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The Dollar Value of Your Time | How Much Are You Worth an Hour?

2,186 views Wait, is this logic right? • Jun 14, 2023
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Is anything worth your time? Understanding the dollar value of your time will help you make better decisions to manage your time. It will help you objectively decide whether something is worth your time or not. Let's learn the concept of the dollar value of your time, how to calculate the money value of your time and everything else related to it that will make your life easier.

Money Can Buy Happiness: https://youtu.be/yxa_jAl5Rs4
Credit Card Secrets You Must Know: https://youtu.be/p6WHZHMLopo
Understand the wealth distribution in India: https://youtu.be/z4Qf44Ti338

Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter:
@ngkabra http://twitter.com/ngkabra
@shrikant https://twitter.com/shrikant

James Clear's Article on The Value of Your Time: https://tapthe.link/i-OTza3Bf

Listen it on the podcast provider of your choice: https://tapthe.link/FutureIQRSS
Watch other episodes of The FutureIQ podcast: https://www.youtube.com/playlist?list=PLAppTB0r5_TaYueZ0adD42Wiw5X-wTE4v

Chapters:
00:00 Introduction
01:02 An offer you will refuse
02:33 The problem
03:46 Calculation
04:57 Examples
07:18 Working vs non-working hours
11:00 Outsourcing
13:14 People not earning money
15:25 Where doesn't it apply
18:43 Money

