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Everybody has a price. If I asked you to write me one paragraph for $100,000, of course, you’d say yes, right? However, if I offered you $0.01 to write that same paragraph I can’t imagine you’d jump on the opportunity.

But how do you decide when the opportunity is right? When is it “worth it” to do a certain job? What is your time actually worth? That’s exactly what we’re going to explore in this article.

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What is Your Time Worth?

Ask yourself this question.

If someone asked you what one hour was worth to you, what would you say…? $10? $25? $100?

Before you decide on a number, there are a whole host of factors that need to be considered before answering.

Calculating Your Real Hourly Wage

Most commonly credited to revolutionary personal finance book Your Money or Your Life, the concept of the real hourly wage is something that we should all understand.

Example:

If you earn a salary of $50,000 and work 40-hour weeks, your stated hourly wage is approximately $25 per hour. But that number doesn’t take into account all of the ancillary costs (both time and money) associated with work.

Total daily commute: 1 hour

Weekly transportation costs: $80

Getting ready for work: 15 minutes

Decompression after work: 30 minutes

The daily cost difference between lunch out and lunch at home: $5

I’m keeping the ancillary costs light for this scenario, but the list could go on forever. Anything like new work clothes, “mandatory” happy hours, and work-related events should all be included in your calculation. For sake of example, let’s dig into the numbers above.

Weekly work time: 40 hours + (5 x 1-hour commute) + (5 x 15 minutes getting ready) + (5 x 30 minutes decompressing) = 47.75 hours

Weekly income: $1,000 – ($80 for transportation) – (5 x $5 lunch differential) = $895

Real hourly wage: $18.74

Everybody’s situation is different, but your real hourly wage will always be lower than your stated wage. Performing this calculation is a great exercise to determine whether or not you’re satisfied with your wages.

The “Know Your Worth” Fallacy

Now that you’ve calculated your real hourly wage, there’s NO WAY you’d never perform a job for less than that, right? Wrong!

This is one of the biggest misconceptions and even some of the most well-renowned personal finance influencers get this wrong. There are two types of “know your worth” fallacies that I want to address.

Outsourcing

Something that I hear far too often is that if a job costs less than your real hourly wage, it should be outsourced. While this may be true in some circumstances, it’s fundamentally wrong a majority of the time.

What this mindset assumes is that the individual will be earning money (at a higher rate) while the outsourced task is being performed. For the vast majority of people (including myself), this is simply not true.

If you outsource your lawn mowing for $15/hour and have a real hourly wage of $22, are you really going to earn an additional $22 while you pay someone $15 to mow the lawn? I highly doubt it.

This discussion reminds me of an old economics joke:

An economist and his friend are walking down the street. His friend says “Look there is a $100 bill on the ground”. The economist laughs and replies “Can’t be. If there was a $100 bill on the ground, somebody would have already picked it up.”

Unfortunately, we do not operate as hyper-efficient machines who maximize the utility of every second. We’re human! And that’s okay.

I’m certainly not suggesting that you should never outsource, but don’t fool yourself into thinking that it’s a “smart financial decision”.

Side Hustling

If you ask yourself “what is my time worth?”, and set a minimum based on the real hourly wage calculated above, you’re probably leaving money-making opportunities on the table.

Now, I’m not certainly saying you should go shovel dirt for $1/hr, but there are plenty of great side hustles that may be worth your time.

It all boils down to this one question: “What else would you be doing with your time right now?”

For example, perhaps you’d argue that filling out surveys on a site like Survey Junkie “isn’t worth your time” since average hourly earnings are between $5 and $10. However, if you’d typically spend that time watching TV, then filling out those surveys are totally worth it!

Conversely, if you can earn $100 doing specialized consulting during that time, then to hell with the surveys. It’s all relative to how you can most efficiently utilize a given block of time.

So, What is Your Time Worth?

Although I can’t answer this question for you, you’re now equipped with the equations and mindset to make the decision for yourself.

Determine how many hours you are actually using toward work each week. Identify the ancillary costs are associated with your job. Calculate your real hourly wage: (Income – Ancillary costs) / Total Hours

Remember, after you calculate your number, that doesn’t create some sort of impenetrable threshold. Be honest with yourself about how you’d be spending your time otherwise, and then make the decision.

I hope this post provided some clarity around the relationship between time and work and ultimately helped to answer your overarching question: “What is my time worth?”

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Note: I am not a financial advisor or fiduciary. All the information presented in this article reflects my opinion. I am not liable for any financial losses incurred related to this content. My content is always written with the readers’ best interests in mind. I believe that my content is helpful and well-researched, but it is not professional financial advice. For more information, read our Privacy Policy.

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