$300/hour - Money Value of Time

You're familiar with one of the fundamentals of finance right - the time value of money? The time value of money (TVM) is the concept that a sum of money is worth more now than the same sum will be at a future date due to its?earnings potential?in the interim. It's often tied at the hip with the phenomenon known as compound interest; the 8th wonder of the world. Well, it's cool and I make a lot of my money decisions through that lens, but I wanna flip it on you. Instead of the time value of money, today I want to talk about the money value of time.

I use THIS concept to determine the value of nearly every action. Let's take for example cutting my lawn. This takes me an hour to do and I hate it. It's not therapeutic for me, I don't care how sAtisfYinG it looks, and frankly, I'd replace it all with turf if my wife would let me. Therefore, I pay someone to cut it. I pay someone to do it for me because the money value of time exchange is quite favorable. Instead of spending an hour of my time doing something I dislike, I can pay someone $40 to do a better job than me.

The same thing goes for my taxes, I can pay my CPA to do a better job with fewer errors for a cheaper rate than if I did it myself. If you've never personally grappled with this money value of time concept, you might now be thinking, "What do you mean by a cheaper rate? If you do it yourself, it's free or maybe like $40 to do it with TurboTax." To that, I'd say, yes you're right but you're also wrong. You're wrong because my self-assigned hourly rate is $300/hour. This isn't to say that I pay myself $300/hour. I just believe that when in my lane, I can easily drive $300/hour worth of value. With this logic, paying someone to cut my grass netted me a +$260 value exchange.

Gosh, look, I know how ridiculous this sounds, but hear me out. This is not an arrogant thing and it's not a delusion of grandeur - it's a defense mechanism. It's a protection measure against me doing low-value or life-sucking tasks. When I stick to things I'm good at, I can drive value far beyond the $40/hour.

This comes naturally to most business people, but sometimes I come across people that do not think about their work, their life, or their business in this way. I talk to a lot of business owners; probably 10 a week. When I visit with a business that wants to hire us for IT or Cybersecurity support, the first thing I check is their attitude. I can quickly figure out if the business owner is the kind who tries to save money or cut corners by doing everything themselves, or if they value the importance of hiring experts and doing things the right way. Those who get it, win and the ones that don't, don't. I'm not immune though. I still struggle with this, which is why I'm writing about it. It drives adherence because now I have social pressure from the 6 of you that actually read this. *Hi mom*

This trait is the single biggest indicator of a successful professional relationship for me. Take this example, you're an entrepreneur that owns your building. It's dirty, so you could spend your whole Thursday pressure washing your parking lot and your building, OR you could pay a professional $1,000 and get a better outcome while still driving value for your business. If you apply the $300/hour concept, your little pressure washing escapade just squandered $2,400 of potential value delivered to your business.

Now I know this is just a framework so please don't send me mean DMs explaining how my worldview is warped. I already know and I don't need that kind of negative energy. I also know that this framework has worked for 100% of the people around me that have applied it so maybe you can apply it in your world and let me know how it goes.