Value of your time calculator

[obstinate]

http://www.clearerthinking.org/value-of-your-time-calculator

This could be thought of as mustachian or anti-mustachian depending on how you look at it. I'm curious what kind of scores people on here get, and what they think of the advice.

[obstinate]

I didn't give it my email. It displayed the results on the page. There is a point where they ask you if you want an email follow-up. You just click no and they give you the results in the page.

[gerardc]

The concept is kinda stupid because the value of your time is not a constant, it depends when that time window is available, your state of mind at that time, and the general context. E.g. after 10 hours of work in a day, you can't focus anymore, so taking 10 minutes to do the dishes is possibly the best use of your time at that moment. In other words, allocating your time is a complex optimization problem, and a greedy approach with constant $/hour is bound to fail. Interesting metric as an approximation, maybe.


ETA for clarification: in my results, my time value for the use of a machine in the weekend was $4/hour, but ~$100 for additional work hour or the gift certificate, which shows that I'm willing to put up with boring software for a much higher price than doing laundry, since I already do too much coding and a little sick of it :) So, this looks like a contradiction, and that I'm bad at judging the value of my time in different contexts, but I posit this is actually correct.

[Raenia]

I had a similar situation, where I valued my time waiting in line very differently than using the machine - in this case because I value the ability to do the task myself rather than using the machine or having someone else do it for me, which adds another term to the equation.  Honestly, I'd expect that to be the case for most of us here, since hiring something done to have more free time raises your FIRE number every time you do it.  At the end, their suggestions included hiring people to clean my house and do my laundry (as long as the price is below a certain point) in exchange for the free time, which fails to account for the extra time I will then have to work in order to sustain that expenditure.  Not to mention that I'm happier knowing that my domain is under my own control.

It's an interesting concept though, and I can see it being useful to some people.

[JLee]

The concept is kinda stupid because the value of your time is not a constant, it depends when that time window is available, your state of mind at that time, and the general context. E.g. after 10 hours of work in a day, you can't focus anymore, so taking 10 minutes to do the dishes is possibly the best use of your time at that moment. In other words, allocating your time is a complex optimization problem, and a greedy approach with constant $/hour is bound to fail. Interesting metric as an approximation, maybe.


ETA for clarification: in my results, my time value for the use of a machine in the weekend was $4/hour, but ~$100 for additional work hour or the gift certificate, which shows that I'm willing to put up with boring software for a much higher price than doing laundry, since I already do too much coding and a little sick of it :) So, this looks like a contradiction, and that I'm bad at judging the value of my time in different contexts, but I posit this is actually correct.

Mine was about the same except I'd probably pay $10/hr for a time saving machine. Average free time value was $87/hr.

That means to take a 24 hour flight delay, I'd need $2k to make it really a compelling choice, ha.

[Mr. Green]

It says I should quit my half-time job. Apparently I value my time at $170 per hour but I only get paid $100 per hour. I guess my employer is getting a deal.

[MadBikePoet]

It says I should quit my half-time job. Apparently I value my time at $170 per hour but I only get paid $100 per hour. I guess my employer is getting a deal.

Similar for me. I guess if my employer was not getting a good deal, I would already be fired, one way or another.

I should mention I did the "Your money or your life" what is your truly hourly earnings exercise 3 years ago.

The most important revelation to me is how much in dollars I value my free time. I feel that deep down I know this, but it is useful to have it expressed intrinsically. I'm on a point of my path where I have more money than time left in my life. I need to remember that for when life presents opportunities to increase free time at a monetary cost and avoid the trap of being instead of intelligently frugal. For example, I used TurboTax for the first time this year instead of slogging my way manually through the forms. The savings of time and stress were well worth the monetary cost.

[omachi]

Yikes, those recommendations. Pay these people to do your chores for you because they charge less per hour than we claim you value your time. Talk about presenting a false dichotomy. Those aren't the only choices. Where's the comparison of cost to just doing your chores, investing your hard earned pay, and making returns without work in the future?

[obstinate]

I think this is a tool to be used carefully, like an angle grinder. But it can still tell you interesting things about how you value your time. One of the things I learned about myself is that I'm naturally inclined to not increase my day job, but I also don't like to pay other people to do things for me.

The main weaknesses, I think: this calculator doesn't take into account things like the intrinsic value of doing things yourself, independence, self-reliance, etc. It assumes that time is totally fungible and I can just work my day job one more hour to pay for someone to give me an hour of service. This isn't precisely true for anyone in salaried work. But it's still quite interesting.

I only get paid $100 per hour.

Was that after taxes? You're doing pretty well for yourself then.

