What is My Time Worth?

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Cody Berman
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Everybody has a price. If I asked you to write me one paragraph for $100,000, of course, you’d say yes, right? However, if I offered you $0.01 to write that same paragraph I can’t imagine you’d jump on the opportunity.

But how do you decide when the opportunity is right? When is it “worth it” to do a certain job? What is your time actually worth? That’s exactly what we’re going to explore in this article.

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What is Your Time Worth?

Ask yourself this question.

If someone asked you what one hour was worth to you, what would you say…? $10? $25? $100?

Before you decide on a number, there are a whole host of factors that need to be considered before answering.

Calculating Your Real Hourly Wage

Most commonly credited to revolutionary personal finance book Your Money or Your Life, the concept of the real hourly wage is something that we should all understand.


If you earn a salary of $50,000 and work 40-hour weeks, your stated hourly wage is approximately $25 per hour. But that number doesn’t take into account all of the ancillary costs (both time and money) associated with work.

  • Total daily commute: 1 hour
  • Weekly transportation costs: $80
  • Getting ready for work: 15 minutes
  • Decompression after work: 30 minutes
  • The daily cost difference between lunch out and lunch at home: $5

I’m keeping the ancillary costs light for this scenario, but the list could go on forever. Anything like new work clothes, “mandatory” happy hours, and work-related events should all be included in your calculation. For sake of example, let’s dig into the numbers above.

Weekly work time: 40 hours + (5 x 1-hour commute) + (5 x 15 minutes getting ready) + (5 x 30 minutes decompressing) = 47.75 hours

Weekly income: $1,000 – ($80 for transportation) –  (5 x $5 lunch differential) = $895

Real hourly wage: $18.74

Everybody’s situation is different, but your real hourly wage will always be lower than your stated wage. Performing this calculation is a great exercise to determine whether or not you’re satisfied with your wages.

The “Know Your Worth” Fallacy

Now that you’ve calculated your real hourly wage, there’s NO WAY you’d never perform a job for less than that, right? Wrong!

This is one of the biggest misconceptions and even some of the most well-renowned personal finance influencers get this wrong. There are two types of “know your worth” fallacies that I want to address.


Something that I hear far too often is that if a job costs less than your real hourly wage, it should be outsourced. While this may be true in some circumstances, it’s fundamentally wrong a majority of the time.

What this mindset assumes is that the individual will be earning money (at a higher rate) while the outsourced task is being performed. For the vast majority of people (including myself), this is simply not true.

If you outsource your lawn mowing for $15/hour and have a real hourly wage of $22, are you really going to earn an additional $22 while you pay someone $15 to mow the lawn? I highly doubt it.

This discussion reminds me of an old economics joke:

An economist and his friend are walking down the street. His friend says “Look there is a $100 bill on the ground”. The economist laughs and replies “Can’t be. If there was a $100 bill on the ground, somebody would have already picked it up.”

Unfortunately, we do not operate as hyper-efficient machines who maximize the utility of every second. We’re human! And that’s okay.

I’m certainly not suggesting that you should never outsource, but don’t fool yourself into thinking that it’s a “smart financial decision”.

Side Hustling

If you ask yourself “what is my time worth?”, and set a minimum based on the real hourly wage calculated above, you’re probably leaving money-making opportunities on the table.

Now, I’m not certainly saying you should go shovel dirt for $1/hr, but there are plenty of great side hustles that may be worth your time.

It all boils down to this one question: “What else would you be doing with your time right now?

For example, perhaps you’d argue that filling out surveys on a site like Survey Junkie “isn’t worth your time” since average hourly earnings are between $5 and $10. However, if you’d typically spend that time watching TV, then filling out those surveys are totally worth it!

Conversely, if you can earn $100 doing specialized consulting during that time, then to hell with the surveys. It’s all relative to how you can most efficiently utilize a given block of time.

So, What is Your Time Worth?

Although I can’t answer this question for you, you’re now equipped with the equations and mindset to make the decision for yourself.

  1. Determine how many hours you are actually using toward work each week.
  2. Identify the ancillary costs are associated with your job.
  3. Calculate your real hourly wage: (Income – Ancillary costs) / Total Hours

Remember, after you calculate your number, that doesn’t create some sort of impenetrable threshold. Be honest with yourself about how you’d be spending your time otherwise, and then make the decision.

I hope this post provided some clarity around the relationship between time and work and ultimately helped to answer your overarching question: “What is my time worth?”

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Note: I am not a financial advisor or fiduciary. All the information presented in this article reflects my opinion. I am not liable for any financial losses incurred related to this content. My content is always written with the readers’ best interests in mind. I believe that my content is helpful and well-researched, but it is not professional financial advice. For more information, read our Privacy Policy.

8 thoughts on “What is My Time Worth?

  1. I love this! I tutor on the side, and I always make sure to figure in time that I’ll be driving as part of my real hourly wage to make sure that I’m compensated for gas and stuff properly.

  2. Insightful post! It took me a long time to start thinking this way. I needed a reminder about it today. I’m spending a lot of time to fight over $138 in an insurance mix-up. I’m starting to wonder how many hours and how much paperwork I should put into it (or if I should just pay it).

    Anyway, as a songwriter charging an hourly rate for shows, I wasn’t thinking of how long it took me to write the songs, how long it took me to book the shows, how much driving I was putting in, etc. because I was just so happy to do the job! Then life got busy. Same with guitar lessons. I would charge by the half-hour, but I put a lot into emailing each week to accommodate people.

    1. It’s definitley something you have to consider. I’ve caught myself plenty of times thinking “why the hell did I just spend 2 hours to save $5”.

      There are usually so many more costs associated with just the job itself. It all boils down to what you value and how you can optimize your time!

    1. Thanks for reading, Mark. I agree that benefits should certainly be factored into the equation. Since I didn’t want to get too deep in the weeds, I just assumed that the benefits were “baked” into te compensation in my example.

  3. Great article Cody! I’m a first time commenter but long time follower as I discover you on Choose FI.

    When my wife and I were use to have “regular” 9-5 jobs, I was using the formula from Tim Ferriss’s book, The 4-Hour Workweek to estimate my hourly wage. Since you read his book you might remember it: “cut the last three zeroes off of your annual income and halve the remaining number”. (So if you make $50,000 / year then your hourly rate is $25 / hour). I loved it as it was providing me with 80% of the output for just 20% of the effort.

    That being said, I like that you go further than this by removing any ancillary cost so that you get to a real number. My question for you: can you think about a situation where some work benefits might increase your hourly rate? For instance, I was used to work in Tech and it was pretty common to get perks like free food (usually lunch and dinner). By being able to get to the company’s cafeteria for lunch I did not have to leave the office, go to a restaurant during rush hour, wait in line and get food. I was saving both commute time and money. Same for dinner, since it was easier for me to stay until 6pm I then grab lunch and head back home (or sometime I packed it as this was allowed to be home earlier). Would you consider such perk adding to your real hourly rate? If so, would you tweak your formula further?

    1. Thanks for the read and for all of your insightful comments. It’s definitely worth taking Tim’s calculation a step further by factoring in things like commute time, food costs, etc.

      If you’re office provides you with free lunch and dinner, I would absolutely factor that in (add it) to your total compensation. Although companies like that are few and far between, consider yourself lucky that you have such an awesome perk! EVERYTHING associated with your job, good or bad, should be taken into consideration when calculating your real hourly wage.

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