Have you ever paused to consider the true value of your time in terms of currency? It wasn't something I thought about during the early days of my career. While it's common to calculate an hourly rate by dividing your salary by hours worked, I believe there's a more nuanced approach to understanding what your time is truly worth.
Instead of letting your salary dictate your value, consider this perspective: time is elusive, with no guarantee of abundance. It's a daily balance that doesn't carry over, urging us to be mindful of the decisions we make and the trade-offs involved. As a starting point in determining what your time is worth you can start with your current work and adjust accordingly because only you know your own true worth.
Let's start by acknowledging that most individuals exchange their time for money. For instance, if your annual income after taxes is $100,000 and you work 40 hours a week for 52 weeks, your hourly rate would be $48 ($100,000/2,080 hours). On the surface, it might seem like a straightforward calculation, but let's delve deeper.
If your time is valued at $48 per hour and there are 24 hours in a day, theoretically, your potential daily earnings amount to $1,152. Extrapolating this, working around the clock could yield a staggering $420,480 annually. Even half of this, at $210,240, showcases the substantial value of your time.
However, life isn't just about work. Considering the other aspects of your day, when you exchange an hour for tasks like cleaning or cooking, what are you truly giving up? Is it worth sacrificing precious time with loved ones or engaging in activities you cherish?
Now, consider leisure time. Watching Netflix, while enjoyable, may mean sacrificing the opportunity to explore a new business venture. If the average person spends 2+ hours a day watching TV 365 days * $48=a cost to you of $35,000. Put's it into a different perspective if that time had been invested in pursuing a passion project that could bring about financial and personal fulfillment.
By adopting a mindset that views time as currency, your decisions take on a new significance. Examining how you allocate these moments and what you're willing to forfeit for what you receive in return becomes a thought-provoking exercise and again don't let what you currently get paid be your only guideline to determining your hourly value.
Take a closer look at where your time is allocated—working and commuting, sleeping, leisure, and other activities. Evaluate the trade-offs involved in tasks like household chores. For instance, is spending $100 a week on a maid worth more than sacrificing over two hours of your weekend, time you could otherwise spend pursuing your passions or with loved ones?
In the upcoming blog, we'll delve into options beyond trading time for dollars if you are considering moving from being an employee to an entrepreneur.