Time – What is an hour of it worth?
Do you find yourself questioning whether something is a good investment? Do you find it tough to make a decision with confidence?
If you find yourself nodding yes as you read that know that you aren’t alone, in fact many Mompreneurs can relate.
The secret to having more confidence in making business decisions is to know your numbers….
And by numbers I’m really talking about what an hour of your time is worth!
Why you need to know your worth
We all only have 24 hours a day, and I think we all can agree that time is our most valuable resource. Once we use it, we never get it back. As mompreneurs out time is even more precious because we don’t just have our business, we also have our precious family to take care of. Money on the other, although very important, is a resource that can be replenished.
When we don’t know what an hour of our time is worth, our gut reaction is to do everything ourselves because we immediately think that we are saving money. And while we may be saving money, we are paying with something much more valuable…..TIME.
Once you put a dollar value on an hour of your time you will be able to use that as a basis for determining if paying for something is worth it. This will make decision making in your business so much easier!
How do you calculate your worth?
There are a lot of different methods for calculating what an hour of your time is worth. The most obvious calculation is to take your net income and divide it by the number of hours that you spend in your business.
If you also have a traditional job then you want to also factor that income and time into your calculation.
While this will give you an actual number it’s important to look at a couple of different factors.
Many of us set goals to grow from year to year. When you are calculating your worth, also add in the expected growth in income.
There are a couple of perceived values that you also want to consider:
- The value of potential income. How much do you value being able to do more income generating activities. How much is a new client worth to you? If you had more time to focus on growing your business how much additional money could you make? This value is really important because this is how you are going to determine if certain investments are going to be worth making in your business. Often when we are overwhelmed we are spending a lot of time in tasks that aren’t growing our business, that aren’t bringing money in. If you freed yourself from those tasks and took that time to generate income, what would that be worth?
- The value of saving time. With time being our most valuable asset, what is it worth to you to save time and have that time available for things that you enjoy? Maybe that means that you have time to do more activities with your family, volunteer at you child’s school, or even do something nice for yourself. Often we discount this because we feel like it isn’t worth the expense, however I would beg to differ!
- The value of happiness. This one can be harder to quantify, but how much do you value doing tasks that excite you, that motivate you or that bring you joy? What value do you place on replacing tasks that frustrate you, bore you or demotivate you?
"When you know what an hour of your time is worth you will stop counting pennies"
How this works in decision making
Why don’t we look at an example so that you can see exactly what I’m talking about!
Let’s say that you are completely overwhelmed with your social media. You can’t keep up with posting on multiple platforms, you end up wasting your time scrolling through the newsfeed because you don’t really have a social media strategy. You spend way too much time trying to find things to post and don’t stay consistent because life happens. You sought out a social media manager and got a quote for $900/month.
Your gut reaction is that it is really expensive for something that you can do yourself. You might as well save the money and keep plugging along as you have been.
And then you calculate out what an hour of your time is worth. Using the information above you determine an hour of your time is worth$30/hour. You’ve been spending 20 hours a week trying to manage your own social media and admittedly not doing a great job. Not to mention the fact that you really don’t enjoy doing it, it stresses you out trying to keep up with all the changes.
Let’s do the math…. 20 hours a week at $30/hour puts you at $600 a week or $2,400 a month.
We haven’t even factored in how much additional income you could be bringing in if you had 20 hours a week back in your life to focus on growing your business! Although you aren’t shelling out $2400 to pay yourself to manage your social media, you are losing at least $2,400 because you could be out bringing in more sales…
Suddenly the $900 per month quote doesn’t look so outrageous! In fact it’s a steal of a deal!
When we calculate what an hour of our time is worth we easily can determine if a tool, service or system is worth investing in. We take the guesswork and the emotion out of the decision and feel confident that we are making a good investment.
Have you calculated what an hour of your time is worth? How does it affect how you make decisions?
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