September 22, 2023
By: Travis Watts, Director of Investor Education
Time—our most precious resource—often gets overlooked in the hustle and bustle of life. In the race for wealth and success, we tend to forget that time is the true currency that we trade. Have you ever paused to consider what your time is really worth? Even if you’ve done this exercise before, the value of your time could have changed since then.
The Unspoken Value of Time
Time is arguably the most valuable asset we possess, yet it’s frequently squandered on non-essential pursuits. We find ourselves fixated on money and trivial matters, ignoring the true essence of what our time can enable us to achieve.
A Journey to Better Decision-Making
Today, I’m excited to take you through a simple yet impactful exercise. This will empower you to make wiser choices in both your life and investments. Let’s break down the process into three straightforward steps:
Step 1: Calculate Your Active Income
Begin by tallying your income from all active sources. This serves as the foundation for understanding the value you place on your time.
Step 2: Estimate Weekly Working Hours
Next, estimate the average number of hours you dedicate to work each week. This lays the groundwork for the assessment of your hourly rate.
Step 3: Calculate Your Hourly Rate
With these two figures in hand, the calculation becomes straightforward. Divide your annual income by the number of weeks in a year, and then divide the result by your average weekly working hours. The outcome is your hourly rate.
Bringing It to Life: An Example
Bob earns an annual income of $200,000. He puts in an average of 50 hours of work per week.
Following the formula: $200,000 / 52 weeks / 50 hours = $76.92 per hour.
This signifies the value he places on each hour of his time.
Applying Your Time Value to Everyday Decisions
Now, equipped with your time value, you can view life through a new lens. I’ll use Bob’s example to illustrate the following points:
- Is waiting an hour in line at a restaurant worth $76?
- Is cooking a two-hour dinner worth $152?
- Is grabbing coffee for an hour after work worth his time?
Evolving Perspectives with Income Growth
When I was young, I embraced a do-it-yourself approach to almost everything in my life. However, as my income grew over the years, so did my time value. Certain activities that used to make sense no longer did:
- Driving extra miles out of my way for minor fuel savings.
- Clipping coupons for groceries.
- Enduring long lines for small purchases.
- Spending hours online to find the best price.
The Time Value in Investments
This notion of understanding time value heavily influenced my real estate investment strategy after years of grinding it out on my own. Initially, I was a DIY enthusiast for single-family homes. But as my time value appreciated, my perspective shifted.
For example, investing three hours of my time seemed more sensible than hiring a painter for $300 to paint a living room, when I valued my time at $50. The realization that my time was more valuable years later led me to transition into passive income investments as a Limited Partner. I then had the freedom to pursue active ventures that I enjoyed more than being a landlord and working manual labor in the oil and gas industry.
Elevating Your Life
The liberation of my time was ultimately the goal. This newfound freedom allowed me to expand my lifestyle in numerous ways. In fact, it was this decision that led me to find my wife and eventually create a family of our own. When I was working the Rat Race, I lacked the availability to build meaningful relationships.
I hope this simple concept encourages an introspective journey for you. What is the worth of your time, and how do you aspire to spend it? Embracing a life enriched with choices is truly the essence of success.
To Your Success,
Please take a couple of minutes to watch the video below.
To learn more or schedule a time to talk to Travis, visit https://www.ashcroftcapital.com/travis/.
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