A few years back, a local hamburger chain advertised that it was going to sell a burger, fries and a Coke for the 1950s price of a dollar. People waited in line for hours to get this super deal.
Today, Denny’s was giving away free breakfasts. I took a different route to work in order to drive by a Denny’s and see if people were waiting in line. I was pleasantly surprised to see that there were only about ten people in line, but I later saw on the news that at some locations people were, again, waiting hours to get the meal.
This scenario is emblematic of a larger problem that holds back so many people. Never forget that your time has value. By whatever formula you decide to use – what you think your time should be worth or the actual value based on your current job – assign a value to your time. Then apply that number to your daily activities to determine what they are costing you.
Let’s say you are an employee earning $75,000 a year. With benefits, that’s probably closer to $100,000 a year in terms of your total compensation. Assuming around 2000 hours a year of working hours, your effective hourly rate is $50. If you decide you are worth more than that, all the better, but let’s use $50 per hour for our analysis.
When you sit down tonight to watch two hours of American Idol, know that entertainment experience is costing you $100 ($75 if you Tivo it and fast forward through the commercials). I’m not making a value judgment here; you may well decide that $100 is a fair price to pay for American Idol, but you need to make that informed decision. Many of the people waiting in line at Denny’s were paying a very high price for that “free” meal because they don’t place any value on their time.
Now it is true that in my situation the hourly cost is quite literal. If I push myself away from the television and go sit at the computer, I can bill hours that I would otherwise delegate to others. But don’t permit yourself to rationalize that your situation is completely different. If your business is not yet in place, that time can be spent getting it there. If you are committed to being a drone employee, the time can be spent looking for a better job or on continuing education for advancement.
I’ll make the point once more in anticipation of the naysayers. This is not to say that every hour must be productive. Down time has a value as well. But knowing what your activities are costing you allows you to make an informed decision.
Next time: The power of delegation.