How Do You Value Your Time?

Here's an interesting piece on how people should think about valuing their time. Here's a sense of what they're talking about:

If you make a sandwich at home instead of buying one at work, it may take you five minutes in the kitchen and save you $6. Is it worth it? That depends on how you value your time. To pocket $6 from five minutes' work is the equivalent of earning $72 an hour. And the savings are free of tax. That's a good wage. Yet judging by the local sandwich shops in any downtown area, lots of people would rather buy.

Should you sign up for a store credit card just to save 10% on your first day's purchases? It may take an hour -- including time on hold -- to get, pay off and eventually cancel the card. If you're spending $200, the savings may not be worth it. But if you're spending $1,000, they might be. Where's the cut-off point?

How about driving 20 minutes extra to get to the cheaper supermarket? If your time is worth $50 an hour after tax, you'll have to save about $17 to make it worth your while.

Clipping coupons is often associated with little old ladies buying cat food. But if 10 minutes' work saves $10 on groceries, that's $60 an hour after tax.

Should you take your family out for an $80 meal instead of making one at home? That depends on what your time is worth to you.

Obviously there is no magic number. The answer varies for everybody. But at least do the math. If you convert every potential opportunity into an hourly wage, it makes the trade-off clear. And of course money saved is tax-free.

So, how do you determine if something is worth doing yourself or if you should pay someone else to do it (which is really the heart of the question here)?

For me, I look at the job, consider the time it would take, the skill (or lack of it) that I have for the job, the frustration factor, and the total cost. Then I simply decide which I'd rather have -- the time or the money.

For example, we recently had someone paint our bathroom. Here's how we decided to have someone else do it versus doing it ourselves:

• The project was going to take a good bit of time since 20-year-old wallpaper needed to be removed, the walls fixed after that, fixtures removed (and then replaced), priming, and painting. In all, it took the painter several days and probably 30 hours to do the job. It might take me 40 hours to do it. That's a couple weekends with some nights thrown in. Yikes!

• It doesn't take a lot of skill to paint, but to do it right (and handle all the prep and other tasks associated with it) isn't a piece of cake (especially the wallpaper removal). Plus there's a HIGH frustration factor with the wallpaper. Did I really want to do this? Sure, if it was going to save me $3,000.

• The estimate was $500. It was from a friend, too, so we knew he would do a great job (he'd done stuff for other friends.) Seemed like a good price to us.

• So it was $500 for 40 hours and no frustration. Seemed like a no-brainer to us -- we had him do it.

We make all sorts of decisions this way all the time, some consciously and some unconsciously. But it really comes down to the same set question -- would I rather have the time or the money?

How about you? How do you look at the time/money trade-off?

Comments

[Sarah]

I think you hit the nail on the head with this one--it's not just time, it's frustration. Now that I have a little more time than I used to, I do a number of chores I used to farm out, because they're not too irksome. But the overall improvement in my life that comes from hiring a cleaning person to take care of the bathroom twice a month--! The total time it saves me is surely no more than the time it takes me to make my lunches, and I do make those, but the aggravation of not having to cope with my most-despised cleaning job is priceless.

[Kirk Kinder]

I think it is important to look at the cost of our time. So many people ignore that. Folks can base it on the hourly rate they make or they can just focus on what drags them down and outsouce those items.

Sometimes I will even outsouce something even if I could save based on my hourly rate. The reason could be I lack the skill to do it well or it just bores me. Most car and home construction tasks are outsourced in my household. I find I save money by hiring someone because it usually takes me twice as long as I anticipate.

[MC]

I agree--time is money. As a single (divorced) mother of 2 young kids and with a full time job, the limits of my time is something that I run up against every single day.

I don't calculate based on my hourly working wage---that would be meaningless since there's no way for me to cut my hours if I wanted to (without quitting my job! Which I need!!!!) Instead, I calculate against what I would be doing instead.

For example, I hire a housecleaner because otherwise every weekend I would have to spend 4 hrs cleaning the house instead of spending quality time with my kids. And because cleaning the house makes me grumpy and tired. I still need to do laundry, shop for groceries, do home repairs, cook, etc on the weekend, but at least now I can spend some of our weekend time doing special things with the kids instead of just doing all "home-work".

I buy lunch at work in the cafeteria because it's cheap (about $2/day) and I feel like eating a variety of "real meal" food at least some of the time is better for my health. At home I tend to eat only salads because my kids primarily eat very plain foods (grilled chicken, spaghetti) that I am really tired of eating myself, and I don't want to cook 2 dinners every night.

Of course, if I couldn't afford these things, I wouldn't spend money on them. But I am fortunate that I can still save a great deal while "indulging" in these things that save time I can spend with my family.

