As they say, “time is money”. In fact, time is arguably worth more than money since it is finite for each and every one of us. If you spend or lose some money you can always earn more. With time, once it’s gone – it’s gone forever. The other key difference is with money, you always know exactly how much you have. With time, you never know how much time you may have left!
This post is somewhat related to another post that I wrote on the time for money tradeoff, however, that post was geared towards thinking about your purchases in terms of time that you have to trade for money to buy things. Through this post, I encourage you to think about the value of your time in an attempt to be more intentional about how you spend it.
I’m turning 35 this year and for the first time in my life I feel like I am finally starting to truly recognize the value of my time. For years I have heard people say that you have to value your time. Now that I fully understand the concept, assigning a dollar value to my time is hugely important to make sure that I am being intentional about how I spend my time. I started seeing the value of time a whole lot more since becoming a father. If I have to spend time away from my son, I better really enjoy it and/or be paid well for it.
A few things change as you age. When you are young, you have plenty of time and not a lot of responsibility. At the same time, you may not be too concerned about how you spend your time since you still have your whole life ahead of you! Further, from a financial standpoint, the opportunity cost is lower when you are young (e.g. me at 15 years old flipping burgers at Dairy Queen for $5.91 / hour).
As you get older, things change! You start working full time, you may start a family, and life starts to get busy with competing priorities. Free time decreases with increasing life priorities, and supply of remaining time decreases as you age. From a financial perspective, your opportunity cost is likely much higher than when you were young as you develop skills and become more valuable and senior in your career (when you trade your time for money, you are most likely getting a lot more than $5.91 / hour).
The other thing I notice is that as you get closer to financial independence, you start to stand up more for your time and what you value.
Examples of changes that I have made to place more value on my time:
- Having things delivered and paying a delivery fee!
- I used to be horrible at this – $4 delivery fee on Amazon for a $20 book, no way! Instead I would buy another $15 worth of stuff I didn’t need just to avoid the shipping cost. Jeff Bezos tricked me!
- Another example was food delivery – I would always choose to go pick up the food than to pay a delivery fee. Now that I’m thinking about the value of my time, I’ll happily pay $10 to get my takeout delivered rather than spend the time on the road
- Shopping at the local convenience or grocery store even though I know that I am paying a premium to a big box store
- I think a lot of people in the financial independence community are over-optimizers, myself included. There is nothing wrong with this. I think a big part of where I am today is due to my frugal ways in the first decade of my career. I used to keep track of prices at different grocery stores and make sure that I bought certain items at certain stores to save a few extra bucks. Now that I’m actually intentional about how I spend my time, I have come to accept paying a premium to get my time back – e.g. going to 1 store instead of 3 stores and taking back an hour or two of my life. I still end up doing a big Costco run about once a month to load up on essentials – the savings from that can generally justify the time spent. Plus, it’s a good excuse to get a $1.49 hot dog and pop! For larger items (e.g. cars), I still spend some time comparing prices and researching deals as the potential saving is much higher and justifies my time investment
- During COVID, this has included grocery delivery which is wonderful! $5 or $10 to save an hour or more of your life and have the groceries picked and delivered to your doorstep – glorious! Even post-COVID I think we will be having our groceries delivered. I had a few funny user errors since we started this – one time ordering 6 bunches of bananas instead of 6 bananas (the delivery guy probably thought I was housing a Gorilla) and the other time ordering the smallest bunch of grapes you can imagine. That said, I’m learning!
- Hiring help with home repairs and maintenance rather than try to figure it out myself
- Being frugal, I’ve always had a DIY mindset. That said, I’ve also realized that when you don’t have a clue what you are doing, it can easily become a time suck trying to do something yourself. Furthermore, you likely won’t do it as well as somebody who knows what they are doing; and if you do it wrong, you may have to call the expert in anyway to fix your mess. Since purchasing our home last year, we’ve hired help on a variety of home improvement work, down to mounting a baby gate! (thanks Allen!).
- Thinking twice before running errands
- The old me would drive 40 minutes to Home Depot to return an item – high or low value. Now, there is no way I’m making that trip – I’ll tag it on to the next time I am in the area
- I am no longer lining up for 15 minutes at Costco to save an incremental $0.05 / litre on gas
- I’ve always tried to fill up the car at Costco as I realize the prices are usually $0.05 to $0.10 better per litre than other gas stations. Recently I have found that there have been long lines and this hasn’t been worthwhile from a time saving perspective
Where I don’t think about the value of my time:
- I don’t worry about the value of my time when I’m doing things that are aligned with my values. Once you ascribe a dollar value to your time, you might be tempted to work more to maximize the productivity of your time. This is a slippery slope. You want to make sure you don’t work too much, otherwise, what is it all for? It is important that you spend time on what you actually want to do and value – guilt free – to maintain happiness and balance in your life. For me this is:
- spending time with family and friends
- getting outside – cycling, walking, etc.
- playing piano
- I worry less about time spent on trying to salvage something if it means less wastage. It’s unfortunate but it is often the case in our convenience-focused society today where many choose to replace rather than fix something that is broken. I find this to be rather wasteful. That said, even though valuing my time would generally dictate to just replace something that is broken, I usually try to take the time to fix something before dumping it. I also try to buy high quality / reliable items so I don’t have to worry about this as much
Things I could be doing better in valuing my time:
- Cutting the grass / shoveling
- I still like to mow the lawn or shovel the snow as I enjoy the time outside and the exercise. That said, I’m not against hiring somebody if I am going through a busy period (it would beat last summer when I was jammed at work and my neighbour offered to lend me their lawnmower as a subtle hint that I hadn’t cut my grass in 3 weeks!)
- Cleaning the house
- We have a good division of duties in the house – my wife does the laundry and I do the vacuuming. So far, I’ve not considered hiring help on housework, although I’m not completely opposed to the idea. It takes me less than an hour to vacuum every couple of weeks and I usually enjoy a podcast or some music at the same time. That said, I probably drive my family nuts as I usually vacuum early on Saturday morning when everyone is still sleeping (like to get this chore out of the way before really kicking off the weekend)
- Layovers
- I haven’t been on a plane for almost two years now – hard to believe. When travelling solo in the past, I would choose multiple stopover options (adding hours to my total flight time) just to save a few bucks. This one I’m definitely rethinking going forward – not to mention other implications of doing so with a toddler in tow!
Key takeaway:
My key takeaway for this article – assign a $ / hour value to your time and think about that dollar value when you are allocating your time. For example:
- If your time is worth $100 / hour, is it really worth lining up at Costco for 15 minutes to save $2.50 on gas? No!
How should you calculate that $ / hour? There are a few options:
- Calculate your real hourly wage as referenced in this post
- This is a good starting point as it measures how much you get paid when you trade your time for money from a job. However, it may not necessarily represent a true tradeoff – if you are a salaried worker, you can’t necessarily work more hours and get paid more
- If you have a side-business, you may want to use your expected hourly wage working on the side business
- This is a good way to think about the value of your time since you always have the option of putting another hour into your business and have to weigh that option against other activities
- Choose an arbitrary number
- Ask yourself, what is the value of your free time? If somebody is willing to pay you $1,000 for an hour of your free time, would you accept? It might be a no-brainer at $1,000, but what about $30? Use trial and error to ask yourself what your free time is worth to you
I hope that you found this post helpful in thinking about how you might become more intentional with your time.