What’s your time worth?
There are many reasons to focus on your financial journey with the aim towards financial independence. No-one’s journey is quite the same and their reasons for starting it are equally unique. However, most people tend to fall within a mixture of a few key reasons:
Security – Security from unexpected events and unforeseen expenses. Security from being homeless if you lost your job or child became ill.
Happiness – Happiness gained from knowing you’ll never need to be stuck in a job you hate just to pay the bills. Happiness to decide what you want to spend your money on and having the freedom to do what you want.
Time – Having the time to do what you want. Never missing a child’s birthday due to being stuck at the office or just having the time to sit around on a sunny afternoon and do nothing for a change.
Security and happiness are both relatively controllable, earlier mistakes can be corrected and recovered from. A majority of the personal finance blogs I read are by people who started their journeys deep within debt and yet still manage to turn the ship around to climb out and shoot forward with an increasing networth. Happiness is subjective and changeable. Some people love their jobs and would be happy to continue working long after they no longer had to. Others are happy to live without the latest electronics and cruise around in the cheapest car possible. Many of us on the journey to Financial Independence have learnt to separate happiness from money and gain joy from free or cheap items/activities.
Time however is a different matter. No amount of money can buy-back lost time and years of early life are just a memory. I often wonder how much money the richest people in the world would offer to buy an extra year of life. A million pounds? A billion? Would Warren Buffett give away his entire fortune on his deathbed for an extra few years to spend with the grandchildren? Which makes me ask the question:
What is your time worth?
I recently returned from our annual last-minute-dirt-cheap holiday abroad and was discussing the planning with a close friend of mine. This friend values his time very highly; he works as a salesman and appreciates that his time spent working has a direct correlation to his daily commission payments. While we were talking, I mentioned that we were flying from an airport about 2 hours away instead of the closer one which was only 1 hour. We chose this because the flights were £40 cheaper per person and the train fare to get there was no extra. Essentially we were willing to sacrifice an hour of our time in return for a £40 saving. This seemed like madness to him, and he argued that he would earn more than that £40 in an hour at work so why would he give up an hour in return for the saving?
It’s an interesting argument and emphasises the point that everyone will value their time differently. My journey towards Early Retirement involves frequent time sacrifices to make financial savings. I am happy with that, in the knowledge that my time spent now will compound to allow the early retirement and give much more time later on. I also appreciate that most people are unable to work any additional hours they want, and so hours sacrificed on the weekends or evenings won’t actually equal to a loss in income.
To my friend; his time in the present is far more valuable than potential time in the future and so he will pay a premium to save time. Is he wrong to do this? No – Because his priorities are different to mine and he may well be happy to continue working for an extra 10 years to find a more lavish lifestyle today.
How about you? What’s your motivation for Financial Independence and does it have an effect on the value of your time?
10 thoughts on “What’s your time worth?”
Today I slogged through another 7 hours. I got paid today. I saved my whole check. We can live on my wife’s salary alone, but then we aren’t saving nearly as much. I am kind of like your friend. I could quit again, but I know every dollar I save away puts us closer to reaching FI. It will be difficult to stay at this job for an extended period. One day at a time. One step at a time. Thanks for these words. Time is the one thing you can’t buy more of.
That’s pretty sweet knowing you can save literally 100% of a paycheck. We’re a long way off of that im afraid. it’s still a good safety net to have knowing you *could* still quit if you absolutely had to and not be out on the street.
Myself and the good lady have several reasons why we want to achieve FI.
We want to feel financially secure. This has not always been the case.
The biggest driver though, is that we want to spend more time doing the things that we feel are important / make us happy, so this is time and happiness rolled into one I suppose.
When we look at the cost of something, we like to get an idea of how many hours it would take to pay for it. This works for big purchases but is especially interesting for things that you purchase on a regular basis that don’t appear to cost much. Buying a nice coffee is a good example. Do this a few times a week, multiply by 52 to find the cost for the year, then multiply by 10. This gives you an idea of how many hours you need to be stuck at work over a 10 year period to pay for this simple treat. Many things lose their appeal. I’d rather spend the time outside work.
A slightly rambling answer, but I hope it made sense.
Hi Big Monkey,
I’ve seen the ‘time cost’ of purchases used before by several people online and acts like a great de-motivator for unnecessary purchases. Those small daily purchases really add up to alot of time spent in the office. Worth it? Unlikely.
My present time is worth a lot to me…. possibly even more than the time of my future self as I don’t know what the future will bring health-wise, so that’s why I down-shifted & only work a 3 day week. Effectively I have an extra 3 months off work year than a 5-day-a-week worker. No payrise will give me this amount of free time to spend with family & persue personal interests.
@Big Monkey: tidying up your coffee example – personally I “gross up” the expense as you’ve paid tax on those hard earns £’s/$’s & then times by 46 (assuming 6 weeks holiday a year).
There is a fun little “demotivator” on the MoneySavingExpert website to this effect: http://www.moneysavingexpert.com/shopping/demotivator/
That’s a great point about the future being uncertain and so present time being worth alot. I see that alot of personal finance bloggers have started to down-shift as they reach financial independence. Another UK blogger Thefirestarter is currently debating it right now: (http://thefirestarter.co.uk/alternative-plans-fi-new-definition-frugally-independent/). Perhaps it’s something i’ll consider when i’m older and have kids etc.
PS: Seen that calculator before, a great little tool and so glad to see it in a mainstream site!
I used to be like you and try to save every dollar possible when it comes to traveling. I didn’t mind the extra layovers. Now I kind of calculate how much savings we get vs. how much extra time would cost and evaluate whether it’s worth it. If my wife and I can save $300 or more on airfare by having one extra layover, it might be worth it for us. If it was less than $100, maybe it’s not worth it. If it’s somewhere in the middle we’d have to take a look how long the overall trip duration is and decide from there.
Hi Tawcan,
I think as you get older, you start to value time a bit more and similarly are more willing to spend extra for comfort. It’s always going to be different to different people, you just need to find a suitable balance which suits your lifestyle and financial aims.
Hmm…by the looks of things, either I don’t appear to value my time that much or I just see things in a different way!
My commute to work can range between 40 mins – 1.5 hours a day (on occasion, 2 hours!) depending on the traffic. I use this time in my car to think, contemplate, catch up on current affairs on the radio or just listen to my favourite tunes. I don’t view it as wasted time, it’s just time I’ve spent on my own, on the road and is something that is part and parcel of my job.
If I saw it any other way, I would be arriving at work and coming home from work thoroughly depressed or angry at the wasted time – I put a positive spin on it because right now, whilst I’m earning and saving for FI/early retirement, it’s something that’s unavoidable so I try not to be negative about it.
That’s not to say I don’t look forward to not having to do that commute any more – just that right now, I am ok doing it while I’m getting paid!
As for the holiday example you gave, I would have saved that £40 too!
Hey Weenie, I can certainly appreciate having the time to unwind during a journey. At one point I did commute on a bus and would look forward to watching my films on an ipad during it.
On the other hand, I find I relax far easier when at home, so would rather get home to relax instead of doing it en-route.