How to Value Your Time (and how it changes all the time)

Have you ever calculated how much your time is worth?

As they say, money is time.

There are so many ways to do it. You can take your salary and divide it by 2,000. You can take a multiple of that, say 2x or 3x. Or you can just say “I’m valuing it at $X” and base your decisions on that.

The benefit of this exercise is it can focus your thinking on what is “worth it” for you. For issues related to money, it’s easy. If you make $20 an hour, would you do a job that pays just $5? Of course not.

But if you made $20 an hour, would you take time in your day to save $5? Only if it took less than 15 minutes, right? (exclude taxes and other factors that might adjust the numbers a bit).

The challenge now becomes the variable nature of time – not every hour is worth the same. It requires a bit of nuance to any type of calculation.

Let me explain.

Table of Contents
  1. Your Are Always Selling Your Time
  2. How to Value Your Time
    1. What if you hate your job?
    2. What if you’re on vacation?
    3. What if you’re retired?
  3. My Rule: 3x Your Salary
  4. How to Increase Your Value
    1. Increase the Value
    2. Increase the Impact
  5. Make informed decisions

Your Are Always Selling Your Time

You have 24 hours in each day and your hours are always for sale. It’s like a hotel with 24 rooms – if you don’t set them aside for a customer, they’ll decay into history.

Sometimes that customer is you. You set aside time to sleep, eat, shower, exercise, or relax.

Sometimes the customer is your family. You spend time with them like taking care of and playing with your kids, driving them to school or activities, and putting them to bed.

Sometimes the customer is your employer – so you can get paid and support the other, non-revenue generating activities, of your life.

It’s big-C Capitalism at its finest. “Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.” (wikipedia)

You own you and (hopefully) operate at a profit.

How to Value Your Time

How much is an hour of your life worth?

If you were to ask someone, you can use your salary or hourly wage. If you make $60,000 a year, you’d divide it by 2,000 (work hours in a year) and arrived at $30. If you’re hourly, it’s your hourly wage.

This is an “easy” way of doing it but slightly inaccurate because most people can’t easily add an hour of work whenever they want it.

You could take this one step further by considering a side hustle. Let’s say you drove for Uber for an hour, how much could you earn from that? I’ve chatted with a lot of Uber drivers and many do it because they’re monetizing their downtime.

However, this “value” isn’t accurate either because it ignores other factors.

What if you hate your job?

You work a full-time job but you absolutely hate it. Would you take on another hour each week at the same wage or would you want more? Would it take 1.5x your base pay? 2x?

In Maryland, overtime law requires 1.5x your base pay for all work over 40 hours (with some exceptions).

So is this the value of your hour?

What if you’re on vacation?

What if you’re on vacation and work calls you – can you jump on a Zoom call with a client? You’re about to sit by the pool or play a game with your kids… but now work needs you.

(to avoid these situations, don’t be reachable when you’re on vacation!)

These are sticky situations. Especially if you’re salaried and aren’t directly paid more for that call!

What if you’re retired?

If you’re retired, you don’t have a salary to calculate so you have to lean on some other metric. You could estimate what your salary could be based on recent information (your last job) or you can just pull a number out of the air. Whatever the approach, having a number in your head is better than not.

You want something to decide against.

My Rule: 3x Your Salary

As a general rule, I use 3x my hourly income. If something isn’t 3x my hourly income, I don’t pursue it.

There are plenty of tasks that I do that are not 3x my salary but those are not tasks I do for financial reasons. Driving my car an extra 5 minutes to get cheaper gas is a task you would do for financial reasons. Volunteering is not done for financial reasons.

When I’m on vacation, not counting the times of day when everyone else is sleeping, that number jumps up significantly. Depending on my mood, that could easily be 100x! (sometimes I just don’t want to do it!)

How to Increase Your Value

Once you have this number, it becomes clearer what you should pursue and what you shouldn’t. Driving to buy gas is an easy example but it’s not realistic – very few people do this.

The more interesting scenario is when you are thinking of ways to invest in yourself. Your employer may offer you education reimbursement but you still need to spend hours of your free time pursuing that certificate or degree. This is when you might want to consider the value of your time and the positive impact of the education (increase the value of your hour).

When we think about the value of our hours, specifically increasing the value, you have two levers to pull.

  • Increase the value of your hour
  • Increase the impact of your hour

Increase the Value

When you work for a company, you get promotions and raises when you demonstrate that you’ve gained in experience to the point that you can take on bigger and broader roles. This might mean moving into management or it could be becoming indispensable as a technical expert.

Through education and experience, each of your hours are more valuable to a single employer. Education reimbursement is a nice benefit because now that increase in value only costs you time in the classroom.

When you’re considering these options, you have to think about how the increase in value impacts your entire career. The value of your hour will go up but so will your annual raises. A larger base means larger gains annually. This is why the earnings gap is so large between college educated workers and high school graduates.

Increase the Impact

When you increase the impact, you’re looking to increase the number of entities that benefit from your hour. The reason why sports athletes and performers can make such massive sums is because they impact a lot of people.

You don’t get paid $100,000 a year from one entity but you get $50 from tens of thousands of fans each performance. And fractions of a cents per stream each day, but that’s a lot of streams (Taylor Swift’s Midnights album was streamed 184.6 million times in 24 hours)

This is why online businesses are so attractive. You can reach thousands of people and increase your impact without a corresponding increase in effort.

Make informed decisions

Ultimately, it’s about making informed decisions. Anytime you can take something qualitative (do I feel like doing that?) and make it quantitative (is it worth my time to do that?), it’s easier for your brain to process. Feelings are like sounds, we know what they are but it’s hard to find the edges.

When you make something a number, even if it’s a rough estimate, it helps the decision making process.

I do want to leave you with this final idea – when making decisions on how to spend your time time, you want to consider the value of your time overall but also the value of your time in the moment.

Sometimes the numbers don’t say “yes” but your heart says “yes” (and vice versa).

In those moments, go with your gut. 😉

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About Jim Wang

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.

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