In the small shopping mall, close to where I live, there are always two beggars. They greet you when you enter the shopping mall and they politely say “Thank you, have a nice day” when you give them something. But they intrigue me because they are just sitting there and it makes me wonder if they have nothing better to do. I mean, I guess that they could do something more useful, something that gives them more money than just sitting there begging. Or maybe not.
That makes me wonder how much money they get in an average hour because I don’t see a lot of people giving them money. Anyway, the little money that they ‘earn’ on average in one hour, apparently is what is worth one hour of their time for them; One hour of sitting at the entrance watching people pass.
And what is your time worth? I guess that depends on the activity. There are activities that you love doing so much that you actually pay to be able to do them; for example your hobbies.
There are also activities that, if anyone would ask you to do them, you would answer “No way, not in a million years, whatever you pay me”. And for other activities that you are willing to do, you get paid to do them. If you have it all worked out, you get paid for doing things that you love to do.
So, if we leave out the things that you will never do anyway, there must be some kind of balance in your life between activities that give you money and those that cost you money.
Time is money
I’m sure you heard the expression: “Time is money”. Only they never really say how much money. Or is it different for everyone of us? Let’s try and put a figure on it. Caution: the figure must be a net figure, net costs and expenses.
What I would do is to split the question in three parts.
1) How much money do you need per month just to live? You know, just to pay housing, water, electricity, food, etc., the pure basics.
If you divide this amount per month by 170, you get the minimum amount that your time should be worth. Why 170? This is the average number of hours in a full time job per month (40 hours per week multiplied by 13 weeks in three months divided by 3 months and rounded).
So, this is the minimum amount that you SHOULD get paid, so you can live. If you get less, then you had better look for a way to up your game to this absolute minimum. If you get paid more, then you can choose: Either to work less, live with the minimum and spend the time that you freed up on your passions, if they don’t cost you money. Or, with the extra money upgrade your life and spend some money to make your life nicer and easier. Or you can do both.
But what is your spare time worth? And how about “Passive income”? You find the answer in part 2 of this article, but this is for members-only. You can become a member of the Passions Pilot community for free by signing up below.
Hi Nickita,
a nice article, as usual. I just wanted to add that economists have already given an answer to “what worth an hour of your life” questions. One key concept here is the “opportunity cost”. Since in life almost always a choice needs to be made between several mutually exclusive alternatives and assuming that the best choice is made, the opportunity cost is the “cost” incurred by not enjoying the benefit that would have been had by taking the second best available choice. If I go to cinema tonight I will not enjoy the benefits of a concert, film on TV and all other alternatives. I decide to spend some money and time on a movie having a number of alternatives to spend those money and that time. In fact the concept of Opp cost is not restricted to monetary costs, but also the lost time, the forgone pleasure or any other benefit that provides utility (i.e. satisfaction by consuming a given good) should also be considered an opportunity cost. So one hour of my time in doing smth (or nothing) is worth the forgone value of the best alternative I could spend my hour. If I’m a beggar I probably do not have many alternatives that might earn me more money, so even a few bucks an hour are still something (but anecdotal evidence has shown that beggars earn more than a few bucks. Next time ask the cashier of the supermarket, since often they change the coins for banknotes there). But if I’m a football Champions League player or a Movie Star than one hour of my life is worth thousands of euros I could make by simply participating in events or appearing in magazines or shooting commercials. I could still do my laundry myself, but with a huge opportunity cost. This is why we normally hire cleaning ladies and babysitters.
All the best
Thank you so much for this interesting point of view. Maybe I should explore this concept of opportunity cost a bit more. To be continued…
Nickita