[stashgrower]

I think this is a tool to be used carefully, like an angle grinder. But it can still tell you interesting things about how you value your time. One of the things I learned about myself is that I'm naturally inclined to not increase my day job, but I also don't like to pay other people to do things for me.

The main weaknesses, I think: this calculator doesn't take into account things like the intrinsic value of doing things yourself, independence, self-reliance, etc. It assumes that time is totally fungible and I can just work my day job one more hour to pay for someone to give me an hour of service. This isn't precisely true for anyone in salaried work. But it's still quite interesting.

+1.

[lost_in_the_endless_aisle]

Yikes, those recommendations. Pay these people to do your chores for you because they charge less per hour than we claim you value your time. Talk about presenting a false dichotomy. Those aren't the only choices. Where's the comparison of cost to just doing your chores, investing your hard earned pay, and making returns without work in the future?

Regardless of the common mantra on MMM, the suggested approach is the rational one with one caveat: that a marginal hour worked at your current job produces more income. For salaried employees, this is not necessarily true (though it's hard to know since the "overtime" bonus of harder work might come in the form of eventual raises).

If you state that you value saving an hour of time working around the house at $30 and you make $40/hour at work, it's better to work an extra 45 minutes and hire someone to do the house chore with the extra $30 you make. There is no impact to net savings as a result and "doing your chores" is 33% less efficient than doing more of your day-job and hiring someone to do the chores. If your answers do not come out reasonably like this maybe you had low consistency.

[omachi]

Yikes, those recommendations. Pay these people to do your chores for you because they charge less per hour than we claim you value your time. Talk about presenting a false dichotomy. Those aren't the only choices. Where's the comparison of cost to just doing your chores, investing your hard earned pay, and making returns without work in the future?

Regardless of the common mantra on MMM, the suggested approach is the rational one with one caveat: that a marginal hour worked at your current job produces more income. For salaried employees, this is not necessarily true (though it's hard to know since the "overtime" bonus of harder work might come in the form of eventual raises).

If you state that you value saving an hour of time working around the house at $30 and you make $40/hour at work, it's better to work an extra 45 minutes and hire someone to do the house chore with the extra $30 you make. There is no impact to net savings as a result and "doing your chores" is 33% less efficient than doing more of your day-job and hiring someone to do the chores. If your answers do not come out reasonably like this maybe you had low consistency.

You misunderstand my protests. Simply work more and buy time now or don't work more is a false dichotomy. If you look at it as a single choice like they present it, sure, your example is rational. But there are really two decisions in play in the single choice they present. Should you work extra hours? Should you pay somebody to free up hours used by chores now?

Let's just go with yes to working more, since your example presents at least one thing where there is more value to working extra than not.

Having worked an extra hour, there are many things you can do with that money beyond paying somebody to do your chores. So let's answer the second question. If you can get more value out of something other than paying somebody to do your chores right now, it isn't rational to pay somebody to do your chores right now.

You have the option to invest that money. At the $40 and $30 values of work and chores in your example and fairly standard assumptions about investments, a fund to cover chores forever can be built in about 13 years by doing one extra hour of work each week and investing it, rather than spending it to free up chore time. As long as you're far enough from dying, don't discount future time too heavily, and aren't super risk averse, this is a better means to acquire time than the option presented.

Allowing that, then no, it isn't rational to hire somebody now. Suppose you're a 30 year old living to the average 79, you work 13*52*2 = 1352 hours to get your chores done for the rest of your life while investing versus 49*52*.75 = 1911 hours to get your chores done for life just working extra. Assuming average life expectancy, you'd have to be at least 45 for it not to be better.

And investing has other upsides. You aren't working extra or doing chores in your older years. There's probably going to be something left over to pass on. You can use that capital for other things if an even better generator of value presents itself.

[lost_in_the_endless_aisle]

Yikes, those recommendations. Pay these people to do your chores for you because they charge less per hour than we claim you value your time. Talk about presenting a false dichotomy. Those aren't the only choices. Where's the comparison of cost to just doing your chores, investing your hard earned pay, and making returns without work in the future?

Regardless of the common mantra on MMM, the suggested approach is the rational one with one caveat: that a marginal hour worked at your current job produces more income. For salaried employees, this is not necessarily true (though it's hard to know since the "overtime" bonus of harder work might come in the form of eventual raises).

If you state that you value saving an hour of time working around the house at $30 and you make $40/hour at work, it's better to work an extra 45 minutes and hire someone to do the house chore with the extra $30 you make. There is no impact to net savings as a result and "doing your chores" is 33% less efficient than doing more of your day-job and hiring someone to do the chores. If your answers do not come out reasonably like this maybe you had low consistency.

You misunderstand my protests. Simply work more and buy time now or don't work more is a false dichotomy. If you look at it as a single choice like they present it, sure, your example is rational. But there are really two decisions in play in the single choice they present. Should you work extra hours? Should you pay somebody to free up hours used by chores now?

