What is your Time Worth?
Over the years, I’ve owned a few houses and done my fair share of home improvement projects. From things as “simple” as painting to installing new floors, it feels like I’ve done it all. But as the years have gone by, I’ve started having my time pulled in more and more directions. Now, rather than simply doing the work myself, I’ve grown to employ a different method in my process.
Our time is worth money, that much we all know is true. But just how much? There’s a reason that people (and software, when you start thinking about it) exist to do specialized jobs. For instance, let’s take installing hardwood flooring as a situation to examine.
I can source out the best deal on flooring pretty easily. With the internet, I can find the flooring I want (go and visit it to make sure it’s the right color and everything), and watch & wait for the best deal to happen. Once it does, I can buy it, but then I’m faced with another decision: install it ourselves (free, but costs time), or have whoever I bought it from install it (or find a contractor).
Things to consider:
– While we’ve installed flooring in the past, we’re by no means experts, so it will take us longer to install than it would a contractor.
– We also have young children, which will impede progress with making sure they won’t get hurt and are happily entertained during installation. This will require either a babysitter (costs money), or frequent breaks (more time consumption).
The latest quote I got for installing hardwood was $2.50 a square foot. Removing the carpet would cost an addition $0.35 per square foot, so for 1000 square feet, that makes installation $2850. I know from previous flooring installations, that amount of floor will take us about 20 hours total to lay down. That means that for that installation price, I’d be essentially paying about $142.50 per hour (total). After taking into account the hourly cost of the babysitter, the mitre saw rental, and at what price I value my time, I’ll be able to make my decision.
There are many ways in which the valuation can reach different conclusions. If I were more skilled at putting down floors (especially if there was less of a chance I’d ruin any planks because of incorrect cuts or any of the other myriad of things that can go wrong), the cost savings versus the amount of time it takes could be wildly different. Extenuating circumstances can also affect the situation enough to sway the result.
This kind of time valuation is something you can use for your home improvement projects, of course, but also for other things, like what you choose to tackle in your business. When looking at your next project, take a hard look at what you handle versus what you delegate out to an employee or even a software. Your time is more valuable making business decisions than it is counting stock or even picking & packing orders. This is why the majority of people use a CPA or a tax software when it comes time for doing your income taxes: using an expert is far more valuable – even when it costs you money – because of the time you get back for not having to do it yourself.
So, on your next project, be sure to do the math to best determine: do it yourself, or hire out?
Onward and Upwards.