My goal is to offer an objective view on how to evaluate the value of your time in money. A sort of conversion rate if you will. The idea is not to become overly consumed with the monetary value of your life and how to evaluate yourself as a human being, but more to the idea of creating a conceptual understanding of the monetary value of your time in order to set new target goals. It is helpful to understand what you may, or may not be wasting time on, in efforts of making a profit. It is not helpful to become obsessed with every second wasted, as that is simply a by-product of being alive. We should all aspire to make improvements on our lives. Understanding our financial target goals in time spent, to the value of that time is the concept. I hope to help anyone who reads this, but this is simply an objective view, and not necessarily "the truth" for everyone.
Determining Root Value
Unfortunately, as it has been for ages, the monetary value of the average person has been determined by someone else. As it stands in the modern era, we can asses our monetary worth for the average person by our employer. Many of us may be self employed or own a business, in which case their monetary value is determined by what they pay themselves after expenses. So what does this mean? As an example, if an employed person makes $15.78 per hour, that person has been given a monetary evaluation by their employer for each hour they work. The same can be said for a self employed person and/or business owner. If this person works on average 10 hours per day, and works 5 days per week, then pays themselves a yearly salary of $75,000 per year, they can then decipher (after a little math) what they are paying themselves per hour. If this person works every week in the year, (52 weeks) they could use a formula like this: (yearly salary) divided by (weeks per year) divided by (hours per week) or i.e 75,000/52/50= $28.85 per hour. The latter example is what a person may be getting paid per hour of work. I want to take this a step further, to know what that value is worth over the course of an entire day. In order to do this I need to provide another example. For the sake of argument we say an average person gets paid by their employer $15.78 per hour, and that person works 8 hours in a day that person is worth, by their employer (15.78 x 8) $126.24 per day. If this individual does nothing else to make money that day, that person is only worth what their employer paid them for that day. What I hope to do here is, break this down per second this person breathes. Using this example if you divide 15.78 by 24 hours, then by 60 minutes per hour, then again by 60 seconds per minute, in this example, said person is worth; $126.24 per day, $5.26 per hour (over the course of 24 hours), $0.09 per minute, $0.0015 per second they live and breathe. This is the theoretical example of converting time to money.
Why does this matter?
Once we can put a number on what our time is worth per second, we can put into perspective what our time costs/profits for us. If my time is worth $0.09 per minute, this means that when I sleep, I am also losing $0.09 per minute I sleep. As sleep is an essential function to live, I have to see this time as a necessary expense. In theory what this means is, I should always work more than I sleep to make a profit on my time. For most people this is doable. If you work 8 hours and only slept for 6 hours you essentially profited 2 hours of time. This example however, is not how you should view your life. The example given is merely a perspective on the time you spend in the form of currency as determined by your employer. If a person works in a day and earns money that becomes a tangible asset and not a theoretical as is the example I provided. Objectively, the idea is you have a base number for what your time is worth. If someone asks you to help them move for 2 hours and only offers you $5.00 you can know that your time is automatically worth more. Ideally any work you do outside of your job that pays right away, should pay greater than what your employer has determined you are worth. Everyday practice could mean that if you wanted to buy a jacket, and you see a jacket online that costs $45, but the shipping is $20, but you can buy the same jacket locally without paying the shipping, and it takes 2 hours to purchase, is it worth it to you to pay the shipping? Another way to use this knowledge as practical application, is as an example, you buy a meal at a restaurant for $15, you can say it took an hour worth of work to purchase that meal.
Understand, that watching tv or reading a book, and etc, does not necessarily mean you are wasting time. If you watch a 2 hour movie (costing your time around $30), but the influence gives you a $0.10 raise through your actions because of that influence, it will only take 8 full time hour weeks to start profiting on that time spent perpetually. You may start to see your time spent on entertainment or a hobby as an investment, rather than time wasted. Furthermore, if you have a goal in mind to earn enough passive income to semi-retire, and you know your employer pays you (to keep the example) $15.78 per hour of work, your passive income needs to be at least $0.10 per minute or greater than $127.00 per day for your passive income to be worth what you are being paid by your employer.
Remember, this is not an evaluation of what you are worth as a human being, as the sky is the limit for your potential and influence. This is a perspective on which to give a base line for the value of your time in the work you do. Understanding what you presently earn to be alive and what you hope to accomplish is the battle. If you want to be worth $0.10 per minute you are alive to live comfortably, know that your yearly salary needs to be upwards of $52,500 (0.10*60*24*365) and set your sights on that horizon. There are many ways to put a value on time spent, and I hope those who read this gain perspective on their worth and time. Give yourself a realistic bar in which to achieve your financial goals. Make the most out of your time, and be well with another persons perspective.
© 2021 Nicholas Conner
Nicholas Conner (author) from Monroe, MI on January 14, 2021:
Thank you for reading! Money that accrues over time like interest can be viewed similarly to a passive income. Once it accrues a higher value than the time spent to earn the starting cash, your time begins to profit.
Umesh Chandra Bhatt from Kharghar, Navi Mumbai, India on January 14, 2021:
Very interesting. Thanks for the exhaustive narration. Point well taken.
If I keep my earned money in bank and get some interest then would you consider it also an earning. Of course, it is without doing anything. But what I mean is for calculation purpose how you take it.