If you want to live your dream life, calculate your billable-hour rate.
You’ve likely heard that your most valuable resource is time. But have you ever figured out how valuable each hour is? Until I did, I was far too cavalier about wasting my time or spending it on the wrong things. I was great about curbing my spending, not succumbing to the temptation of the hottest bag or shoes-du-jour. But I gave out 30-minute “let me pick your brain” sessions to any colleague who asked and spent big chunks of my day doing things I should have delegated to others.
I knew something had to change when I found myself drowning in my life. I was juggling a fast-growing business, fast-growing kids, an aging mother, a marriage that deserved nurturing, and I deserved to enjoy my life without being stressed, exhausted and way too often feeling like a failure. So I had to get really clear on where to spend my time and where not to, because it had become crystal clear that I was never going to have all I wanted if I was trying to do it all.
It’s human nature put things on our plates based on emotions like fear and guilt. This tendency is even greater when you’re a serial people-pleaser like I used to be. I knew I needed to figure out a way to take the emotion out of it. Because of my two previous careers that were ruled by the billable hour—law and PR—I thought that if I came up with a way to figure out my billable hour (so to speak), it would give me the mathematical proof I needed to determine what I should hire someone else to do and what things to knock off my plate altogether.
I applied it to my own life, and I’ve taught it to tens of thousands of others, to show that our wasted time is wasted money. And I’m willing to bet my hourly worth that you’ll be like everyone else who’s reported back to me: your time is worth a lot more than you think.
This process first requires you to get clear about what your Dream Life looks like and how much that life will cost each year. Maybe you’re already living it, but even if you are, very few of us have a handle on the annual price tag that comes with living the life we really want. Where do you live? Do you want or have kids (because those suckers are insanely expensive)? What are you doing professionally and is it different from what you’re doing now? What about travel and retirement funds?
Here’s an important and non-negotiable rule: you’re not allowed to censor your vision with the doubting voices in your head telling you what’s practical or doable. If you do, you’ll never find your true hourly worth, and you surely will never build the life you really want.
Once you have a clear picture, and the cost associated with living it each year, you’ve got your first number.
The other number you need to determine is how many hours a week you want to work. Not the hours you think you’ll have to work to reach your big number, but how many you want to be working every week once you get there.
Now you’re ready to plug the numbers into the two-part calculation I came up with:
______ hours per week x 52 weeks = _________ hours per year
__________ (annual income) ÷ _________ (hours/year) = $ _______ per hour
When I first did this, my audacious goal was to earn $1 million a year and be working on my business 20 hours a week. This would give me plenty of time to be a hands-on mom, practice self-care, pursue my hobbies, spend time with my husband and friends and still have some left over to spend on causes I care about.
When I discovered that every hour of my time was worth $962 per hour, it made it easy to decide what I should be deleting off my plate—which meant I said No a lot more often—and what to delegate to others—because it made financial sense to pay someone else.
Let’s say your hourly worth is $300. The 10 minutes you might spend scrolling through Facebook to take a mental break from a particularly taxing project? That’s 50 bucks, which you might consider it a worthwhile escape.
But 45 minutes of getting lost down the scroll hole without even realizing where the time has gone? That’s $225 down the toilet. If one of your priorities is living in vibrant health, that time could’ve gone toward a yoga class, a run with a friend or a massage.
If there are things that you aren’t good at or don’t want to do that you can pay someone else less than your hourly worth, you have the mathematical proof that outsourcing makes financial sense. For example, if you need to ramp up your social media presence for your business, but it’s not in your wheelhouse and you should be focusing your time on other parts of your business that only you can do, you can pay someone else a lot less than it costs you to spin your wheels or drag yourself through hours and hours of something you hate.
Maybe paying your bills and keeping track of your tax deductions is something you hate to do, but you can pay someone less than your hourly worth to take it over. That’s a no-brainer. Or the time you’re spending on cleaning your house and doing your laundry is keeping you from building your side hustle or doing business development to get a leg up on a promotion.
You might be telling yourself that since you’re not yet making a certain amount of money or have a certain title that you should be doing everything yourself. The truth is, you can’t do everything, and so much of what you’re filling your days with is taking your time away from the things you really want to do and zapping your energy and making you less productive in all parts of your life. I’m living proof that if you learn how to calculate what to take off your plate now, as your income and your dreams grow—along with your hourly worth—you’ll not only be working smarter but living smarter too.
But this requires you stop worrying about what others might think. A head of a law firm who was in the audience of a talk I gave recently reached out to me, admitting that she’d been reluctant to hire the help she wanted and needed because she was afraid of being judged. “I don’t want to cook, I want to work out and pour into my kids. Knowing my hourly worth 1000% changed my life,” she wrote. “My chef starts today.”
Maybe you’re not at chef level yet, but all the time you’re you spend grocery shopping and chopping costs you a lot more than the money you’d spend on a meal delivery service. The decision to delegate goes from being an indulgence to a smart investment.
Once you’ve delegated and deleted, there’s a third “d-word” that’s essential. You’ve got to practice discipline to spend your time according to your hourly worth. You actually have to use your freed-up time to do the things you said you wanted the extra time for in the first place, like building your business, spending quality time with your kids or fitting in yoga classes.
Over the years I’ve consistently calculated what every hour of my time is worth, making constant adjustments to what I was putting on my plate. Because I had more time to do what I could uniquely do to boost revenue, my hourly worth has grown from that initial $962 to $6,412. It also allowed me to pursue passion projects—like writing two books and fundraising for causes dear to my heart—and be present for the most important people in my life, which includes ME.
Make 2020 the year you start making smarter decisions about where to spend your time and where not to. If you think you can’t afford it, I’ve shown you that you can. In fact, the math proves you can’t afford not to.
Romi Neustadt is the author of “You Can Have It All, Just Not At The Same Damn Time.” Follow her on Twitter @RomiNeustadt.
