Overcoming Time Famine: Understanding Time vs. Money (and ideas on Time Management from Randy Pausch)
What is a greater asset to you…time or money?
I know, it’s a tough choice. I struggled with this question for years…and at times still do.
When you truly take the time (pun intended) to stop and think for a minute…you realize that time is your most valuable asset.
Unfortunately, many overlook this fact. They believe “time is money” and use phrases like “I’m going to do this to save time.”
I want to challenge those beliefs.
Saving Time vs. Buying Time
“I’m going to save time by going to the grocery store after my appointment.”
On the surface, this statement sounds logical: after all, time will not be “wasted” by making a second trip. But, I believe a better distinction is “I’m going to buy time.” Huh?
Let me explain.
The way I see it, time is a finite resource for all of us. We all get the same 24 hours.
Some people make more money in that time period, while others make less. Why is that? Because few people see what they do each day as an activity to buy more time.
Most people trade their time for money. This is especially true of employees who are on salary, and specialists who charge per-hour fees. Hence the popular saying “time is money.”
Instead of thinking of activities, software, and other things used to “save” time, a better thought to pose to yourself is “how does these (or this thing) help me buy time?
How Valuable is Your Time?
Few people sit down to determine what they are worth per hour. If you take your salary or earnings and divide it by the number of hours you work, you will get a rough idea of the value of your time.
For example: if you work 50 hours/week for 50 weeks/year (50hrs x50 weeks=2,500hrs) and you make $40,000/year you would earn $40,000/2,500hrs=$16/hr. You can hire virtual assistants (VA’s) through different sites at a fraction of that hourly rate.
Once you realize how much you’re worth per hour, you can better look at the next function of time: opportunity cost.
In economics, there is a term called “opportunity cost” that refers to what happens when you make a choice; if you are spending time doing some activity, you are giving up the opportunity to do something else. What you give up is called the “opportunity cost.”
This concept is important to keep in mind because it affects several areas of your life.
Let’s say for instance that you have the option to watch Youtube videos for hours or go to the gym. The opportunity cost of watching Youtube videos is not exercising your muscles.
Now apply this idea to every area of your life.
How great are your opportunity costs? What are they costing you?
Another way to look at this is to not only apply the idea of “opportunity costs,” but also use the 80/20 principle.
The 80/20 Principle (Pareto’s Law) states that 80% of your results in life come from 20% of your actions.
This is applicable to many areas of your life: 80% of your happiness is caused by 20% of your friends, 80% of your profits come from 20% of your customers, etc.
Let’s wrap all of this up by laying out some actions steps you can take right now to move forward with managing your time more effectively.
1) Determine your earnings per hour. Divide your total salary by the total number of hours worked in a given year to give you a dollar per hour ($/hr) figure. This will help you assess where your time is best spent, and thereby determine when you should consider outsourcing tasks that are less than your hourly rate.
2) Write down your 80/20 rules for each area of your life. What 20% of your activities produce 80% of your results (both good and bad)?
3) Look at the opportunity costs associated with the 80/20 rule. Once you eliminate activities or spending that are the least efficient or most unproductive, what can you do with that reclaimed time or money?
4) If you have some time, consider watching Randy Pausch, the author of The Last Lecture, give a talk on effective organization and personal time management.