[Cherilynn Stone]

Thank you for this I really enjoyed it.

[Jim]

Things I consider when deciding to do it myself: How fast do I need it done? Am I capable of doing the job? Do I *enjoy* doing this kind of work? What else could I be doing with my time? How safe is the work?

Don't forget to consider the time it would take to pay someone else to do the task. Some things you save time or break even doing it yourself: It takes me a few minutes to make my lunch but it would also take a few minutes to get a lunch in the cafe at work. Other tasks you still save a lot of your time by paying someone but theres still some time involved in hiring someone. To hire a painter you had to invest some time in shopping around and getting the quotes.

[LotharBot]

I consider the following:

- how much money does it cost to pay someone else, and how much money could I save doing it myself (counting costs of supplies etc.)?

- how many hours will I spend doing it, including time it takes to learn how and/or redo it? What's my per-hour savings?

- what would I otherwise like to spend the time doing? (If I'm just going to be playing minesweeper to kill time, saving $5/hour doing something else is actually a pretty good deal!)

- will I enjoy doing the task, or will it be frustrating? Conversely, will it be enjoyable to watch someone else do it? (Some restaurants are a form of entertainment as well.)

- how often will this task be repeated? Will learning to do it now bring repeated savings in the future?

- will doing this now save me time or money on other tasks in the future? Time spent on building infrastructure is often VERY worth it! (My wife and I spent two weekends moving across town, into an apartment that cost $100 more per month... but this cut both of our commutes from 45 minutes down to 7 minutes each way, with gas savings of perhaps $60 a month. Is it worth $40 per month, and 2 weekends at the start, to save 2 and a half person-hours per day? It was to us!)

- how soon can I be finished, and how much sooner or later will that be compared to whoever I pay to do it? How important is it to get it done fast? (If your only toilet is broken, fixing it FAST becomes a priority!)

- if I hire someone to do it, can I learn from them? Is it worth paying to have it done once if I can then do it myself on an ongoing basis?

[Reini]

When doing this kind of calculations please keep in mind that you don't want nor could work 100% of your time. Saying your time is worth, say 50$ per hour, just because thats your hourly wage at work isn't realistic at all. Because then you could simply work 100hours per week, get rich quick and retire by the time you're 35... oh wait... you can only work, say 45hours each week and the rest of the time... well, you might be pursuing some other income generating activities like ebay or whatever. But they sure won't pay you nearly as much as 50$ per hour.
And the more you earn - the more taxes you have to pay. So the first dollar you earn really is worth a lot more than the 100thousandth.

[Mike Hunt]

Interesting article. Keep in mind that unemployment is relatively high right now so a lot of people have time but no income. The time / income trade off only plays out if you are working or especially busy growing your company or getting paid a lot of overtime. Take that out of the mix and the default position is do be doing almost everything you can without paying another person for their time.

I live in SE Asia and labor is very, very affordable. Like a full time driver is about $400 per month. However I'm more of a do-it-yourselfer, maybe from growing up in the US. My wife is like that as well. So we do our own laundry, and clean up our own place. There's more privacy and less hassle in this. Similarly, I don't like having a driver on the weekends when we tool around to run errands- it's more relaxed to drive myself. Taking the time to do daily and mundane chores can be relaxing and I think it's a big part of being human, just like taking care of your personal hygiene.

-Mike

[Old Limey]

What do you think of a retired engineer that has been a saver all of his life, has been married for 53 years, is now a multi-millionaire and still saving, but does all of his own gardening, washes his own cars, grows lots of his own fruits and vegetables, fixes just about everything that needs fixing in his home, buys things on eBay, and feels entirely fulfilled and very satisfied in his lifestyle? You may ask what does this guy do for enjoyment. Being in a happy and wonderful relationship is by far the most important contributor to my happiness and just doing normal things like a nice overseas vacation trip every year, eating out a couple of times/week, and going on tough hikes in Northern California's beautiful state and county parks with a congenial group of seniors. Managing my own investments is actually fun also since I have been very successful at it and haven't had a losing year since 1994. You don't have to put a high dollar value on your time when you are retired and when money is not an issue. The important thing is to keep stress out of your life, stay happy, eat healthy, and stay healthy.

[Corporate Barbarian]

Not only do I look at the monetary aspect, but also the activity itself. I enjoy working outdoors, and do just about everything for myself, whether it's mowing the lawn or building a deck. But I hate spackling and painting. I'll gratefully pay some expert to do these jobs, as I'm sure that not only is it more cost-effective to pay them to do it, but the fact that I deplore these tasks is the icing on the cake.