Let's just go with yes to working more, since your example presents at least one thing where there is more value to working extra than not.

Having worked an extra hour, there are many things you can do with that money beyond paying somebody to do your chores. So let's answer the second question. If you can get more value out of something other than paying somebody to do your chores right now, it isn't rational to pay somebody to do your chores right now.

You have the option to invest that money. At the $40 and $30 values of work and chores in your example and fairly standard assumptions about investments, a fund to cover chores forever can be built in about 13 years by doing one extra hour of work each week and investing it, rather than spending it to free up chore time. As long as you're far enough from dying, don't discount future time too heavily, and aren't super risk averse, this is a better means to acquire time than the option presented.

Allowing that, then no, it isn't rational to hire somebody now. Suppose you're a 30 year old living to the average 79, you work 13*52*2 = 1352 hours to get your chores done for the rest of your life while investing versus 49*52*.75 = 1911 hours to get your chores done for life just working extra. Assuming average life expectancy, you'd have to be at least 45 for it not to be better.

And investing has other upsides. You aren't working extra or doing chores in your older years. There's probably going to be something left over to pass on. You can use that capital for other things if an even better generator of value presents itself.

But you can work that extra hour to have more to invest regardless of if you work another 45 minutes to save an hour's worth of chores at home; here are some of the options assuming a baseline 40 hour work week, $40/hr wage, $30/hr to hire someone to do housework on your behalf (recall the underlying assumption that each type of work is equivalently pleasant to you):

(1) work 40 hours at your job + work 1 hour on a chore at home = 41 hours worked, $0 extra invested
(2) work 40.75 hours at your job + work 0 hours on a chore at home (hire someone) = 40.75 hours worked, $0 extra invested
(3) work 41 hours at your job + work 1 hour on a chore at home = 42 hours worked, $40 extra invested
(4) work 41.75 hours at your job + work 0 hours on a chore at home (hire someone) = 41.75 hours worked, $40 extra invested

Comparing (1) and (2) is what I initially suggested: you are getting the same thing but for 15 minutes less of your time. But if you want to invest more, it makes sense to work an extra hour in both (3) and (4). In (4) you still get 15 minute saved to complete the chore and still can invest $40 extra. This shouldn't be surprising since it is the reason why division of labor and specialization create considerable economic gains.

Naturally, this logic fails if working a marginal extra 45 minutes at your job is qualitatively much worse than spending an hour at home on a chore (but if a marginal 45 minutes at your job is so bad, it might be rational to reduce the hours worked from 40 and spend more time optimizing household spend).

[omachi]

If the work is finite and you have time to do it in, then it isn't necessarily the case. And thanks to compounding, the point where that choice is rational isn't obvious. Under the given conditions, if there's exactly 45 minutes of extra work available, the above exemplar 30 year old works only 1365 hours investing the pay from that and doing chores, rather than 1911 hours without any investment. If there's 1:45 of work available, working it all and investing it all yields 1287 hours of work over the long term while working it all, investing only one hour of it, and paying for chores yields 1183 hours worked.

And sure, if we assume there's a supply of work available that you're willing to do and you're out of free time to do it in, then it always makes rational sense to pay somebody less than you make to free up your time to work. There's zero argument there.

But in both of these cases, where does how much you value your time even enter the equation? It doesn't. If you have some free time and work is finite, value of time would come into play and things might be interesting. But that would require some nuance for value of free time, time at work, and time doing chores that is mashed into one value here.

[lost_in_the_endless_aisle]

I agree the biggest flaw is treating all of the examples provided as equivalent. I hate standing in line more than anything and put in $100/hr for that one. IRL people have preferences and sometimes people prefer for a large number of reasons to do their own chores, regardless of what homo economus would prefer.

[aceyou]

Agreed.  I'm looking forward to folding laundry today.  I'll put a podcast on, make a pot of tea, and make my way through the big pile.  It's actually something I've been thinking about for the past couple days as I see the pile sitting there...Saturday is gonna be AWESOME!!!  But other days or times of huge stress, illness, etc, I'd consider paying someone money just to have that pile go away. 

Also, I think this idea misses out on the future value of doing things yourself now.  If I learn a skill or a new habit along the way, then the hour spend doing something myself could add up to thousands saved.  Or it could develop a skill and passion that could lead to a side hustle or new career someday.  I guarantee that Mr. Money Mustache was "LOSING MONEY" every time he sat down to write on this blog for the first couple years.  But this "chore" that he gave himself in retrospect is now giving him an income stream that makes his initial FIRE stache look like peanuts.  You just never know which uses of your time will lead to future benefit.  Variety is valuable.