How Much is an Hour of Your Life Worth?

I’ve been reading and thinking a lot about money here lately. Something I don’t think anyone can truly ever put out-of-mind, but definitely something most folks should probably seek more education in. I know I’ve lagged (big time) in getting up-to-speed, money-knowledge-wise. No time to start like the present!

It’s a good thing there are some great books out there on the “mindset” as well as the “wallet-set” plans. It’s been kind of hard for me to judge if my efforts online and offline are making any real difference wallet-wise. Sure the bills get paid, but what about the future?

I know for a fact the work here at RichardStep is helping people and that’s my true motivation for doing what I do. Ya’ll are so awesome about feedback and emails and I thank you for it. I hate to tie monetary thinking to this changing-the-world stuff, but it comes up and here goes.

Thinking About Money Differently

As humans, we like to be able to take a quick look at something to judge its value and be done with it. That’s why knowing what you make per hour is such a handy number in job-hunting, but basically useless elsewhere.

I do the things I do here in my free-time, which is why I don’t get to do as much of it as I’d like. My corporate job is pretty-neat (working for NASA) but it doesn’t really give me the deep-down fulfillment like the stuff I do on this site.

But as my wonderful wife is quick to remind me, and quite appropriately, I should continue to keep a keen eye on the bills. I think we all struggle a bit with balance between our passions and our realities. I know I’m trying to make my passions my only focus, but I also realize it’s going to take some more time.

So how do I compare my 24/7 extra or residual income efforts from online ventures to the static, show up, do the work, go home, cubicle job? For example, how do I place a value on Project X and compare it to time spent at Job Y? Well, I like to think a little differently about it all.

Introducing: Dollars per Living Hour

What’s that? I’ve started thinking about the things I do (and the things I buy!) in terms of how dollars per living hour. You know, even the hours I’m sleeping, eating, and otherwise not really working.

Oh sure it’s nothing too complex but it has helped me get a better grasp on the night and day comparison. If you’re looking to do the same line of thinking, check it out:

Take your “regular job” income and divide it by the total number of hours in a year, 8760. This is how much every breathing moment is worth in cash. A cold way to put it, but it’s on par with “dollars per hour.”

For example, let’s go with a $50,000 per year salary. That’s $50,000 / 8760 = $5.71 per living hour (LH). That means for every hour you sleep, eat, play, work, whatever – you make $5.71. For example, when you sleep for 6 hours, you’ve already made $34.26 of your $50,000 salary for the entire year.

Great, so that’s a start in this new line of thinking. Awesome and easy way to think about it – thanks brain!

Okay so how do extra income efforts and projects fit in? Let’s say that the average person (after putting in a few years of work) can bring in $10,000 extra in cash. That’s an extra $1.14 per living hour. Now every hour of sleeping, eating, playing, and what-not have been boosted by an extra buck an hour.

So now it’s a little easier to compare where you can focus some of your extra efforts. I put in an extra-year’s worth of super-duper effort at my corporate job and that nets me a 3% raise or an extra $1500 per year. That’s an extra $0.17 per living hour.

Or hey maybe I can keep doing a great job at work while focusing on my extra-work activities that bring in that $1.14 per living hour for a year’s worth of effort. Sure, you can compare the hard-cash numbers and forgo the DpLH thinking, but it’s important for folks to think in terms of passive “money-coming-in-all-the-time” income instead of the active “trade-time-for-money” income we’re so used to.

Work Based on Effort, Not Time

Now I know. And the next time I look at a project that looks like it’s going to bring in a few extra hundred a month regardless of my time, then I know, “hey – that’s another $0.35 per LH toward my goal.” It also makes it easier to figure out if I really want to spend $130 on that new gadget, that’s almost a full-day’s worth of cash, and I only have 364 more days’ worth to invest and spend this year.

The key point is that it puts you in the “residual” or “passive” income mindset, which is where I think folks really want to be. And I like it.

It’s also enlightening to think how many hours of my life that hamburger meal cost me. But that’s another post.