#futureiq #timevalueofmoney

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Transcript

because I offered you the job you don't want it but you offered it to yourself and you kept it for 20 last 20 years you've been doing it because you offered it as a job man when it's a job then I have to think about whether that job is worth my time srikant if Jeff Bezos is walking and there is a hundred dollars lying on the road there is it worth his time to bend down and pick it up of course it is a hundred dollars why why wouldn't a hundred dollars be worthless time to bend down and pick up it takes him 10 seconds to pick up yeah do you know how much Jeff Bezos makes in 10 seconds
far more than a hundred dollars right so it was just I mean he could be doing much more useful things with this time with those 10 seconds those 10 seconds right I mean it sounds ridiculous but when you put it that way it yeah it makes sense of this concept he's losing money by picking up those hundred dollars absolutely absolutely right so um this concept applies to you also except that you don't know the dollar value of your time so that's what we are going to discuss today but before we get to that I am going to make srikanth an offer he will refuse oh not the Godfather there so I am going to offer you a part-time job
the demon father right so the part-time job is this that whenever I am buying something right I will just you know decide what I want I will not do any price comparison anywhere I'll ask I'll not do any haggling I just whatever is the first price that they say I say I'm willing to pay this except that at that point I turn it over to you and I say now you do price comparisons you do whatever haggling just get me the same item and whatever you manage to save you can keep it right but I'm not going to do it for like big ticket items like car or fridge like the vegetables and the Rickshaw and like a
book that I buy and things like that so you want me to haggle down a 50 rupee auto rickshaw right or 100 rupee auto rickshaw right down to 80 rupees and keep the difference you get the money 20 rupees yes for haggling yes no thank you why do you not want this job srikant what is wrong you're getting money 20 rupees well whatever sometimes it's a little more or five rupees if it is Masala and what no I'm not Naveen no you already said I'm going to refuse it I am refusing it you are right tell me why because it's it's not worth my time but in your daily life you do exactly the same things you spend exactly the same
amount of time to make save exactly the same amount of money so just because I offered you the job you don't want it but you offered it to yourself and you kept it for 20 last 20 years you've been doing it because you offered it as a job man when it's a job then I have to think about whether that job is worth my time but when I do it I am doing it for myself I'm doing it in my non-job time that's that's the difference oh because you enjoy haggling kind of it's it's who doesn't right so unless you are a weirdo like well not I know people who enjoy haggling okay but for everybody else
if you this is not what you want to really spend your time on why would you do it right no I I get I get what you're trying to say it doesn't make sense to haggle for a small amount of money because at the end of the day it's not worth your time I mean so but there are time has to have people huh okay um for people who get salary right I mean you work about 40 hours a week yes and there are approximately 50 weeks two weeks of vacation correct a year so you work 2000 hours in a year yeah right easy calculation what is your income out of those 2000 hours right after tax okay
some X number your income yearly income after tax if you divide by 2000 you get the hourly value of your time so if your income is like six lakh per year approximate above an assumption pre-tax so with tax after taxes it is your time is worth 275 rupees per hour right if it is 10 lakh then we are talking 400 rupees right and it keeps going up like this right which means that if you are if your time is worth 400 rupees per hour and you spend an hour to save 200 rupees on something that's a really bad use of your time yeah right I'll give you a couple of examples please okay um when I and my wife were younger right we
got a pitch from one of those time sharing holiday things yeah and the one where they give free food no yes they said you know you just come no obligation to buy but if you listen to our product if you understand it at the end of it we will give you free lunch yeah right and the lunch is never or never great although it is free no no it was good good lunch right we went to uh he went to an expensive timeshare holiday person yeah but the thing is that I wasted two hours right and we got a lunch which was probably worth like you know 300 rupees per person okay I was just I mean if we had thought of
the time value of our sorry the money value of our time it was just a very bad deal yeah right we should have just said no and most of you probably do say no to such things right yeah I'll give another example which makes it clear in a different way right this comes from James Clear we are big fans of James clear here right yes sir he was looking for some item which was not easy to find okay I did a search online search she found it 15 but it was in UK and shipping that item from UK to us where he was was forty five dollars extra right okay now anybody is going to see 15 item 45 shipping I'm
going to say you know what forget it yeah so he continued his search locally and he founded oh my God there's a store here where I can go and buy it in person for 15 and the store was one hour away okay and you didn't feel bad about you know going one hour picking up the item and coming back just to save 45 on shipping right okay now again very bad use of his time right as long as his time is worth more than 45 dollars per half hour yeah about half hour correct so calculation yeah so the point is that sometimes we just feel this is morally wrong how can they charge me so much and
then we go to Great Lengths to get that charge reduced and it's just not worth the time I I get it but uh was was it was that r that he took to drive to get that item uh a part of his working R schedule or was it because see when we were calculating the money value of the time then we were calculating it it based on the hours worked well let me put it this way that that value huh is the amount of money you can easily make with your current skill level correct that is the amount of money the world is willing to give you per hour correct right the only reason you don't work doing that for all
24 hours of the day is because you want to sleep you want to spend time with your family you want to uh you know do things you enjoy the reason why you're earning the money correct correct but the point is that one hour of work is going to get you at least that much the world values it that much in fact to work more than eight hours beyond that uh you probably want to be paid more because they are dragging you away from your leisure time your family yes so infect your time value of money should be more than that but let's stick with just what your current let's stick with the lowest value that you can possibly
earn so yeah because the thing is the only reason you are not working the rest of the time is because presumably you are doing things that you enjoy you are doing things you want to do now if you are a weirdo who enjoys going to four different shops to find the cheapest version of uh listen I tend to think of it in terms of cost benefit analysis so there is you know no benefit whether the benefit is like 200 rupees and the cost dopamine is a very real benefit let me tell you dopamine and serotonin are real benefits they are they're useful so if you and adrenaline no adrenaline is not a benefit okay if
you get stressed out over the price actually that is much worse for you right all right enjoy I know a few people who really enjoy going to four stores and then getting 100 rupees cheaper and then for the next like two months they will be telling that story to everyone right so the value they get out of it is infinite right everybody knows people like that but and some people are thinking of me talking about whatever no so let's talk about normal people right who don't enjoy these things you should not be wasting time on such activities fine fine fine but you know there is a different thrill in standing in a line overnight for the latest uh Harry Potter
yes to come out although now the situation is quite different with stuff that the author has been saying anyway moving on wait so I mean U.S has a whole bunch of other interesting examples of this right yeah waiting in line for hours for a Black Friday sale just to at this point it is basically a tradition to wait outside a big store I mean or you know doing like a plumbing job at home when because you don't want to play the plumber I mean the good thing is in India nobody thinks like this you're just you're not happy to pay the plan in fact now that I think about it India has a lot of spaces or a lot of situations
