Time – it is the most valuable commodity you possess and consequently, the most valuable contribution you can ever make. How then do you value your time? Well, the simple answer is… you cannot. You cannot place a value on the worth of your time. However, you can make some assumptions and then place a value.
Why is this value important?
It is important because it adds a sense of responsibility to every hour that you spend on work, leisure or anything really. It makes you think about utilising your time efficiently. It adds an opportunity cost element to your time.
How do you calculate the worth of your time?
While there are many ways to do this, we will stick to a very simple explanation for now. To calculate this, you need to think about and assign a value to the following points:
- How many hours a day will I be able to work?
- How many weeks in the year do I want to work for?
- How much do I want to earn every year?
- Assign a slack time and training time value.
Here’s an example:
The average person works 8 hours a day and 5 days a week. That’s 40 hours a week. There are 52 weeks in a year, of which, 4 weeks are usually off – therefore about 48 working weeks. That gives you 40 hours * 48 weeks = 1,920 hours. This assumes you work every hour of every working week. That’s rarely the case.
You must budget for two additional components.
Slack time – where you are not productive. You can define this percentage for yourself. Let’s assume 10 per cent.
Training time – spent on improving your own skills and abilities so that you are more productive next year. Let’s assume 15 per cent.
Therefore, of your 1,920 hours in the year, you probably underutilise 192 hours and use 288 hours to improve yourself. That leaves you with 1,920 – (192+288) = 1,440 hours in the year.
How much money would you like to earn each year [this requires some serious thought and is the most important assumption is your calculation]. Let’s say 150,000 units of currency [whichever you wish]
The value of your time, simply put, is
= Amount I’d like to earn in the year [150,000] = 104 per hour
You can use this calculation to figure out the following:
- How much should I charge someone for the work I’m going to do? [Simple – how many hours will it take you multiplied by the rate you’ve calculated above]
- I want to volunteer my time to a social organisation, how much will that be worth? [Simple multiplication]
Write in to us at firstname.lastname@example.org if you have any thoughts to share on this.