What is Your Time Worth?
This important time management strategy will prompt you to start thinking about the value of your time in a different way.
When you know what your time is worth, you can quickly determine whether or not something is worth doing yourself, pay someone else to do it, or simply not do it at all. Once you calculate your real dollar value, you can better understanding how much interruptions cost you in business.
Once you know your true value of your time, you can move towards better time management.
Let’s calculate your worth using a familiar formula. Flip Your Time System makes taking days off a priority so we included those in our example calculation.
First Time Worth Formula:
- You want to earn $100,000.00 this year.
- You decide to make Saturday and Sundays your Rest and Relaxation days.
- You decide to take a 2 week vacation
- You will take off 118 days for the year
- This leaves 247 days to work your business.
- You decide you will work only 8 hours a day
- You multiply 247 x 8 hours giving you 1976 hours a year to work.
- Divide $100,000.00 by 1976 = $50.61
You need to do $50.61 an hour to make your target figure. Sounds doable…
But there is a major flaw using this formula in determining your worth.This formula is based on eight hour workdays.
Reality… no one works eight productive hours every work day. Productive means doing “high profit/ revenue generating activities. Don’t confuse money fulfillment activities with money making activities. A common mistake many entrepreneurs make.
How much of your 8 hours consists of doing stuff activities? How time do you spend doing paperwork, answering email, talking on the phone, surfing the internet and other assorted stuff activities. Stuff activities fall into the low-no profit zone. These activities don’t earn you income.
Second Time Worth Formula: More Realistic Number:
This time formula starts out the same.
You want to earn $100,000.00 this year.
You decide to make Saturday and Sundays your Rest and Relaxation days.
You decide to take a 2 week vacation
You will take off 118 days for the year
This leaves 247 days to work your business.
You decide you will work only 8 hours a day
Let’s add the reality component
2 hours a day for productive activities (money making/high income activities)
6 hours a day to non-productive activities (stuff/low-no income activities)
Productive hours = 494 a year
Divide $100,000.00 by 494 = $202.43
Your time is worth $202.43 per hour
Write this on a card: My time is worth_________ per hour and post this in front of you… put it on post it notes… keep this number in front of you at all times.
Applying this time management strategy will effect how you spend every hour of your day.
Use it help you eliminate or delegate tasks or activities that do not match up to the value of your time. Use this number to make decisions and determine pricing a project, product or service Apply this number toward assessing your return on investment on marketing activities.
Answer these questions to determine if the way you spend your time is worth $202.43 or what ever figure you calculated
- What is the cost of when you let other people and interruptions to take up your time?
- Are you wasting time with clients that drain your time?
- Can you think of some ways that you are wasting time?
- How much time are you spending on low paying tasks that keep you from doing you high paid activities?
- More importantly, what value do your bring to the marketplace in exchange for your time worth?
This time management strategy will increase your profits if you use it effectively. Share your thoughts.