where we uh happily give our money to someone else so we don't have to spend the time the plumbers being one example but that is only for a bunch of standard things for which there are well-known people providing those Services yeah I was thinking of Agents yeah yeah for agents but in your regular work I bet there is a whole bunch of things you do which are boring okay yes why don't you pay someone to do the boring parts for you so you can focus on the interesting Parts in fact you can spend more time doing the more value added parts of your job very few people click that it's only when a person becomes like a fancy executive
and he or she suddenly realizes that you know what let me have an executive assistant to do all these things for me why don't you have an executive assistant right now I do I have three of them they are called swiggy donzo and big basket well buying food is not a part of your job I'm talking about things you do on the job which are boring right or routine or somebody else could do it doesn't require your brain because stat GPT only came out in November man give me a break yeah so in fact yeah chat jpt is going to be everybody's executive assistant we did an episode on that please check it out yes but yes think of the value of your
time and then think about what do you spend your time on and is it actually that much value true but otherwise Outsource it Outsource it yes but also Outsourcing it makes sense only if you're going to be able to use that uh uh time to uh to invest somewhere else and make money yes otherwise at the very least you can invest in improving your skills which will make money next year right so or I mean just generally because what what what we also have to remember at this point is that when I Outsource it it also is an expense on my account yes and that expense has to also tally with the entire budget that I set
out for the year and the assumption is that you can you know make more money with the time you saved if you're a freelancer that's relatively easy I mean just get more customers if you are a salaried employee that might not be easy but what it means is that you can do much more valuable things in the job so you get a promotion faster right you guys faster yeah so uh that is something that everybody I guess will have to figure out for themselves but here's the question and uh we've been talking about salary people but what about people who are not earning money so I think a excellent example here is women exactly that's the one that's the thing I'm
thinking about a stay-at-home mom correct I think of it this way right that the reason the person is at home is because this is what she wants to do okay right and so the time value of her money should roughly be the time value of her husband's money because correct the reason the husband is able to do all of that stuff is because she is at home correct so just because you're not making money officially doesn't mean that your time isn't valuable right so in fact figuring out the time value of money can be tricky in cases where uh you are not just a salaried employee right so there is an article Again by James Clear which gives six different
ways of computing the time value of your money check it out in the links it is uh interesting the the concept of figuring out the dollar value of your time or money value of your time makes sense only once you reach a certain level certain amount of income because for for numbers who's making her barely enough to you know get into a tax bracket the inverse tax bracket it doesn't it doesn't really make sense to think of dollar values because it does make sense always right the only thing is that when the dollar value of money is small enough the number of places where you are wasting time reduces right right because you know uh if spending a few
minutes on getting the Rickshaw charge reduced correct right if that if you're learning less than that then it was totally time worth well spent right so just but keep in mind what is your time value of your money so doing money value of your time yeah and if the money value of your time that calculation you have to do only once and then every time you're doing some activity where you're wasting time to save money you can just quickly take just a few seconds to decide whether this is worth doing or not right because I was also trying to think of are there any situations where the concept of a dollar value of time or
money value of time doesn't really uh shouldn't really be a factor one example that you gave initially was when uh it's a it's an activity you enjoy doing maybe even if it is something like haggling yes if you enjoy doing it go ahead okay uh second is that if the time isn't really wasted right so another example is that uh you are traveling somewhere and there are two different options one is a direct but more expensive thing which is taking uh six hours and another is an indirect one which takes uh 10 hours but it is much cheaper should you go with six hours or 10 hours right one way to look at it is time value of by
four hours how much am I Saving right on the other hand if the 10 hour thing involves that I can do four extra hours of reading a book then it's not time wasted or it could also be I have already chalked out my entire I've already chopped out an entire time period for which I'm not available for work so six hours or 10 hours it doesn't really matter understand this not available for work thing right as in if you have not available for work you should be enjoying that time or investing in your future right if you're just wasting it on an airport line then it's you know it cost you okay wasting in that sense yes but I was I was
thinking more along the lines of okay my uh my days from say uh Monday to Friday are already scheduled for travel and whatever else I'm doing within that period so just because you scheduled it doesn't mean that if you get an extra four hours there you know you can't use it now just have to sit like this because oh I said your life but if I'm going to read in the train I'll read at the airport how does it make a difference well no it depends I mean if you can read at the airport but yeah but you know the security guy who has like hands up looking for things is not going to let you read what kind of airports
did you go to man what kind of airports do you go to uh I mean you know there's a bunch of things where you can't do anything with that timer it's really wasted whereas sometimes it is not wasted all right so essentially one of the thoughts that I had was a dollar value will probably change depending on the kind of activity that you're doing or the kind of time that you're utilizing what I want to read right sure uh related to money and efficiently allocating your money okay so by this by Edward lutwak and he says I believe that one ought to have only as much market efficiency as one needs okay because everything that we value in human life
right is within the realm of inefficiency love family attachment Community culture old habits comfortable old shoes yes right you can't count these things in terms of money I will write so do not look at the price when one of those things is involved right friends family community culture Freedom impact all of these things or basically haggling if haggling is something you like exactly yeah the other way of looking at it is you know money is good to think about right you need to have money to be able to do the things you want to do but do not forget that this is a Tim O'Reilly quote money is like gasoline during a road trip okay
you don't want to run out of gas on your trip but your tour is not a tour of gas stations the whole point of the trip is to see other things not just gas station to gas station so the point isn't money the point is ultimately to use the money for things you enjoy doing yeah fair enough fair enough me personally I am not I am sure Naveen will probably not entirely agree with this but me personally I tend to think of my money value of time in three different segments one is the work value one is my leisure value and one is my family time values so my uh work time value is the lowest of these three my
leisure time value is like uh a little on top of that because I consider that as equivalent to overtime and if you want to take me away from my family time you will have to pay a lot more than a H my usual whatever numbers usual rates yes so next time you choose to go to four different stores to save 200 rupees think about whether it is taking away from your family or when I take my family along yes I take my family along and make it like a leisure time out of it so yeah no I get I get what you're saying but this is a very interesting perspective to look at the next time uh
you want to spend just that little bit of extra time doing you know to save uh just a little bit more because that just a little bit more takes a lot more out of other places and other moments in your life so don't do that yes shrikant Naveen this is future IQ