Many people know to the penny what an hour of their professional work costs. But how valuable is an hour of your free time?

Every week we make dozens of time-management decisions about the costs and benefits of trading money for time or vice versa, usually without thinking about the true cost of these choices. Do you hire someone to pick up your dry cleaning and groceries…or run errands yourself? Do you do your own yardwork …or hire a landscaping company?

Putting an actual dollar value on your free time can help you make better, more satisfying time-management decisions in life, says Spencer Greenberg, PhD, founder of the decision-making website ClearerThinking.org. Otherwise, you are at the mercy of all kinds of hidden psychological biases that lead you astray. Examples of biases…

  • You might drive out of your way to save $10 on a $20 purchase but not to save $10 on a $500 item, even though the dollar amount saved is the same.
  • Perhaps you overreact to the word “free”—you’ll sacrifice large amounts of time to get something for free, even if the item’s value in dollars is very modest.
  • Or you are reluctant to spend even small amounts of money on time-saving services because you feel guilty offloading tasks you dislike onto others.

Bottom Line Personal asked Greenberg how to consider the value of your own time when making life’s time-management decisions. 

Step 1: Determine the value of your time. Click the Value of Your Time Calculator button among the free research-backed tools at ClearerThinking.org. It takes about five to 10 minutes to minutes to complete a series of questions about various time-vs.-money trade-offs to ascertain the dollar per hour figure. Surprising: About 80% of people who take the test place a higher hourly dollar value on their free time than the amount their jobs currently pay them.

Step 2: Use the dollar value as a starting point to think about daily time-vs.-money trade-offs. Example: Say you value your free time at $60 per hour…

  • If you can hire someone to do cleaning or chores for you, go for it as long as they charge you no more than $60 for each hour of work they take off your hands.
  • If you’re considering waiting in line for 15 minutes to get something free, ask yourself whether you’d be willing to pay (or save) $15 for that item. If not, you probably shouldn’t wait.
  • If you are thinking of driving a total of 10 minutes out of your way to get gasoline more cheaply, realize that you need to save at least $6 filling up your tank to make that drive worthwhile.

Step 3: Recalculate the value of your free time occasionally. Since it’s highly subjective, this figure can fluctuate depending on what’s going on in your life. Example: When you’re very busy around the holidays, the amount you’re willing to pay to free up your time likely will be higher than when your schedule is wide open.  

Remember: Some activities are priceless. Putting a monetary value on your time doesn’t always make sense—even if you are being hugely inefficient. Example: You may spend 20 hours knitting a sweater for your grandchild that you could have bought in a store for $80. That means you are valuing your free time at just $4 per hour. But you enjoy knitting, and it relieves your stress. Plus, making a sweater provides a deep sense of accomplishment…and seeing your grandchild wear it is more meaningful than any cash consideration.   

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