How to Calculate the Actual Value of Your Time, No Matter the Profession

If you own a home, I would presume you know how much your home is worth.

If you have a bank account, I would presume you know how much money is in the account.

If you have credit card debt, I would presume you know the amount of debt you owe.

Why, then, do most people not know the value of their time?

After all, time is the single most valuable of the Big 3 Assets — Health, Money, and Time.

We can always make more money, we can always live a healthier lifestyle, but we can never create more time.

In fact, time is the one area where essentially everyone in the world, regardless of circumstance, can compete on a leveled playing field. We all have the same amount of hours in a day as Prince William, Lady Gaga, LeBron James, and J. K. Rowling.

Unlike William, Gaga, James and Rowling, however, you're probably a "knowledge worker," which means your profession requires you to "think for a living." This includes virtually every white-collar job under the sun, such as engineers, physicians, architects, designers, accountants, lawyers, marketers, writers, academics, and even students.

In other words, most of us exchange our time (in the form of knowledge and experience) for someone else's money. Imagine if you were on the other side of this equation; imagine if you were the one paying someone for their time, yet you had no clue how much your money is worth. Would you just write people a blank check and tell them:

You decide!

Because, frankly, this is what most people do: They show up to work and allow their employer to decide what their time is worth.

Even for people who chose their salary, most of them don't choose the amount of hours they work, which decreases the value of their relative income. And, vice versa: For people who choose the amount of hours they work, they likely don't choose their salary — which, again, decreases their relative income.

Relative Income and Absolute Income

Relative income is the amount of money you earn, relative to the amount of hours you invest in earning this income. On paper, a knowledge worker might earn $120,000 per year — her absolute income — but when you consider she only receives 20 days of paid vacation and holidays per year, and she must work 60 hours per week (including her commute) to earn this income, her time is worth around $40 per hour (before taxes).

Just a bit less impressive than Donald Trump's qualifications to be President of the United States.

If you were the knowledge worker above, would you have accepted this job if the employer told you:

We're going to pay you around $40 per hour before taxes, for 60 hours per week, including your commute, as well as 20 days of paid vacation and holidays per year.

Since most people don't know the true value of their time, they accept "high-paying" jobs which take up a significant percentage of their days, causing them to sacrifice other areas of their life (sleep, social activities, hobbies, et cetera).

That's why my team and I created the "What is my time worth?" Calculator, so you can accurately measure the value of your time.

The calculator works as follows:

1. It takes 260 work days per year (52 weeks times 5 days per week) and subtracts your total paid vacation days (including paid holidays).
2. Then, it multiplies this number by the number of hours per day you work on average.
3. Finally, it divides this number into your total yearly income (before taxes).

Give it a try >>

Note: The "What is my time worth?" Calculator purposely excludes benefits you might receive from your organization, because only cash is useful in the situations it pays to know the value of your time, such as:

Spending money to "buy back time"

Once you know the value of your time, you can make more better economic decisions, including but not limited to:

Cleaning your home versus hiring someone to do it for you

Let’s say it takes you two hours to clean your home, and your time is worth $75 per hour. Let’s also say it will cost you $100 to hire someone to do it for you. Since you’ll save $150 worth of your time, while spending $100, it pays to hire this someone.

Doing your laundry versus outsourcing it to a laundry service

Let’s say it takes you 90 minutes to do laundry, and your time is worth $45 per hour. Let’s also say it will cost you $45 to outsource it to a laundry service, including pick-up and delivery. Since you’ll save $67.50 worth of your time, while spending $45, it pays to outsource your laundry.

Cooking your own meals versus buying them from a meal preparation service

Let’s say it takes you three hours to prepare three meals (including shopping for the food), and your time is worth $25 per hour. Let’s also say it will cost you $13 per meal to use a meal-preparation service. Since you’ll save $75 worth of your time, while spending $39 for three meals, it pays to use such a service.

Using a ride-sharing service (e.g. Uber) to arrive somewhere sooner versus using a slower form of transportation (e.g. bus, train, bicycle)

Let’s say a ride-sharing service will save you 25 minutes in each direction, for a total of 50 minutes, and your time is worth $17.50 per hour. Let’s also say it will cost you $30 for this roundtrip. In this case, it doesn’t pay to use the service, since you’ll save $14.50 worth of your time, but you’ll spend $30 for the roundtrip.

Working "overtime"

Sometimes an employer asks employees to work "overtime," which I put in quotes because many people do not receive extra pay for extra work. No more.

When you know the value of your time, you can accurately ask for extra pay, presuming you've super-charged your time management (you're already getting more done in less time) and productivity (you're consistently completing higher-quality levels of work).

Simply put: A staunchly time-efficient and productive employee is worth more to an employer — and has greater leverage — than one who is, at best, inconsistently time-efficient and productive. By becoming noticeably more time-efficient and productive, you merit more respect and appreciation within your workplace, you become worthy of extra pay when you're asked to complete extra work.

Either way, it starts with knowing the value of your time, which you can determine here >>