Time is Money because Money can buy you Time
Most of us feel we are pulled in multiple directions all the time. Balancing work, family, health, finances and other commitments can seem almost impossible. We have a limited amount of time so how can we decide what is worth our time and how do we reject things that aren’t how we want to spend out time?
How to Put a Price on Your Time
Deciding what your time is worth is more than picking an hourly rate for work or your services. Everything you do takes away from something else so you need to use your time wisely. Do you really want to spend all your time chasing money and never seeing your family?
For us, family comes first. This means, I have passed on a lot of money at times because it was not worth my time. My time is valuable. I want to enjoy my life anf ensure I spend it doing what I love. So how do you put a price on your time?
How to Determine Work Value
If you work in a job, your salary is set by your boss usually. This does not mean you can’t negotiate though. Before you are hired negotiate for a higher rate if you believe you are worth it. Try for extra vacation time or other benefits if they won’t budge on the actual cash amount. There are numerous ways to get more for what you do.
As an employee, don’t wait for them to give you a pay rise, seek it out. Prove you are worth it and deserve a rise. No business will pay you more than they have to sooner than they have to. Look out for yourself and get the pay you deserve.
Also, discuss wages. Check your contract as more companies are putting clauses in employment contracts to ban the discussion of wages. Open discussion of wages ensures people get paid properly.
How to Determine Self Employment Value
Do not undersell or underprice yourself. Being self employed means you need to calculate in taxes, retirement, holiday and other leave, the cost of running business, your time and skills. Too many people undercharge because something is easy to them. People are hiring you and paying you because you have what they need. Your skills and knowledge are valuable.
For self employment, it is preferable to charge per project, not per hour. One of the reasons being as you get better, you get faster. If you’re charging per hour this will mean you are doing more work in a shorter time frame so making less money per project as you grow. This does not make sense!
But some like an hourly rate to use as a base to work out a per project rate. If you choose to do this, use the formula below but as you get faster at your work and better, double then triple your rates and keep moving up.
Formula for Self Employment Rates
1. Work out how much you want to earn a year. E.g. $100,000.
2. Add retirement, tax, business expenses such as site hosting, insurance, design, advertising, courses and events you want to participate in, self-care etc. This likely brings your $100,000 up to $150,000.
3. Work out how many days you will be working and it’s not 365. Start with the 365 days in a year. Remove weekends (104 days), public holidays (11 in Australia), holidays (20 days if going for the 4-week standard) and sick leave (10 days is standard, however, allow more if needed). This brings you down to 220 days.
4. Work out how many hours a day you can actually work. Most mums I know have school hours only, this means 5.5 hours max (after school drop off and pick up) or 1,210 hours a year for the 220 days they can work.
5. Divide $150,000 by 1,210 hours and you get $123.96 per hour. Let’s round that up to $125
6. Charge accordingly! If you charge $200 for an article that takes you 1 hour to write, you are in front and that is great. If you are charging $200 for an article that takes you 3 hours to write, you are behind. However, if your goal is less or you can work more hours this changes.
Time Vs Money
What do you want more of, time or money? In our family, we have specific goals both for time with family and activities we enjoy as well as the income we want for that lifestyle. Finding that balance can be tricky but it is worth it.
One thing that helped us, when we wanted to buy some random thing, we’d calculate how much time it would cost. Using the hourly rate about for our time or our hourly wage, it is easy to see how much something truly costs. For example, we went through a stage where we blew a lot of money on takeaway. When we added it up, it was hours of work wasted PLUS more than the cost of a weekly dive which we had not been doing because we didn’t feel we could afford it.
Our spending did not match our values or desire for life. Seeing how much time we wasted working to pay for that junk hit home. Next time you go to waste money, calculate how long you have to work to pay for it and what else it is taking away from.
How To Say No
No is a complete sentence. Too many people struggle to say no. Even if they do say no, they feel they need to provide reasons why. You don’t owe anyone a reason. It’s your life and if you don’t want to do it, don’t. Within reason of course. If you work and your boss tells you to do something you can’t really tell them no without a reason.
Stop doing everything for everyone. Stop saying yes to all the extra things you don’t want to do and take your life back.
Think About the Life you Want
One of the best things we did to help us change our habits and value time more was to truly think about the life we wanted. We have 4 kids and want them to have great memories. Diving, travel, hiking, experiences and fun are important to us. Every week we have a family activity and we do date night.
Our dream home in Vanuatu is chosen as are our businesses and other elements of our ideal life. Images of these specific things are on our devices and walls. Constant reminders of why we do what we do and what we want in life enable us to make better decisions.
For us, it is about living in the moment, enjoying family time and creating memories while establishing wealth to help our kids and all our family back in Vanuatu and the Solomon Islands.