MD Cents: What is Your Time Worth?

Time is Money—Benjamin Franklin

I have often heard people quote Benjamin Franklin when talking about time.This is often in the context of a work life balance lecture at a national conference or hospital CME program. At first this quote seems to push one to maximize the time at work, but on my second glance made me see it in an entirely different light. I began to think of the time our job can cut into the time we have to spend on different pursuits. Obviously, we need a job to fund those pursuits and our job is one that is immensely rewarding, but nonetheless it still has a time cost in terms of our relationships and outside pursuits.

We had a lecture during fellowship from a physician outside of the department of emergency medicine that told us to “hire out as many things as you can to free up your time.” At first, I dismissed this as advice from someone who didn’t have the same financial plans as me. I was of the thought that “a penny saved is a penny earned.”

While this is another quote from Benjamin Franklin, again it has two meanings. Initially, I used this quote to mentally say that if, I drive just a few minutes out of my way to save money on gasoline and I save a couple of dollars per tank that those couple of dollars will add up significantly over the course of a year. While true, I never thought about the opportunity cost of those minutes that I was using to save the 2 dollars. Another area for me that I refused to spend money on was mowing the lawn. Given our sporadic schedule with many nights/weekends and the vagaries of mother nature with rain, it was hard for me to regularly mow the lawn. You can just see the mental accounting now, “should I mow the lawn or play with my kids (insert anything else here you like to do).”

Let’s use the gasoline example to flesh this out. Until recently, I would totally drive 5 minutes out of my way to save 10-20 cents/gallon of gas at a local warehouse club. If you drive 5 minutes one way to save 10 cents per gallon of gas, that is a total of 10 minutes. Extrapolating out the costs, unless you value your time at less than $12 per hour you shouldn’t drive the 10 minutes to save 2 dollars. How did I come up with that? Let’s see:

2 dollars saved cost 10 minutes of driving. Multiply each by 6 to get the rate per hour and this gives you a rate of $12/60 minutes of driving. Most of us are paid more than $12 per hour after taxes.

There is a wonderful online tool that can help you figure out what an hour of your time is worth (not what you think it is worth) using data from your current job.

Go to: http://www.clearerthinking.org/ and scroll down just a bit in the left hand column and choose the “value of your time” calculator. It will ask you several questions and takes about 10 minutes and will give you a lot of FREE feedback on how you value your time. It will also give you many real world examples you can use to aide your decision making on whether doing a task or paying for help is worth your time. It will ask you for your email at the end, but you don’t have to give it to get your results.

All of this discussion is predicated on the fact that you already have a good financial plan in place. This means you have an emergency fund, have plans for retirement savings, college (if need be), insurance (life and disability), and other financial matters in place. Hiring out tasks is great but if you need to squeeze out margin in your budget to make an emergency fund happen or to make a retirement contribution, by all means do it! The compound value of a retirement contribution makes the original value of the money much larger than it would first appear. If you have a good financial plan in place than consider thinking about the value of your time and using services to maximize your time. Services like task rabbit (you have people bid on doing errands for you), hiring a local kid to mow a lawn, or painters to paint your apartment/house, or something like amazon express/google express to deliver items directly to your door can save you the most valuable resource you have—your time!

Nothing in this article should be construed as offering specific legal, tax, or investment advice. Please consult the appropriate professional about your individual situation before acting on anything you read here. This is offered for entertainment purposes only.
Brian Wagers

Brian Wagers

Assistant Professor of Emergency Medicine at Indiana University
Brian's academic interests include injury prevention, quality improvement, and global health. He is from Cincinnati, Ohio (go Reds and Bengals). Brian loves to travel, run, and is interested in the intersection of business, medicine, and health policy.
Brian Wagers
Brian Wagers

Brian Wagers

Brian's academic interests include injury prevention, quality improvement, and global health. He is from Cincinnati, Ohio (go Reds and Bengals). Brian loves to travel, run, and is interested in the intersection of business, medicine, and health policy.