Before making any purchase we always want to know how much money it costs, but when was the last time you thought about those dollars as a direct representation of your time?
Here's a good little trick to help you put the cost of something into better perspective. Before your next expenditure ask yourself:
"How many hours will this cost me?"
I would much rather be at home with my family doing what I want to do than sitting behind a desk doing what I'm told to do. So for me this exercise has translated into "Am I willing to go to work for another X number of hours for that item?" But you can translate it into whatever question will provide you with the most insight.
But, the first step is to figure out your number.
Step 1: Determine how many hours you spend "working" each week.
In this context, working is defined by anything that you have to do because of your employment. For me this includes the time that I spend commuting, at work, mandatory lunch break taken at work, changing into and out of work clothes. So basically everything from the time my alarm wakes me up until I am able to act for myself and play with my boys. I figured that I spend roughly 54 hours "working" each week even though I'm only paid for being at work for 40 hours a week.
Step 2: Determine how much you are being paid in that week.
Since I'm a salary employee this was very simple for me since I get paid the same amount every week, no fluctuations. But if this is not the case then you should take an average or determine your "typical" amount.
Step 3: Determine how much you spend each week to be able to work.
This one is a bit more tricky. This is where you would account for all of your expenditures that allow you to keep your job. You're basically looking at your daily expenses and asking if you would still have that expense of you didn't have to go to work. This will cover things like special clothing, tools, gas to commute, childcare, tithing, etc.
If it isn't a normal weekly expense, like tools, just figure out how much you typically spend each year and divide by 52. Then add all these expenses together.
Step 4: Determine your hourly pay.
Subtract your expenses from your party and divide by your hours. Simple as that.
This is what it looks like for our family:
$721.51 Weekly take home pay
-$102.15 Weekly work related expenses
$615.34 Weekly increase from my job
÷ 54 Work hours required to make the $615.34
$11.40 = The dollar value of one hour of my time.
This can be a pretty disheartening figure to look at, especially when my company says that I make $28.37 per hour. But a tempting $20 splurge takes on a whole new meaning when you stop thinking of it as "just 20 bucks" and start thinking of it as an hour and 45 minutes away from my family.