The Value of Time and What it Means for Your Potential
Your time is more valuable than you think and realizing this will do wonders for your decision-making and ultimately your life.
I’m standing in line at Starbucks during the busy lunch rush and the couple in front of me are discussing their weekend plans. It’s finally their turn to order after about a 10 minute wait. One of them looks over to the other and asks, “Do you know what you’re getting?” This prompts them to browse the menu while making small talk with the cashier.
“Really? You couldn’t decide what you wanted while waiting in line for who knows how long?” screams the voice inside my head.
The scenario above is one you’ll regularly encounter at coffee shops, fast-food chains, and pretty much anywhere long lines exist. I’m not impatient (though my fiancée would probably disagree), but I get annoyed at the lack of consideration for other people’s time.
In the grand scheme of things the few minutes that I lost are probably insignificant, and the whole thing sounds like a ‘first world problem’ to begin with, but there’s something to be said for the value of time. The minutes we spend waiting in line, waiting on hold over the phone, or stuck behind a slow driver add up, so it’s worth considering what we’re losing in the process.
It’s not just other people that use up our time. We make decisions every day that involve time as a trade-off. Shop online or in-store, take the tollway versus local roads, go to the office or work from home, etc.
When faced with alternative courses of action, if we choose the one that will take longer to complete, we’re giving up time that could be spent doing something else. Perhaps something more productive.
In fact, if I really think about it, I lost more time by choosing to drive to Starbucks, waiting in line while browsing sports articles, and then driving back to the office. I could have settled for a cup from the coffee machine at work. This would have allowed me to catch up on my long list of to-dos so that I wouldn’t have to continue working at home.
The Value of Time
When you’re making every day decisions on what to buy, where to go, and what to do, do you consider the value of time and any trade-off involved? Do you think about what you’re potentially losing based on what your time is worth? If you’re anything like I was before starting this journey then the answer is hardly ever.
Consider grocery shopping as an example. A survey indicates that there is a 25% premium for online groceries versus in-store. A $200 grocery bill at your local store would equate to $250 plus a delivery fee via online services. Let’s say the delivery fee is $10 for simplicity’s sake. Is $60 in savings worth the additional hour spent grocery shopping (including drive time) for you?
If you answered yes, consider the same scenario for Warren Buffett (or whoever else qualifies as your favorite multi-billionaire). Do you think $60 is worth an hour of his time? I would think the answer is no if he can use that same time to research investment options.
Clearly we don’t all have the luxury of thinking like Mr. Buffett. His value of time would put most of us in the poor house if we started using it to make decisions. But our time does have value. By realizing this value we can start making wiser decisions in our life.
What is Your Time Worth?
Entrepreneur offers a simple formula for how to calculate the value of time for ourselves:
“At least for the sake of our conversation, get a number — your base earnings target for the next full calendar year. Divide it by the number of workday hours, which is 1,760 (220 working days per year times eight hours per day = 1,760). Then, multiply it to allow for unproductive vs. productive hours. If you don’t have a good estimate of that, use a three times multiple. Now you have what your time is supposed to be worth per hour.” – Dan S. Kennedy
I think the last part of the equation is key. The majority of us earn a paycheck based on 2-3 hours’ worth of work per day. The rest of the time is spent in chaos, clutter, and general unproductiveness.
What happens when you multiply your hourly value by three? Are you amazed at your own earning potential? Now consider what it means to lose hours a day due to other people and your own misguided decisions.
I suggest you take it a step further and go beyond the salary you expect to make in the next year. What’s the best case scenario for the role you’re in or the role you want to be in? Could you be earning three times, four times, or five times your current salary? The new hourly value that results would make you think twice about how to spend your time.
Now I’m not suggesting that we should make all our decisions based on the value of time. There are other benefits to consider besides the potential earning power in an hour. Perhaps a coffee run was just the break I needed in order to have a more productive afternoon at work.
The point is that we should, first of all, understand that our time is valuable, therefore we shouldn’t allow others or even ourselves to waste it frivolously, and secondly, that the value is higher than the income we are currently generating.
How many hours a day do you spend browsing social media? Or watching TV? Or thinking unproductive thoughts about work, people you dislike, or past events? What if instead you used this time to work on your side hustle or develop your skillset?
The life you’ll be able to create is limitless once you understand the value of time. With this newfound productivity you’d be able to create more space for what really matters, like your loved ones, and travel, and new experiences. You know, the priceless things in life.
Ready to join the Journey?