Quick and Dirty Rule of Thumb - Calculating Your Hourly Rate
Knowing what your time is worth is crucial when you are strapped for time and you are trying to determine if an activity is worth your effort. As they say in the working world...Time is Money.
According to Tim Ferris, author of The Four Hour Work Week there is a quick and easy way to calculate what your time is worth. I will use myself as an example.
1. Take your annual salary ($75,000)
2. Remove the last three zeros ($75).
3. Divide that number in half ($37.50).
Unless you are "making" or "saving" that much with the given activity then it may not be worth your time.
If you are interested in drilling down deeper to get a more detailed look at what your "true hourly rate" is, then take a look at Trent's post (here) on the subject.
Don't get me wrong, doing things simply because they aren't financially worth your time isn't the only consideration. I know the time that I spend consuming media like MSNBC.com, ABC News in the morning before work, and the 50+ blogs I read on a daily basis (about 1.5 hours) may not be the best financial use of my time. However, I accept this because I subscribe to a maxim that people should learn something new everyday. As such, I see this as time well spent.
Cheers,
TMac
Cheers,
TMac
1 comments:
I calc it the same way. But there is 1 issue with that (besides the fact that most flat salaried people don't work 40 hours). The problem is that working additional hours at that job does not give you that additional amount of money. I make quite a bit but if I want extra money, I have to do things that are well less than half my hourly equivalent of my day job. If someone offers me $15 an hour to do some work under the table a couple hours a week, I would probably do it, though i usually make 4 times that.
You have to look at opportunity cost vs comparing against your normal salary.
Post a Comment