Common: Squandering time due to underestimating its value… and yourself.

Uncommon:Assume you had to record all of your daily tasks and activities to include on an invoice.  Tally the hours and imagine sending this invoice to yourself.  Now ask yourself two indispensable questions:

1. What is the grand total ($$)?
2. What is the hourly rate?

If you’re like most people, you will likely struggle to answer these questions for two reasons.  First, there is the common inability many face in recalling the numerous tasks they engage in on a typical day.  And two, the majority has no idea what their time is worth–they simply allow their employer to decide for them.  Together, these two conditions encourage mindless routine and feelings of servitude.

I find it intriguing how people direct more attention (albeit, still not much) to tracking their dollars and cents than they do accounting for their scarce and dissipating minutes of life.

In the common exchange of time-for-income, a lack of clarity here can lead to substantial waste – a waste of personal time, money, energy and countless other resources.  And any form of waste is costly, but a waste of time is vain and irreversible.

The (real) value of time:

Highly effective individuals realize that time is more valuable than skill, money, and almost any other resource. Why?  Because with enough time, you can hone skills, raise capital, nurture relationships, and summon what is required for an exceptional life.  You can always acquire more material things, but you cannot invent more time.

So why is this concept of “invoicing yourself” important?  Quite simply, when we place a value on our time, we become aware of how we spend it – what we’re doing and how we do it.  

I’m sure you’ll agree: most people complain about never having enough hours in the day, but squander their minutes on trivial activities because they have not appraised their personal time.

The way we use our time is directly related to how we value it.

Said differently, how we use our time says a lot about our priorities, our level of self-respect, and our understanding of the finite nature of time.  I know more people than I care to admit who fool themselves into believing they are “making things happen” because they are constantly in motion.  Yet the reality is that being busy and being productive are two completely different engagements.  And only a deep concern for your time inspires maximum efficiency and effectiveness.

Money is not the end all, be all.  But because it’s quantifiable, let’s examine the time-money relationship.  Consider the age-old axiom of “pinching pennies.”  The intention of “pinching pennies” is positive: to develop awareness of small expenditures, assess their importance, and recognize how the little things add up.  Fair enough.  But taken literally, and applied to its extreme, the benefits have a converse effect because while we’re safe-guarding pennies, we’re marginalizing our time.

Enter one of the most powerful, underrepresented economic principles…

Opportunity cost:

Sure, we recognize the term, yet we often fail miserably in applying its surprising capacity to better our lives.  For example, we drive 10 minutes farther to a supermarket selling breakfast cereal on special.  We belligerently cut across three lanes of traffic to and perform two wheel-screeching u-turns to pump our gas at a station that saves us 4 cents per gallon.  And we spend hours as a coupon-hunter… all in the name of being frugal.  But each of these actions have multiple repercussions – although subtle enough to overlook.

I used to spend hours perusing numerous shops, making special trips to specific department stores, and scanning newspapers looking for premium sales on clothes before I purchased anything.  It took a while to realize that this was a very poor use of my time when considering the opportunity cost.  I discovered that the time I spent bargain-hunting would likely save $20.  This meant I was valuing my time at less than $2.50 per hour (far below minimum wage).

Keep in mind, this hourly figure of $2.50 was an unconscious evaluation.  It took seeing the numbers to reconsider the actual value of my time.  Now, as a result, I have a much different perspective and allocate my hours with critical thought.

Recently, I had a midterm that required extensive study.  Unfortunately, I was not particularly interested in the class and had several other important business and personal commitments that were simultaneously demanding my attention.  I looked at the mountain of readings that lay ahead and estimated the time it would take to complete.  When I considered the opportunity cost of not spending that same time doing other, more important things (yes, this is subjective), I realized spending six hours or more buried in school textbooks in a mandatory (yet seemingly irrelevant) class was was an imprudent use of my time.

Instead, I spent $50 purchasing notes from a company online offering a detailed summary of the readings as well as notes from additional course discussions I was unable to attend.  Just do the math: $50 divided by six hours equals $8.33 per hour – far below my own appraised hourly rate.

I hesitated at first to spend money on something I easily could have done myself (reading), but after considering the opportunity cost, I realized I was actually saving myself money by engaging in activities that were a higher priority and yielded a much better return on time invested.  (You may wish to re-read that last sentence as it is the crux of this concept.)

As you can see, this strategy is only as effective as your priorities are perceptible. You must have a good feel for the activities that yield the best return for you personally. And of course, perhaps most importantly, money is not the only metric affected. Tasks with your highest yield may offer a reward of personal satisfaction, passion, creativity, inspiration, etc. – not so easily quantified, but equally important. Such rewards are lost in the repetitive act of routine and trivial tasks.

What’s on the table?

Sadly, most people do not assess the opportunity cost of doing something different with their time.  When money is involved, it is relatively easy to calculate the cost of making one decision over the next, but in most instances, the cost may be less apparent (but I assure you the opportunity cost is still present).

When we fully understand the law of opportunity cost we understand a sobering, yet notable concept: We are always leaving something on the table.

Figuratively speaking, our choice to do one thing is a declination to do another.  No, we cannot do everything – especially multiple tasks with a high-quality output. And perhaps, the best way of ensuring that more high-yield, productivity-driven decisions are made is to first define the value of our time. 

It’s not necessarily the hourly figure/amount that is most important, but the fact that we acknowledge that each task or activity we engage in warrants an honest cost-benefit analysis.

When we realize that ultimately it’s not just the company’s payroll on the line, but our time/life, the value of a minute increases.  To be most efficient and effective, we must be willing to scrutinize our actions and priorities on a semi-consistent basis to avoid falling into habits that are conducive of time-abuse.  Remember, in the end, your time is worth much more than money; so spend it wisely.

Inciteful Questions & Actions:

Actions:

• Invoice yourself: Track all of your tasks and activities that compose your day and include the items on a fictitious invoice.  Tally the hours and assign an hourly rate.  How will this figure impact your approach to future engagements?
• Define your core talents and focus more of your time and attention on them.
• Identify the activities you consistently engage in and isolate those which do not maximize your talents or yield the greatest return on time invested.  Search for a competent individual to help you accomplish such tasks (this is a wise use of time).
• STOP doing things that merely keep you occupied.  No one can do this for you.  Admit when you’re not being productive.  All elimination, automation, and delegation begins with YOU.  It may be time to re-prioritize your life.

Questions:

• What am I “leaving on the table” with this decision?  What is the opportunity cost of engaging in this activity?
• Is this activity the best us of my time?  Or, what is the ROI for this activity?
  
• Would it be best to delegate this task?  Can someone do this better, faster, and enjoy it more?

Your thoughts?

What are your thoughts on this concept?  How do you avoid personal time-abuse?  Please take a moment post your ideas below.

Stay uncommon,

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