In the shower this morning I was thinking about some of the major road blocks to becoming more productive. It has been said that people of certain economic status do not see income as a speed bump to higher achievement as much as the time available to devote to current interests and initiatives. With that I want to explore how you value your time, which should impact
Investopedia dictates that the definition of time value of money isas follows:
The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
That is a good head start for this discussion but I’ll propose a simple tweak on this idea by asking how much you value your time? How can you go about this exactly? Well you can start by trying to think of your hourly billable rate which many can calculate quite easily. However I want to take this a step further and apply it, not just to your working life but everything you do in life. In other words, how much would YOU be willing to pay some mystery entity to engage in a certain activity?
My primary premise here is to take a deep internal self-evaluation on where you spend your time and resources and figure out if you’re in the black at the end of the day/week/month/year or not. For some, this may be challenging as it’s frankly just hard to keep track of everything you do. For others, it might be simpler if you’re living life through your calendar appointments. But what about the ancillary stuff? What about dinner with family or friends? Time spent at a bar? Time sleeping? I think you can see where I’m going with this.
To use an easy example, let’s say you value your time at $100 per hour. That means for every hour of the day, you should hopefully be “billing” your time somewhere for some kind of realized gain, be it monetary, emotional, physical, etc. There is a total pot of $2400 available to you in a given day but how much of that is spent on something non-productive, versus something that realizes gains in the aforementioned categories?
To further the example, if you sleep for 6 hours per day, you’re in the hole $600 (obviously this is required but I see the argument against calling this an expense). Add to that time spent showering and getting ready for work and that might be another $100-200 depending on your routine. How much do you really want to go to happy hour with friends? Aside from what’s coming out of your wallet, that might be another $200-300 spent just to join them in that activity. Is it really worth your time? Only you can be the judge of that. Of course no one wants to be a recluse and solely focus on finding ways to maximize productivity for purposes of earning money, but I think this is a great way to keep things in balance and in perspective. We all want to enjoy our lives and have fun but this can also be a great budgeting exercise for those so inclined to find out how else you’re spending time and money. Not to say that we’re all operating in the red or that finding ways to get to profitability should be the primary goal but finding out the top categories where your time is spent can be invaluable and likely something few people have actually done, let alone calculate on a regular basis.
Just to write this post, I would estimate that I spent about 30-45 minutes coming up with the idea and theme and another 30 minutes getting the ideas onto paper. I will need to find an image and post this through the site which might take another 30 minutes or so after some editing so the time/money spent for me is roughly 1hr 45mins x $100 = $175. Was it worth it? Well I hope that it kicks off a nice discussion and serves to provide value to the users here so I’m happy to spend the time.
After all, according to Dr. Braverman, we only have so many days on this earth. Why not use them as wisely as possible?
Interesting post. From my initial read, the issue I see with this line of thinking relates to assuming that the realized gains from time spent are fungible, that is to say, that an hour spent to achieve monetary, emotional, physical gain should be 'billed' the same amount. But that really comes down to personal preference, as you hinted at. Someone might value one type of gain much more highly than another.
I think the broader point is that time should be spent purposefully and intentionally, with forethought, regardless of whether the outcome is one of productivity or enjoyment, so that one can make the most of their time.
Great comment and certainly something I was thinking of at the time writing this post. Surely many people will have different interpretations of what is an enjoyable or productive use of their own time. I think that many people may not have really thought about where they spend their time and these same people are always saying they never have time for anything.
I personally try to track my daily/weekly time every few months sort of like a reboot.
Be sure not to forget that the value of a certain activity may not scale linearly with time - for example, I would rank the first two to four hours of sleep higher than the next two, and these higher than the next, and so on. Similarly, an hour of exercise in a day can be very valuable to one's health, but the value of this exercise drops off sharply with more time spent in a single day.
New keynesian economics goes into this concept to some degree. Basically yes, we all have these utility curves for every action we do, or do not, take and theoretically each of theses decision nodes has some self-determined level of 'wellness' or 'goodness' we get from that action. Also a bit of opportunity cost in there as well
While you mention 6 hours sleep puts you $600 in hole. Hence resulting in your pot being $1800. But in my opinion that 6 hours sleep could result in your hourly rate to jump to $150 per hour. Therefore $150 * 18 remaining hours equals $2,700 in pot.
In my opinion I think of sleep as an Ivy League MBA that allows you to go from a regional bank somewhere in Minnesota to Goldman Sachs in NYC.
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