average is reasonable (if you’re making 3 meals a day, and not going out to eat). That’ a whole lot of time! Would it be possible for me to pay someone else $20.22 every day, to cook and to clean for me? That doesn't sound unreasonable.
A maid service in my area costs 20 dollars an hour (based on my proximity to the border, they could be had for much less if you pay cash and don’t ask questions, but let’s stay legit here). Typically maids don’t want to go somewhere every day for a short period of time, it simply isn’t economical. So they stop by your house once a week for 4 hours. 80 dollars a week to never have to clean again . Perhaps even less if you live alone. If you don’t live alone, say you have 3 roommates, each of them pays 20 dollars a week to never have to do dishes, sweep, mop, dust, wipe, scrub, or vacuum. If you happen to be their landlord, just include it in the cost of the rent.
So the cleaning one seems like a no brainer to me. What do you do with the extra time? Improve your quality of life by giving time to something you love. Use the time to learn new skills for your job! You will undoubtedly find that allocating an extra hour a day to learn a new skill will pay for the 80 dollars a week in a short amount of time. The hungry employee gets the worm, or some such nonsense.
Cooking is another time sinkhole that I have thought about. Paying a chef to come to your house to cook for 10 dollars an hour probably isn’t practical. But paying him 50‐75 bucks to come to your house on Sunday afternoon for 2‐3 hours, and prep lunches for work the next week sounds much more reasonable. This also benefits you by saving money that you would spend eating at restaurants or fast food for lunch at work –it could pay for itself. Find out where a local advanced culinary class is taking place, and post a flyer saying you want a chef for a few hours a week. Give them freedom to make you whatever they want, and you’ll compensate them for their time and pay for necessary resources.
There is certainly a limit to this, of course. Skills, tools, and resources put a damper on your ability to perform certain tasks. I’m a mechanic and fix my own cars. Given a problem and time, I could repair or replace just about any component on any vehicle so long as it doesn’t involve extreme frame damage. Not everyone has the skill and resources to do the same, so an important consideration is how long it would take to learn. Another consideration is the capital investment required for the practice, such as tools, a space to work on a car, and the busted cars themselves. By the logic presented in this article, you would have to be a CEO making a $300,000 a year to justify paying some dude $150/ hr to fix your Audi instead of doing it yourself . Certain tasks simply aren’t practical, and although I would highly recommend learning a money saving skill like fixing your own cars or doing your own plumbing, for some people, it’s just not the right move.
So what is your time worth? What should you be paying someone to do that you do yourself? If you’re independently employed, this could include hiring a secretary to keep track of paperwork and expenses, following up with clients, confirming appointments, and making sure you don’t forget to put your pants on before you go to an important meeting. If you’re in the middle class, consider opening up free time by paying someone to clean. Toy with the idea of paying a chef to prep you some meals for the week –it keeps you healthier and wealthier to have meals to take to work instead of going out. An important consideration here is that you’re spending money, not making it, when you shift what you do yourself to what you pay someone to do. For this concept to be financially savvy, you need to be using at least some of this new found free time to allocate to finding a way to save in other areas or to earn more overall. The idea is to put the monotonous activities on autopilot and never stress about them. Find someone to do the job for you. Your only worry is cutting a check at the end of the week or month with a smile on your face. Cutting checks is one of a financial guru’s favorite pastimes. Remember, you've got to spend money to make money!