Time is valuable, we know that. The more interesting, yet harder to figure out question is: how much is it worth in dollars? Here’s how you can calculate the value of your time.
Confession: I’m a bit obsessed with the concept of figuring out how much my time is worth. This obsession was birthed from the “Social Media Sabbatical” I took in January 2022 and wrote about in Part 1 of this time/value series.
I took a break from social media because I love it a bit too much. Yes, it is possible to love something a bit too much, especially if the marginal gain isn’t all that strong.
While I inherently knew I was giving up a lot of “potential opportunities” by spending 1.5 hours (hrs) a day on social media, I didn’t know how to quantify what that time was worth. I mean, 1.5 hrs a day is 10.5 hrs a week. 45 hrs a month. Nearly 548 hrs a year! Surely that time is worth something, right?
Is spending that much time on social media a waste, or is it “worth it”? I wanted to try to answer that for myself. But before I could, I first had to figure out what my time is even “worth”.
Figuring out the value of your time is a concept that transcends social media, and applies to much of life. So, without further delay, let’s talk about How to Calculate the Value of Your Time.
How Much is Time Worth?
Author of the super popular Atomic Habits, James Clear set out to figure out this answer when he asked How Much is Your Time Really Worth? and took a deep dive. He explored how to approach common time/value dilemmas:
- Should you buy the nonstop flight and save two hrs or get the flight with a stopover and save $90?
- Should you pay your neighborhood teenager $20 to mow your lawn so you have an extra hour free on the weekend?
- What about, should you spend this week working with a client that will pay you $2000 right away or working on a business idea that could generate $20,000 over the next year?
These are common scenarios! Back when I was hiring a young neighborhood entrepreneur to maintain my lawn, I arrived at the decision by doing a similar time/value calculation that James proposes.
More recently, I used a thorough time/value calculation to determine my jazz trio’s new rate structure. As a drummer living 1-2 hrs away from most of my gigs, I have to spend a lot of time loading equipment, commuting, setting up/tearing down, oh, and actually playing the gig!. I wanted my compensation to reflect how much time and effort I needed to invest to bring my vibes and energy.
How to Calculate the Value of Your Time
In his article, James mentions a couple different methods to calculate how much your time is worth. We are going to focus on the simplified “Realized Income” method. It’s based on what you currently earn in total income.
Step 1: Track Time
The first step is to measure the total amount of time you invest to earn money, not just the hours you are physically at work. For example, if you spend one hour commuting to work each day and eight hours at work, then it cost you nine hours to earn money that day. If you work 5 days a week, you invest 45 hrs a week to work. In 50 working weeks a year (including 2 weeks’ vacation), you roughly invest 2,250 hrs a year in this example.
Step 2: Track Money
Calculate how much you earn in a year. To simplify this example, let’s use a fictional gentleman named “JC” that earns a round salary of $50,000 a year.
Step 3: Calculate Value of Time
In this example, JC would divide total money earned (Step 2) by total time invested (Step 1).
$50,000/2,250 hrs = $22.22 per hour
From this, JC could say his time is worth $22.22/hr based on realized income.
Apply This to Social Media Usage
With this information, JC could then assign a quantitative value of how much his time is “worth” when scrolling on social media.
Let’s say JC’s iPhone app metrics, like mine, says he spends 1.5 hrs a day across all platforms.
Expressed as a dollar amount:
- Spending 1.5 hrs a day on social media is $33.33 ($22.22/hr x 1.5 hrs)
- In a week, $233.31 ($22.22/hr x 10.5 hrs/week)
- In a 30-day month, $999.90 ($22.22/hr x 45 hrs/month)
- A 365-day year, $12,165.45 ($22.22/hr x 547.5 hrs/year)
Based on what JC earns for his time while working, spending 547.5 hrs a year on social media would be worth over $12,000 in income!
Is It Worth the Time?
This is a purely hypothetical situation, but if you inserted in your personal income/working hours, how much in income are you theoretically giving up when doing something that doesn’t offer a clear, quantifiable exchange of value, like using social media?
By the way, I’m not a monster. I know people use social media for different reasons. For some, they feel the connection to others, networking opportunities, or occasional distractions are worth their time. Many have claimed to have learned valuable skills and knowledge from platforms like Twitter, Instagram, and TikTok.
If that’s you, cool! You don’t owe me an explanation or justification for how you spend your time.
If anything, I just want you to THINK about it.
Run the numbers, weigh the benefits and make the determination for yourself if how you spend your time is indeed worth it.
Keep in mind, this simplified approach doesn’t adjust for opportunity costs, and/or invested time that leads to greater future income. For more on that, check out the Expected Value Method of calculating value further down in James’ post.
Assigning value to time is NOT meant to judge yourself in activities/experiences that simply align to your values. Time with your family, friends, and community, for example, should not be thought of in terms of hypothetical “lost income”.
This is just something for you to quickly think about as you assign your “worth” to various decisions you’ll undoubtedly have to make in life. (Hint: it’s usually worth taking the nonstop flight, even if nothing else gained than less aggravation).
As for me, I am now better able to assess whether a task, gig offer, or good ole fashioned “Twitter rant” is really where I should be directing my time (Spoiler: Twitter rants are never worth the time).
P.S. This process of calculating the value of time was originally shared in my weekly newsletter. After some thought, I decided to also publish it as the blog post you’re reading. Every week in my newsletter, I share tips, resources, and insights on how you can strengthen your relationship with money. Most of these topics don’t end up as a blog.
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