6. Timeout

Happy Tuesday!

I hope you enjoyed a wonderful holiday and had the opportunity to express gratitude with your family and friends. I want you to know how grateful I am to you for taking the time to read my letters, I hope you're finding them valuable! On to this week's note!

How much is your time worth?

Everyone is going to have a different answer to this question but not because we all make different amounts of money. The real answer is far more subtle.

Whether we like it or not, the way we choose to answer this question impacts everything. Time and money are the two most powerful levers we have to control the quality of our life.

Some people expertly manipulate these levers to optimize their welfare because they understand the relative value between time and money. Others are confused about how much each is worth and end up wasting both.

I find myself confused all the time.

Money can almost always buy me more time but it's tricky to assess the monetary value of any given hour, day, month etc.

I tend to undervalue my time and overvalue my money. But even knowing this bias doesn't really help me make specific decisions about when to trade money for more time.

If you're like me, you have a lot of blindspots around what types of time are available for purchase. Our biases about how much things are "worth" are usually completely unrelated to our current circumstance and instead are based on other people's (usually our parents) time value of money.

If you've grown up in a world where your parents always cleaned the house every weekend you might find the idea of hiring someone else to do the cleaning ridiculous.

Like couldn't I just do that myself?

What about hiring a part time personal assistant to help you save 5 hours a week in coordinating things like dinner reservations, buying gifts, scheduling meetings, and booking appointments at the dentist etc.

Suppose it costs you a $50 a week to hire this personal assistant? That's $200 a month!

Is that expensive?

Well it really only depends on how much you value the 20 hours a month you currently spend on life admin.

What else might you do with that 20 hours?

The most wealthy, productive people are (in part) wealthy and productive because they're so good at using money as leverage in a world with limited time. They learn how to leverage money to maximize not only value but also time.

So back to our original question. How do you know how much your time is worth?

I've heard a lot of people calculate the value of their time by dividing their wage by the number of hours worked. Unfortunately, for most people this is actually a pretty terrible metric.

If you're earning a salary you can't earn more by working more. Therefore a better time cost metric would be dividing your salary by the total number of hours in that pay period. Even this metric is fairly imprecise since working more hours may lead to future gains in the form of promotions and bonuses etc.

For those of us who are not salaried there isn't usually a linear relationship between hours worked and income. If we make an hourly wage, or we contract our services out at an hourly rate, the math might be might be easier but we always have to take into consideration all the non-billable time we spend that enables us to generate billable hours.

Regardless, the point is that everyone's time is going to have a different cost based on both their earning potential and their own personal value system. The trick seems to be in figuring out what that balance looks like for you.

As a new founder it's been a real challenge to try and reimagine the cost of time. There's no salary, just a pile of investment money that you have to figure out how to use most effectively.

I can do it all myself, I can do it just good enough, I can save some money and spend some extra time ... or I can also hire someone else to do it. What's it all worth to me?

Whether a founder, freelancer or salaried employee you are the CEO of your own time and finances. Up till now I feel like I've paid very little attention to how well (or poorly) I use my time.

I can see so many ways to trade money for time that I previously overlooked because I believed they were for the so called "rich". In reality though, money can buy efficiency and better outcomes and thus time.

As someone who values my time very highly this extremely appealing. Unfortunately I'm still fairly unskilled at making this tradeoff effectively.

But I am learning.

I believe it probably begins with recognizing your biases but also having some humility. Even though I can do a lot of things, and maybe I can do a lot of them well, just because I can doesn't mean I should.

Are there ways that you could more effectively trade your money for time? What is it worth to you?

Cheers,

Nick

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