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What are the best approaches to assess the cost of my free time?

I am looking for suggestions on formulas for computing the cost of one hour of my free time in money equivalent for decision making. Ideally, they should take into account net income (salary), "survival" housekeeping expenses (house rent, etc.)

I am not well-satisfied with the basic formula I have found on the Internet so far:

worth = net income / number of hours spent on earning this income

It implies a mindset that if I earn X per hour on my job and if I want to spend one hour of my free time on some activity, I should compare it to X as I could earn X during this hour.

In my opinion, this formula has several drawbacks:

  • It supposes that you can always earn X per hour which is probably not true (eg: our productivity capability is limited to a certain amount of hours; it is not guaranteed that you can find activities for extra income of X per hour)
  • It does not take into account housekeeping expenses
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closed as too broad by Dennis S., Rory Alsop Mar 10 at 23:33

There are either too many possible answers, or good answers would be too long for this format. Please add details to narrow the answer set or to isolate an issue that can be answered in a few paragraphs.If this question can be reworded to fit the rules in the help center, please edit the question.

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It's easy to compute this if one is a freelancer and charges by the hour -- the value of your free time is the same as your rate. So if you go to a site e.g. How to Calculate Your Hourly Rate which helps you calculate what you would be charging as a freelancer, then you have the number. –  tcrosley Feb 27 at 23:38
    
Maybe an interesting question in itself, but far too subjective, and entering the world of philosophy. Have you Googled "value of free time"? You'll see plenty of criteria for which you have to decide first if you consider these important, then you would have to somehow reduce their value to a number. –  Jan Doggen Feb 28 at 8:07
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Voting to close as too broad, though it's also primarily opinion-based. This is more of a discussion question rather than a Q&A site question. It is an interesting question though. –  Raystafarian Feb 28 at 13:43
    
It's not exactly a productivity based question, but plenty of productivity books cover it as a way to emphasize how important time is. Also, you can probably earn similar to half your usual hourly wage by working somewhere part time, learning a new skill, or doing some simple freelance job like ghostwriting or data entry. –  Muz Feb 28 at 17:28
    
I think i may be quite happy with the half of usual hourly wage estimation. –  dimi Mar 1 at 13:48

3 Answers 3

I know this isn't the answer to your question and I suspect it might get down voted but why would you want to measure you time in this way?

It seems to suggest that:

you know the cost of everything and the value of nothing

What I mean is how can you calculate in money terms, that spare time spent with family or friends?

Surely a better way to be more productive is to decide what you want to focus on (goals, objectives etc) and the benefits this will bring you and others.

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The cost of your period of time T is equal to the sum of values V_i that your clients received from you by that time. You can ask your clients: "How much do you estimate the value you recieved from me for period T?" Then you can add up V_i and divide the sum by T to get the average per hour for that period.

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I would start with something like:

free_time_cost = possible_income - rest_value + free_time_expenses - other_factors 

where

possible_income - money you could make
rest_value - how much work you can perform thanks to taking time free, like 8 hours of sleep makes it possible to work 8 hours on the next day
free_time_cost - sleeping costs nothing, cinema costs a bit, holiday in Hawaii costs a lot but making a dinner instead of buying one saves you money
other_output - how much is family time / hobby worth? or maybe extra work can give you new financial opportunities?

If you aren't using it for automated calculations but for decision making it should serve you well:

  • spending night working:
    • extra income
    • getting tired - less work can be done on following day
    • extra cost of coffee and food
  • spending time with family
    • lost income
    • no efficiency loss on the next day
    • eating at home at with family which is cheaper the ordering Chinese food or pizza

Examples above don't really factor in other_output with here means factors more difficult to measure but the equation can help you making reasonable decisions. It shows whether whether you really can get extra money working more and pushes into factoring in quality time with your friends and loved ones or your hobbies.

Of course really value of other output is difficult to asses and there is always the question if you get a better financial opportunities in the long run thank to extra focus on work. Or maybe social time can open new business opportunities?

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