Obviously, it’s a somewhat generalized figure, so it’s not going to take into account your own specific bills or expenses. But it’s a handy quick estimate and doesn’t require dozens of fields to be filled in. Just your annual income, tax bracket, tax filing status and where you live.

The driving time and gas hit the hardest, because it’s about 1.25 hours roundtrip each day. But I think this is a reasonable way to calculate your leisure time worth. I’ve always said, I didn’t go to college so I could do manual labor the rest of my life. Now I don’t feel so bad about paying someone else to mow the lawn, do house repairs, etc. I do what I can, but it’s not my competency, so in some respects I’m spreading the wealth :-P

Rather I focused on the amount of time spent getting rid of spam –
http://blog.boxbe.com/email/the-high-cost-of-attention

but the idea could be applied anywhere as you’ve suggested.

The biggest point here is that if there are things that you hate to do, look at the value of your time. If you can pay someone else to do it or use a service that cuts the amount of time down to do an activity you hate, you should seriously consider it.

For example, I hate doing laundry. It’s not so much the sticking it in the washer, then the dryer, it’s the folding and putting away part. Sending my clothes out to a wash and fold for $.75 a pound is a luxury that makes sense to me.

Great post!

Cheers,
Randy

Then I figure in that I took this job as a learning experience that contributes to my long-term goals. I work as a legal secretary and I plan to attend law school, so there’s a benefit that really can’t be quantified.

I don’t think it valid. Your free time is valued not in dollars, but in utility. These are not related in a linear manner, as the law of diminishing returns shows.

The real measure is:

Total Utility of Alternative A
versus
Total Utility of Alternative B

Total utility is calculated by taking the utility you get from doing the activity (and can be negative in the case of things you actively dislike). You add that to the utility gained from the present financial expense (or income) from performing the activity, as well as to the utility gained in the future from having done the activity.

Note, this isn’t the amount of dollars, but the utility of them. For instance, the first 20K you earn in a year (assuming typical American level savings) is much more important than the second, which is again much more important than the third.

Then again, the first day off in a week is the most important, the second day off much more important than the third.

For instance, you have the choice of writing a website yourself or hiring someone to do it.

If you do it yourself, your utility gain from this activity is:

Build a Website Yourself =
Fun (or Angst) of writing a webpage
+ utility gain of the time you won’t use in the future when building web pages

Hire someone to build it =
- Utility of the money it costs to pay the developer
+ utility of building a relationship with someone to do things for you in the future
+ utility of 2nd best use of free time you lose (say playing a Wii or soccer with your kids)

I’m not saying Trent’s method isn’t useful. It is incredibly useful for comparing *jobs* (although only hints at some areas of the evaluation criteria for those). True hourly rate is a useful metric to aid in calculating the utility of an employment situation. It isn’t the whole picture, you have to go into stuff such as the above to get there.

–Michael

1. Overtime jobs are a lot more common than you might think. During the late 90′s, for 5 years I worked a white-collar job where I could essentially work as many hours as I wanted at a flat hourly rate. (40 hours/week…80 hours/week…whatever I wanted to work.) During that time, I paid people to do a lot of tasks I could have done myself because it made financial sense to do so. My objective was not to minimize my spending level, but to maximize the difference between my income level and my spending level.

2. The opportunities that don’t involve money may often be the most significant. For example, if you are a busy person with a family, paying the neighbor boy $10 to mow your lawn will seem like an absolute bargain — for only $10, you can spend another hour playing with your kids! If the marginal utility of your leisure time is very high, you will make decisions like that, including even forgoing overtime work if you would rather have the free time than the extra money.

1. You will not be paid your hourly rate for sitting on the porch or watching TV. In fact, you will be paid nothing for that time, so from an economic perspective, if you save $1 an hour by doing chore yourself instead of watching TV, it is still worth it. What you are pointing is the equivilent of opportunity cost – but an opportunity cost is only real if you truly have the opportunity to save / make the amount of money in question. If what you are really going to spend your time on is hanging around, you are not truly making any money.

2. Now for the opposite argument – even if I am paid $50 an hour to do a chore, it is not worth it to me if that is the last leisure hour I have in the day. There is a diminishing utility for money, if all you do with your time is use it to make more money…