Is Time Really Money?

Posted on 01. Mar, 2006 by in Saving & Investing

timeismoney.jpgI came across an outstanding article on which explores the old addage “Time is Money” and tries to quantify the amount of money your time is worth. If you’re like me, I thought that the best way to quantify your leisure time is to use the amount you earn on the job per hour – but the article raises some interesting ideas as to why your leisure time is actually worth a lot more.

The concept of quantifying your leisure time is important – in my opinion – in order to prioritize your life. For example, if my leisure time was only worth $12.50/hour and it cost me $15 to change the oil in my car at the corner Jiffy Lube, then I might be inclined to change the oil myself. But if my time is worth $65/hour then I would much rather spend that time with my kids than changing the oil or mowing the lawn.

Michael Norton, assistant professor of marketing at Harvard Business School, thinks the exact opposite. He calls it the “Ikea Effect” because he’s found that shoppers who assemble furniture purchased at the Swedish big box store seem to value the furniture more than it’s really worth. Likewise, we often feel that our own efforts are some how more valuable the produce better results than others we might pay to do the same tasks.

In any case, I believe it’s important to figure out – at least roughly – your leisure time “billable rate” so that you can make decisions (both business and personal) that will allow you to maximize your time, resources, money, and happiness. It’s like Paul English, the chief technology officer at Kayak Inc. said, ”The thing that I realize as I get older, and as I witnessed the death of my parents, is to try to focus on every minute,” English said. ”You don’t need to get to the end of your life to wish for another hour or minute with a loved one. You can think about that every day.”

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