In this article, I talk about a simple framework to estimate the value of your time and how to use it wisely. Understanding this concept can help you make better decisions about how to allocate your time and whether to outsource certain tasks. Plus, don’t miss out on my upcoming book about the IoT Journey for OEMs, where we extend this concept for use in major decision-making.
A few years ago, I noticed a drop in my energy levels and physical activity. Other things were also changing as a direct consequence of this. My attention span was decreasing, and I could not focus on activities. This led to a drop in productivity, causing a buildup of pending items. I was getting more and more worried due to this.
I knew this was impacting me, but I did not know the root cause. Due to my background, I like to use technology to analyze data and get helpful insights. So, I started with my wearables and phone. Pretty much immediately, I saw the trend of screen time and mobile usage to be high. I was watching TV series continuously – at home, during travel, during breaks, and before sleeping. Everywhere. This was causing many of the issues I was having, but it was also causing an unstated problem – the problem of wasted time.
Once I became self-aware, I started to investigate more and see the impact of wasted time on my life. This self-reflection helped me arrive at a simple idea to estimate the value of my time and how to use it.
It is a simple two-step process. Would you like to know about it?
First, estimate the value of one hour of your time
Time is often referred to as money, and it’s important to consider its value. Take a moment to reflect on how much money you would like to earn annually, and then divide that by 12. Next, calculate how many hours you work in a month. This number will vary depending on your job, hours worked, and other factors.
For example, a typical job of 8 hours a day would be 160 hours per month. Whatever your current situation, I want you to give it some thought and arrive at the total number of hours that you would like to spend working next year.
By dividing your desired annual earnings by your desired work hours, you can determine the hourly value of your time. This calculation can be useful in various contexts, such as determining the value of your time spent on different activities.
Then, determine how to use the value of your time
Outsourcing is the simplest way where you can utilize the value of your time.
Think of the hourly value of your time that you have determined.
Now, think of an activity you need to do that won’t add much value, joy, or happiness to you. For example, buying groceries, buying a lightbulb from the store, and changing it in your house. There is a cost associated with your time spent on these activities. It is a cost because you will spend that time but not get value out of it that is more than the cost of your time. Now, if there is a way to do it for cheaper than that value, say by outsourcing or paying someone else, then you should do it.
This is the framework for choosing activities to outsource:
Value you derive out of the activity < value of your time taken to do that activity
What if I don’t have anything else to do at that time?
This is the classic reason why people hesitate to outsource.
“Oh, I have a few hours to kill. I am free, and I have nothing else planned now. And this work is important, let me get it done myself. Anyway, I am not going to “earn” anything during this time.”
Well, this is where we need a mindset change. The value of your time is constant – it is always the same, irrespective of what you are doing at that moment. So, if you have nothing to do, then do nothing. But even in doing nothing, we can have valuable thoughts. You can get a few ideas for your next article, blog post, podcast, or your bestselling book.
Why not? Use the time to think and jot down those thoughts. Use the time to read and make progress on the goal of reading 50 books a year! Use the time to take a walk with your son or daughter, or walk your dog. Why not?
At least these activities will bring you more joy, happiness, and value with the same effort or even less than it takes to change a lightbulb. Another way to apply this is to time on activities that give you no value like binge-watching, excess sleeping, scrolling through endless feeds, etc.