Time Management - Determining How Much Your Time Is Really Worth -part 3

Not all uses of time are equal and this simple truth can make a big difference in life. This article of 3 parts explains how to figure out what your time is worth and use that information to spend your time more effectively. This is the final part of the series.

Expected Value Methods can help you

• Make big, strategic decisions about where to spend your time.
• What projects should your business focus on this year?
• Which uses of time aren’t effective and should be eliminated from your daily work routine?
• Should you start a business that could payoff big time in ten years, but won’t make any money right away or work a stable job with a reliable income?
• What is the best way to manage these tradeoffs?

Types of Expected Value Method:

The Growth Multiple Method

Take your net income from the previous year and multiply it by a reasonable growth multiple. This method is an easy way to estimate how the work you are doing today will payoff in the long-run.

The Expected Value Method

It is the most difficult way to calculate the value of your time. The easiest way to understand it is to look at the calculations of the Time-Value Spreadsheet of Step 3 in the previous part.

Additional notes

Misguided success 

Don’t waste your time becoming successful at the wrong thing. Too many people chase money or power or approval because everyone around them does the same. What if that’s not what you really want? But what if you’d rather have more free time than more cash?

Tradeoffs and opportunistic addition 

It refers to choices that would decrease the value of your time if you spent all of your time on them, but increase the value of your time if you do them at opportunistic moments. For example, consider an author who also does speaking engagements. If they spent all of their time speaking, then they would decrease the value of their time because they wouldn’t write any new books. However, by doing speaking engagements every now and then, many authors can add thousands of dollars to their bottom line while still having plenty of time to write new books.

Non-negotiable free time 

One of the dangers of calculating the value of your time is that you end up convincing yourself to work another “productive” hour. For example, if you work late, does the hour between 9PM and 10PM lead to positive outcomes on average? Or does that hour include more mistakes than accomplishments? Working hard on a project is good until the next hour of work burns you out more than it produces something valuable.

According to an article in the Wall Street Journal, some researchers say those who are encouraged to focus solely on the dollar value of time tend to feel impatient and pressured. They work more and spend less time in rewarding activities such as volunteering or enjoying music.  

For my part, having free hours where I could relax and decompress made it possible for me to be effective during the working hours that remained. You need to value your free time, and leisurely activities that provide whole health and wellness to your life.

Calculating the true value of your time is actually much harder than it sounds and far more powerful than it seems.

Source: http://www.entrepreneur.com/article/269922, originally appeared on JamesClear.com