Time is money… right?
If it is, we certainly haven’t been treating it that way. Research has shown that we’re much more frugal with dollars than with hours. Why is that?
Eric Barker addresses the issue in his book Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong:
“They say time equals money, but they’re wrong. When researchers Gal Zauberman and John Lynch asked people to think about how much time and how much money they’d have in the future, the results didn’t add up. We’re consistently conservative about predicting how much extra cash we’ll have in our wallets, but when it comes to time, we always think there will be more tomorrow. Or next week. Or next year.”
This isn’t a new concept. The question of time versus money has been around for a very long time. So long, in fact, that the Stoics were talking about it. According to the ancient Roman philosopher, Seneca:
“No person hands out their money to passers-by, but to how many do each of us hand out our lives! We’re tight-fisted with property and money, yet think too little of wasting time, the one thing about which we should all be the toughest misers.”
So how can we tackle this dilemma?
It’s simple: manage your time like you manage your money.
Know the Value of Your Time
It’s hard to manage something you can’t grasp.
Until you know what your time is worth, you can’t make informed decisions about how to spend it wisely. I recently wrote an article for the ladies at Syt Biz about how to calculate the value of your time. It boils down into two methods:
1. The amount of money you make vs. how much time you spend working
This is the simple method that accounts for how much you’re currently making. It doesn’t consider your mindset about time versus money, but it gives you a basic understanding of your time’s worth.
This is my preferred method. It factors in your personal opinion through a series of questions that gauge how much you value your free time. The quiz takes less than five minutes to complete, and ClearerThinking.org will send you its own analysis of your results via email.
(To get the full explanation of each of these methods, read the full article What is the Value of Your Time? at SytBiz.com)
A few minutes spent calculating the value of your time is well worth it. You gain a powerful piece of information that will become the baseline for all your time management decisions. (From here on we’ll refer to this term as “time value” to keep it simple.)
Think of it this way: Hourly time value is the threshold between the choice to spend time versus money.
Your hourly time value is like the tipping point on a scale. Say you calculate your time to be worth $50/hour. That means you should be more willing to outsource an hour-long task if you’ll pay less than $50.00 for someone else to do it.
Yes, I hear you. That’s all well and good, Tina, but how do I apply this knowledge to make it useful to me?
Apply Your Time Value to Your Current Schedule
Your time value is just a number unless you put it to use.
Start by analyzing your current schedule. Where do you spend most of your time? Are those activities worth your time?
Track where your time goes each day. Either a time tracking app or the good ol’ planner method (you know, tracking your time by hand) can work for this exercise. There are lots of great time tracking apps out there. (For a list of suggestions, check out this article from Entrepreneur: 8 Great Time-Tracking Apps for Freelancers.)
After you’ve gathered anywhere from few days to a week of data, evaluate where you’re spending more time than you’re worth. Are you pouring hours into a task that could be easily outsourced? Are you going out of your way to save money (i.e. coupon clipping) but spending more time on the effort than the value of the money you save as a result?
This is super useful information! Use the knowledge you gain here to adjust what I like to call your “time budget.” Make modifications to your schedule based on what your time is worth.
Adjust New Behavior Using Your Time Value
Your hourly time value is the threshold for time versus money decisions. When you’re armed with this information, you can adjust new behavior accordingly.
Let me give you a couple examples.
Example #1: Imagine you’re trying to determine whether to use a wash and fold service to do your regular household laundry. Let’s say you spend three hours a week washing, drying, and folding. You’ve calculated your time to be worth $50/hour. So it’s “cheaper” to use the wash and fold service if it will cost you less than $150/week.
Example #2: Your friend is heavily involved in a local charity. She asks you to volunteer on a Saturday to help raise money for an upcoming charity event. You’ll be spending four hours soliciting donations in your neighborhood. You’ve calculated your time to be worth $50/hour. That means unless you’re able to raise at least $200 in your four-hour shift you would be better off donating your money than your time.
Real life scenarios are obviously not so black-and-white. There are many other factors that go along with decisions about how to spend your time. Sometimes you simply have to trust your gut.
But knowing what your time is worth gives you a benchmark for weighing these kinds of decisions. Time value is the starting point. Your final choice is made once all emotional factors have been considered as well.
Time is Money… Or Is It?
Recognizing that time is more valuable than money is easier said than done. It takes practice saying no to requests for your time (this is a whole topic in itself!). But until you show that you value your own time, how can you expect others to respect it?
In the words of Eric Barker, “Plain and simple, you need to treat your time more like money. Be more miserly with hours than dollars. Why? You can get more money in this life. You can’t get more time.”
Now if that’s not a source of motivation, I don’t know what is.
What can you do TODAY to start managing your time like money?
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