It is important to put a dollar amount on your time. Obviously your time’s value is going to vary based on factors such as how much time you have, how much money you make, what you do in your free-time, etc. Never-the-less it is important to put a dollar value on your time.
Why is this so important? Its important because it will help you find a balance in saving money and living. Let me give you an example. For example, you find out gas is $.30 cheaper per gallon 10 miles away and it takes you 30 minutes round-trip to get there. You have a 12 gallon tank and get 30 MPG. Your savings, $3.60 – $2 of gas = $1.60 in savings (ignoring the wear and tear on car), but at the cost of 30 minutes. This would put the value of your time $3.20 an hour. Now to some people, that savings of $1.60 is vital, but to others – when you put a pencil to it, its quick to see how worthless those savings really are.
Putting a value on your time can also be important when applied to things like buying a house or rental. Do you value your time at $5 an hour? Well I can tell you if I value my time at $5 an hour, I probably put about $5,000 of time into my houses rehab (remembering that is BELOW minimum wage, do you know how to survive on minimum wage?). If you want to own rentals – make sure you put a dollar value on the time you spend rehabbing, finding a tenant, cleaning up, and maintaining on your property.
So what does this all boil down to? Maybe some of your decisions would be changed if you put a dollar amount on your time, maybe they wouldn’t. Maybe extra time with your kids or wife or working on a hobby would be better than saving a couple bucks.
You have to draw the line somewhere.