Time is often equated with money, but have you ever wondered how much your time is really worth? When making decisions about how to spend your free time, assigning a value to it can help you understand the tradeoffs you’re making. Let’s explore different ways to determine the value of your time and find a balance between work and leisure.
Finding Your Hourly Worth
One traditional method to calculate the value of your time is to consider your annual earnings and divide that by the total number of hours you work, including commute and other work-related activities. This approach gives you an average dollar value per hour, such as $24.98/hour for someone earning $62,455/year.
However, this approach might not be the best way to assess the worth of your free time. After all, your leisure hours are not just an extension of your work hours; they are earned through your dedication and hard work during the day.
Comparing Free Time to Potential Earnings
Another perspective is to assess what you could be doing with your time instead. For those engaged in freelance work or side hustles, any hour has the potential to be a working hour. Suppose your side hustle pays $20/hour. In that case, spending an hour shopping to save $12 might not be worth it, as you could have earned more by dedicating that time to work instead.
However, this approach assumes you want to be working all the time, which may not be the case. Sometimes, paying a little extra to save time and avoid chores can be more rewarding than earning a few extra dollars.
Introducing Surge Pricing for Your Time
Instead of a fixed value, consider surge pricing for your time. Think of it like ride-sharing services during peak hours. Your free time becomes more valuable during specific periods when you desire it most.
Here’s how this model works:
Standard Working Hours: Calculate the price of your working hours by dividing your income by the total number of hours you work, including commute time.
Limited “Free Time” Hours: Estimate the income you could make during your free time if you chose to work instead. This rate may differ from your regular job rate.
Surge-Priced Free Time: Assign a value to any additional free time beyond the limited hours above. This value reflects how much you would be willing to forgo to prioritize family, hobbies, or relaxation.
By using surge pricing, you decide how many hours are available at the rate of your side hustle and how many hours warrant a higher value. Some hours might be “unpurchasable” due to personal commitments or other factors.
Life’s Complexities and Monetary Decisions
Money and time are intertwined, but not every hour can be exchanged for a specific monetary value. Life is multifaceted, and decisions depend on more than just financial considerations. Factors like personal preferences, stress levels, and health play crucial roles in determining the worth of your free time.
In the end, finding the true value of your free time is a personal journey, one that goes beyond simple calculations. It’s about striking a balance that enriches your life and ensures your time is spent in ways that bring happiness and fulfillment. So, next time you’re weighing how to spend your free time, consider the surge-pricing approach and let your choices reflect what truly matters to you.