Probably you have heard that “time is money”. If you know how much your time worth you will be able to focus more on your goals and work harder and effectively to achieve that proposed amount of money per hour.
How many hours do you work?
Okay, so before you can calculate the value of your time you have to know the answer to some questions:
- How many hours do you work every day?
- How many days do you work a week?
- You will get the sum of these days if you exclude weekends and those days when you don’t do anything which is related to your work.
Probably you already know this but as an entrepreneur, there isn’t as big separator line between work and personal life as an employee. You can work whenever and wherever you want and it’s harder to determine these hours… but try to be as close as you can.
Now you have the sum of your work days and work hours. It will show you the total amount of how much time you’re spending with work. You’re closer to knowing (and achieving) your dream income (per hour) than most of the entrepreneurs. Remember, if you can’t measure something most likely you can’t achieve it. Most of the entrepreneurs don’t know how much money they want to earn.
Causes and amount of unproductivity
Everyone knows this but we don’t often say it… but to be honest the biggest part of the time you spend with your work is not productive. It’s because our employee mindset, we don’t want to talk about this because what if our boss will realize we don’t work as much?
Just think about this… you’re scrolling through your Facebook news feed, reading and replying emails, watching YouTube videos and got distracted by a lot of other things.
Only the 1/3 of the time you’re spending with work is productive. This is huge because from an 8-hour long workday you will be productive in 2 and a half to 3 hours – or less.
Of course, we have less and more productive days but as an average, we can use this amount of time to calculate. Simply accept it as a fact that 1/3 of our time is productive and 2/3 is unproductive.
How to calculate the value of your time?
If you don’t have an income goal for the next (or current) year you don’t know much your time worth. It’s a huge problem because you won’t know what you should spend your time with.
So here come the steps of the calculation of your entrepreneurial time:
- Open a blank spreadsheet document or take an empty paper.
- Write down how much money you want to earn in the next year (not necessarily from January to December, you can calculate with the next 365 days).
- Multiply this number by5 because the amount you have calculated in the previous step was your proposed net income. It depends where do you live but you have to pay taxes… It increases the amount you have to earn.
- Divide the previous number by 250. It’s a rough average but we work around 250 days in a year. Now you have got your proposed daily income and you see how much you should earn in a workday to achieve your dream income.
- Now divide it by your daily work hours (which you calculated based on the beginning of this post). Doing this, you will get a better picture how much your time worth.
- If you remember, only 1/3 of your days are productive. Multiple the previous number with 3 to get the value of your productive work hour.
Okay, so now you know the exact value of your work hours. You should work from now on keeping this amount of money behind your eyes. If you want to achieve your dream annual income you have to make value every hour.
Increase the value of your time
If you haven’t liked the number above, it can be due to two things.
- First, if it was too small it means you have low standards. If this was the case, it’s not so big problem. Simply you don’t need too much money to achieve your goals. To be honest, you don’t have to be a millionaire to live like one. But if you don’t have nice goals you won’t be motivated, so I encourage you to go back and figure out a higher dream income.
- Secondly, it was a huge number and you can’t imagine how would you make this happen. I will talk about this case below.
You have to ask yourself some questions. First of all, how can you operate your business or personal life with fewer expenses? Will you cut down on bills or will you work with higher productivity? Will you hire employees who will help you to make higher value (and thus more money)?
If you look at the value of your time… you still have to create more money to pay other expenses: your employees salary, if you have an office then rental fees, bills and so on. Your business’ income should cover all of these costs.
Habit changes to increase the value of your time
You have to change some things if you want to increase the value of your time. All I can say that changing your habits requires self-discipline.
- What are those activities you must stop because it holds you back?
- What new activities you have to start to achieve your proposed income?
- What activities you have to continue because they are already good habits?
Think about your tasks and your average day. Do you scroll through Facebook all day long? Or you are answering emails? I already published a blog post which covers this topic, so click here to read it: How to win several productive hours a day?
To answer the second question… Maybe you should hire a virtual assistant because they can complete several easier tasks which takes your time.
You should also think about the third question. You can continue your good habits, which can be waking up an hour earlier, or using Pomodoro technique, organizing your to-do lists better. I already have a blog post about this, read it now: Drop unnecessary things from your to-do list to the trash can and save a bunch of time.
Knowing the value of your work hours have that amazing power that you will be more motivated and you will know how much value you should make every hour to earn your dream income. I gave you the formula above which you can use to calculate the value of your entrepreneurial time. Also, you should form new good habits and let the bad habits go.