To increase value, you need to know what your time is really worth

“Do you mow your own lawn?”

Yes.

“You’re stupid.”

Shaking my head a bit, I simply said, “Probably. Why?”

The gentleman across the table asked me what an hour of my time was worth. I didn’t know. Best I could do was mutter what felt like a reasonable hourly rate - the sort of response I would offer to a client (aside: I don’t work on an hourly basis anymore).

With a less aggressive tone, he helped me get a sense of how others value my time. After a few questions, we agreed on a reasonable hourly value of my time. Then he had me list the steps to mow and trim the lawn, including any related cleanup. We figured out mowing the lawn took four hours. Worse, I was mowing the lawn about 6 times a month (not quite twice a week).

We multiplied the value of my hour by the time to mow the lawn. The number was high. And that didn’t include the need to maintain and clean the mower, get fuel, and the like.

A few days before this conversation, I actually got a quote for $32 per mow. That included mowing, trimming, and cleanup. And with their bigger and better equipment, what took me four hours took them 30 minutes. And they did a better job.

With my newfound perspective, I called that afternoon and signed up for their lawn service. I haven’t mowed my own lawn since.

Our conversation revealed a simple, powerful point: our time has value. The more we invest our time in activities and pursuits that increase value, the more valuable it becomes.

Why does the value of your time matter?

While you can make more money, you can’t make more time.

Each day holds 24 hours. The key to success is using the time wisely. Understanding the value of an hour of your time leads to the ability to make better decisions about where and how you invest it.

Power comes from doing the right things (and doing them well), not from doing everything.

To grow your value means measuring where and how your time is spent. By tracking and considering the results, we learn what pays off, and what just wastes time. We gain insight into which tasks are better delegated or outsourced to others -- in both business and personal pursuits. With purposeful action and regular review, we align our priorities with our actions. Or we shift one or both.

A quick way to calculate the value of your time

In college I took (and aced) a micro and personal finance course. We spent a lot of time focusing on calculating value - including how to figure out what your time is really worth. I took three things away from that exercise:

1. If you truly enjoy an activity - like mowing the lawn or gardening - the intrinsic value and benefit often outweigh the strict calculation; in other words, this is guidance and does not apply to everything, especially activities you truly enjoy
2. Understanding what your time is worth is important, but the value of your time is not the value of you
3. Trying to figure it out took a spreadsheet and a lot of time; a noble exercise that was hard to repeat

Good news.

You don’t need a college course in personal finance or a complicated spreadsheet to figure out what an hour of your time is worth.

You can calculate the value of an hour of your time in just 3 steps and 1 minute or less.

Ready?

1. Take your current salary (or whatever you made last year, in gross numbers).
2. Remove the last 3 digits (hopefully zeros)
3. Divide by two

Here’s how it works out for someone making $100,000 (to keep the math easy):

1. Take your current salary: 100,000
2. Remove the last 3 digits: 100
3. Divide by two: 50

If you make $100,000 annually, then the value of your time is $50/hour.

Sometimes the first time we actually calculate the value of our time is a bit sobering. Keep in mind that we’re measuring the value of our hour, not the value of our person.

What happens when you place a value on your time?

Initially, assigning a value to an hour of your time creates an awareness. Suddenly each task is quickly evaluated to consider the time invested. Steps are counted, hours totaled, and a cost estimate assigned.

While natural, it becomes a bit maddening. Then it fades away.

The key to understanding the value of your time is knowing when to step back and consider if the investment is paying off or not.

A more extreme - but useful - approach is to conduct a time audit. There are a few methods and even some applications that help you figure out where you spend your time. The key is to capture an accurate picture of where your time goes. Then you can assign a dollar value to each of the tasks. Consider if the value invested creates the necessary returns.

Useful for individuals, time audits work equally well for teams. Usually the initial time audit is a real eye opener. It’s easy to get caught engaging in time-consuming, low-value tasks. With a desire to improve outcomes and grow value, documenting a candid snapshot of a week (especially with a team) really helps align and set priorities.

As a result of a time audit, routine analysis, or just a periodic check of activities, sometimes we realize the smart investment is to shift low-value activities to someone else. Or stop them altogether.

The real benefit of understanding the value of your time is purposefully investing it. By shedding low-value, repetitive, time-sucking tasks, you create the time and space necessary to solve problems, advance projects, and the like.

Where do you need to place focus to grow value?

By focusing your time on what produces the most value, you are able to grow what your time is worth (to others and yourself). It sets off a chain-reaction of opportunity.

It means instead of rushing to throw together a pitch for an important project, you invest the hours necessary to win the deal (internal or otherwise). If you know the value of the deal and the value of your time, it makes the decision to invest the right hours easy.

Like most things, this becomes a practice. The more you engage, purposefully, the more benefit you’ll get. Eventually, you’ll gain a better “instinct” at where to place your time.

Now that you know how, why wait?

Take a moment and figure out what your time is worth. No need to share the value - but reflect on it for a moment and let me know how the knowledge impacts you.

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