# How much is your time worth?

If you were on an overbooked flight, how much would it take for you to take a flight the next day? \$500? \$800? \$1500?

If you’re a doctor, on a United flight in Chicago, and had to be somewhere the next day – the answer is “infinity.” Or as United showed us last week, the cost will be in the millions after they concussed a passenger before bumping him.

Here’s the rub – we all have a price. If United offered him \$10,000 – he might have taken it. Delta does a clever thing where they ask for volunteers and just starts paying them. How novel.

But how much do you ask for? How much is your time worth?

It’s often said that time is money but that’s backward. Money is time. We have a limited amount of time on this earth and when you have money, you control more of your own time.

If time is money, can you quantify the value of your time to make better decisions?

Yes.

I start with the value of a “work hour” and then triple it.

To get the work hour value, I calculate my take-home pay (salary minus taxes and payroll deductions, accounting for deductions) and divided by total hours worked – 2,000. If you want to use the total number of hours in a year, divide by 8760 (365 * 24).

To help you make the calculations easier, I made this really simple calculator (assumptions in the calculator to follow):

## How Many Hours Calculator

 What is your annual salary? (\$) How much is the item? (\$) How many hours do you work a year? That will cost you: Your hourly take home rate is: Your marginal tax bracket: Your effective Federal tax rate:

## How Do I Use This?

I have an hourly rate when I work. To calculate the value of my personal time, I triple it.

That’s how much I value an hour. (you can value it 1x, 5x, 10x — it’s your time!)

If I make \$40,000 a year, that’s \$16.48 an hour after taxes and other common reductions. The value of my hour is three times that, or about \$50.

With a number, I can now start making trade-offs. When I decide whether I’d like to fly or drive somewhere, I can use this to help decide. If the flight costs \$200 and saves me 5 hours, I fly. If it costs \$500 and saves me 5 hours, I drive.

I can use this to help decide whether or not to buy something too (which is integrated into the above calculator). If I make \$16.48 an hour and want something that’s \$3, it’ll cost me 10.92 minutes of work. \$3 doesn’t seem like a lot but if I want to make it back, I have to work an extra 11 minutes. It helps you put an abstract concept (money) into something more concrete (time).

If an airline wants to bump me, I calculate how much “time” it’ll cost me and adjust the value accordingly. I won’t value a 24-hour bump at 24x this personal time value – it’s probably close to like 8 hours. But if you pay me for 24, I just might take it.

## How did I reach 3x as my free time value

Good question!

This is 99% gut feeling – if I earned \$17 an hour, I’d probably sit in a focus group for \$50 an hour. When I was making \$60,000 a year (\$23.63), I sat in a 90-minute focus group for \$100. A multiple of 2.82.

The other semi-informed 1% was based on overtime pay. In many hourly paid roles, overtime pay is 1.5x so I just doubled it.

I think we all have a gut feeling of how much our time is worth, this just adds a little data support for those of us who like data. 🙂

This calculator is very simple and makes these assumptions:

• Figures are based on 2020 tax information (tax brackets, exemptions, FICA, etc).
• You are single, take the standard deduction and have one exemption.
• We also deduct Social Security and Medicare (FICA), but nothing else.

This calculator is still valuable if you’re married, itemize deductions, or have other special circumstances that affect your take-home pay. As with anything tax-related, it gets complicated very quickly without providing additional insight.

Valuing your time is meant to be a general rule and a way to help you make decisions, so it doesn’t have to be accurate to the penny. Does it make a difference if your hour is worth \$16.48 or \$18.92? Not really.

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Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

1. constance says

It wasn’t even \$800 cash. It was a useless voucher (coupon) with an expiration date and limit on how much you could use at once. That sucks! I wouldn’t fly United (unless the price difference is greater than 30%).

2. FullTimeFinance says

Not to make it overly complicated but it also would depend to me on where I was. An extra day in Hawaii… foot the bill on the hotel over night and I could be persuaded regardless of cost benefit in dollars… 😉

• Jim Wang says

Oh 100% — and what’s nice is if you get bumped for a day in Hawaii, they have to put you up!

3. The calculator is interesting. I always try to find the most effective way to spend my time. Even when I’m watching a movie or a TV show, I always ask myself what value I get from it.

In general, I find my time more valuable in the morning when I’m in the rush.

4. Jeremy says

I love the calculator. My multiplier depends on how much I hate the task. If I wasn’t married to Christina (who is ok with doing laundry), I’d be willing to pay an exorbitant amount to have it done for me. Since we are crazy busy in the spring, it is an easy sell for a lawn service to do our lawn but as I enjoy gardening after work, that’s not something I’d outsource. Regularly asking “what’s your time worth” is sage advice!

• Jim Wang says

I do a lot of yard work but I see it as meditative – it’s a time I can do something mindless but also physical. It’s not work if you don’t dread it!

Folding laundry is, however, the worst. All of the other steps I’m OK with – it’s the folding I strongly dislike.

5. Ben says

I also invert the concept in a way with my entertainment choices. One example is I enjoy putting Lego models together and there are a million great sets out there. Knowing roughly how many pieces I assemble in an hour, it is easy to calculate a “dollars per hour of fun” value. The value can vary widely between sets and it plays a factor in my choice of which ones to buy or avoid. Video games are an extremely cost-effective purchase when viewed this way.

• Jim Wang says

I don’t have the patience or time to lovingly fold my clothes and appreciate its support and love. 🙂

6. Fred says

This is a really cool calculator. Thanks for creating it. The older you get, the more you realize that time is your most valuable asset, far more valuable than money.

7. Tanya says

This calculator almost makes me re-consider my cleaning lady … I just HATE cleaning and having her every other week just makes my life so much better. My weekends are not spent doing cleaning chores I dislike.

8. David says

The article is excellent and the calculator is a great tool. Being recently retired, I have a somewhat different outlook on the subject than I did during my working years, since I generally don’t have a fixed deadline to return home. If I’m in a city where I really wouldn’t mind spending some more time, and the airline’s offer will cover my expenses until the rescheduled flight, that’s all I need. Anything more is welcome and is icing on the cake.

• Jim Wang says

That’s a good point, your tradeoff is less about the voucher amount vs. the time because you can turn that waiting time into more leisure!

9. gofi says

Conversely, if you spent 2 hours mindlessly watching TV, stuck in traffic, or in a line somewhere – that’s 3x cost to you. So best to focus time more efficiently.

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