How to calculate how much your free time is worth

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Time is money, or so they say. But how much is it your is it really worth the time? When you are deciding what to do with your free time, it can be helpful to price it to determine what trade-offs you are really making.

Find out how much your working hours are worth

The traditional way to put dollar value on your time is to consider how much money you make each year and divide it by how many hours it takes to make that money. If you want to go into the details of this calculation, James Clear wrote about it for Lifehacker in 2015. He advises you to consider everything the hours you spend searching for income, including your daily commute and the delivery time of daycare. Then, simply divide your income by the total number of hours you have counted. (Most people, he says, spend around 2,500 hours a year on full-time jobs.)

Based on this math, if you earn $ 62,455 per year (the median income for men in the United States when he wrote that piece), your time is worth $ 24.98 per hour. So you would be wasting time if you spent an hour trying to make or save anything less than $ 25. And this is a useful calculation when it comes to comparing jobs: if you are looking at a job that pays more than it currently does but has a long way to go. , for example, it might not be worth changing.

But I don’t think that’s the right way to look at your free time. If you spend an hour shopping at a flea market and save $ 20 on something you would have bought anyway, it’s not like you’re wasting five dollars. Your free time is yours to use as you see fit, and you already earned your free time by working during working hours.

Compare your free time with what you could earn working

Another way to look at this is to ask yourself what you could do with your time right now. If you do a freelance job, like I used to do, whatever the hour could potentially be one hour of work.

In this example, let’s assume you have a side hustle that pays $ 20 / hour. If you had to spend an hour shopping to save $ 12 on something you need to buy, you might as well pay the extra $ 12 and spend that hour working instead. You’ll make $ 8 richer than you started.

The problem with this method is that maybe you don’t want to work all the time. If you have the choice between spending money or spending time doing a chore, say grocery shopping, you might be inclined to pay the delivery costs so you can earn an hour without obligations. It’s not about what job you would like to work during that time, but rather how much you would pay for not working at all.

Add a price increase

Ultimately, an hour’s worth of actually free time it is one you must judge rather than calculate. The way I see it, I only have so many hours a day that I’m willing to use for work (whether it’s paid or unpaid work, such as childcare or housework). If I’m so busy that I only have, say, two hours left to myself, you simply can’t pay me enough to give up one of those hours.

In this sense, I think a more logical approach would be to variably rate the hours of your day using a price increase model. In conditions of rising prices, the more there is demand for something, the more you have to pay for it. In this case, your hours are in great demand at your placeand any potential gains must be offset.

Here’s what such a model would look like in practice:

  • The price of your working hours is your income divided by the total number of hours you spend earning that income (including commuting time, etc.)
  • The price of a limited number of hours of “free time”. is the income you could earn in that period if you were interested in working. This is based on the rate you get from your side hustle, which may be a different rate than what you earn from your daily work. (Feel free to calculate these hours per month or week instead of per day.)
  • The price of the remaining hours of free time is set by you, depending on how long it would take to get away from your family and hobbies. Sky is the limit here: if you really want to turn down $ 200 to be able to sleep an extra hour on Saturday mornings, that hour’s value is over $ 200.

Using this model, you you can decide how many hours of “free time” are available at the rate paid by your side hustle and how many hours are available for the price increase. If you have a stressful life or a chronic illness, that number may be zero and your time may simply be “not available”. When it comes to money you Spendthis could mean that you will gladly pay the extra $ 200 to get home early from vacation and have time to decompress.

Of course, monetary decisions also depend on how much money you have to have, not just how much money you want to spend. If you simply can’t afford to paint your home professionally but have the next two weekends free, your choices are either to spend your time painting your home or living with peeling paint. When you don’t have the money, the money doesn’t fit.

Life is complicated. Just knowing that money and time are related doesn’t mean you can always trade with each other at a rate of your choosing. And speaking from experience as a former freelancer, looking at every hour of your day through the lens of “what.” I could Am I making money now? ”Is a fast road to burnout.

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