Time is Money, Part One : Remember Time is Money said Ben Franklin

I was pondering the adage that time is money. Wikiquotes revealed that the adage is from an advice given by Benjamin Franklin (one of the Founding Fathers of The United States) to a young trader way back in 1748. He actually said, "remember time is money". Today parroting time is money is such a cliche that one might be forgiven for taking its personal significance for granted. In a sense since we have to fork out money to pay for so many things in life on a timely basis (daily food, weekly groceries, monthly bills, mortgage, annual taxes, etc.) we scarcely need reminder that time is money. Really though, I wonder how much money my time is worth. How to quantify it? Right off the top of my head I came up with some simple calculations, I also did some research on the internet to find out if there were formulas out there that we could use.

The most simple formula that I figured out is basic maths. Take your mortgage divide 30.5 and that is the minimum wealth to make per day to keep a roof over your head until the mortgage is paid off. Take your total basic monthly expenses and divide it by the same and that is how much you need to make per day, even on Saturdays and Sundays, to maintain your lifestyle. Refining this calculation to be more effective means one would take the actual money producing hours, i.e. average monthly work hours or industry hours and divide it with the total basic monthly expense and your minimum per hour dollar amount is revealed. Here is a simple formula I created to determine this.


$/h(V) = Monthly Expense (including tax)(M) / effective hours of work (not including commute time)(W) multiply with 22 (Average workdays in a month)

V = M / 22W

This simple formula can be useful especially if you are deciding to start your own business and are wondering how much the minimum income is that you need to make per hour. This is a good figure to have in mind to reason or justify expenses in time and money in the pursuit of business leads or marketing.

If you have a monthly salary, then the formula is much more simple. If income does not exceed expense than you are on an even keel. If effective money making time is your bosses money, if you are comfortable with the work you are doing and the company is financially bullish the fact that time is money is usually an ignorable fact. However if expenses (this should also include those pesky bank charges and credit card interest and tax) exceeds income then time becomes more than money, it also becomes stress! Especially when those monthly bills or phone calls start coming in. It also means it is time to ask for a raise, find another job, get into business yourself or the quickest solution, axe spending.

If you are interested in finding what your time is actually worth there is this article on 'Running a Business' in about.com that can help you figure it out. Here is a quote from the article.

"How much is your time worth?
Have you figured it out? If not, you should. To figure the minimum, figure out how much money you're making per year and divide it by 2,000. To figure the maximum, consider how much you make for your most productive time -- closing a deal, a speaking engagement, billable client time, etc. Somewhere in between there is the real value of your time.
There's a saying which I recall reading somewhere (I thought it was Harvey Mackay, but I haven't been able to track down the quote):
Don't pay someone $25 an hour to do $7 an hour work.
Plug your own numbers in there. Maybe it needs to be, "Don't pay someone $50 an hour to do $20 an hour work." You're the first number. Whatever your time is worth, think about each and every activity that you're spending time on on a regular basis. Could you outsource it to a bookkeeper, a virtual assistant, a web designer, a copywriter, a part-time employee, your spouse or even one of your kids? It's very difficult for most entrepreneurs to relinquish that control and delegate, but it's one of the best ways that you can ultimately increase your income while decreasing the number of hours you work."

Here is the link to the article: Time is Money, How much is your time worth? on About.com. About.com also has plenty of resources on time management and advice on starting businesses. I find about.com more relevant than wikipedia most of the time.

In 2002 a British university professor created a mathematical equation which concluded that the average British minute is worth 10 pence for men and 8 pence for women. With inflation since 2002 and the current economic doldrums of the West these figures are probably higher. If you want to calculate that figure the formula is available in an article that appeared in CNN Tech. This is the formula V=(W((100-t)/100))/C, click here to find out how to use it.

While these formulas may all be useful academics, the bottom line is how does the statement that Time is Money effect you. Are you comfortable with it? Do you loathe it? Do you enjoy it? Or does it make you run in circles? If you are not really sure and want to gauge yourself on exactly how you stand with the adage Time is Money, there is "The Time is Money Test". It is true or false test put together by inc.com that can help you uncover your standing. It is designed for business owners but unfortunately, does not come with an evaluation. It can be useful nonetheless. Click here to go the test.

It is interesting that Benjamin Franklin's advice was "remember time is money".  I think these days, especially if you own your own business, the reminder is not so necessary. How to make time work for our money instead of money work for our time is more cut-to-the-chase relevant. There are plenty of advise and courses out there, online and realtime on this. If you want to share a link that you found especially useful on the subject of time is money, or good time management practices do share it in the comments. Your thoughts on this matter is welcome too. My next article on Time is Money will be from a psychological perspective.