The old saying ‘Time is money’ came to mind recently as I sat in a recording session that had to be paid for by the hour. As the taping extended beyond the planned schedule, I began to watch the steady progress of the clock’s minute hand, and mentally calculated the cost of each tick of time.

Time is really the only resource that’s in limited supply, as we only get 24 hours, or 1440 minutes, or 86,400 seconds in a day. Oftentimes, we forget the important connection between time and money, as there are many ways that we squander time that will negatively impact our money.

Here are some considerations about time and money:

How much is your time worth?

Many people have never thought about their income in terms of the time spent to earn it. You can calculate how much you are being paid for your time by dividing the salary you recieve by the number of hours you typically work in a month. For example, if you take home $60,000JMD monthly and work eight hours per day for 20 days in a month, then you would be earning at a rate of $375JMD per hour.

Carrying out this exercise can be a real eye-opener, as it can help you to decide if an hour of your time should be worth more money. If you routinely work overtime hours without getting paid, then your hourly rate will decrease proportionate to the extra time you put in on the job.

If you are uncomfortable with your earning rate after doing this calculation, don’t get mad and blame your boss. The challenge with most salaried jobs is that you get paid based on the market rate for the position, not for the time you expend. You have to look for ways to improve your skills or qualifications to increase your earnings, or channel your previously unused hours into other income-generating activities.

If you are self-employed, working out your hourly rate can also help you to think twice about how you spend your precious time. If your regular activities are not generating money, then you are essentially cutting down your hourly rate of earning. While social networking sites and instant messaging can help you to network, should you be sending proposals to customers instead? Is it worthwhile to do your own accounting or data entry when you could be marketing your products?

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How much time do your posessions cost?

Once you have worked out your hourly rate, then you need to consider how many hours you have to work in order to buy the things you need or want. Looking at these figures will help you to determine if some of the material possessions you would like to own are really worth the time you would have to spend.

Let’s say your earning rate works out to $500JMD per hour. A $5,000JMD dinner tab at a fancy restaurant will require 10 hours of work. To pay your rent of $30,000JMD, you would need to work 60 hours. An updated $70,000JMD flat-screen television set will cost you about 140 hours of sweat equity, while a $2-millionJMD car will set you back 4,000 hours of your time. If you use a loan to buy these items, then factor the interest cost in your calculations.

When you look at your purchases in terms of your equivalent work time, you may realise that you have been sacrificing your time to buy meaningless acquisitions. Are you spending too much time working just to buy things that you don’t really need? Can you use some of those work-hour dollars to create memorable experiences with your family or friends, or to save towards future goals instead?

How much is lost time costing you?

Since time really equates to money, then it stands to reason that if you waste time, you’re effectively wasting money. You also need to quantify all the money that you stand to lose when you don’t use your time effectively.

Being disorganised is a sure way to squander valuable time that could have been more profitably spent. Have you ever wasted time looking for an important work document or trying to locate details on your personal affairs? Get rid of clutter and organise your records so that you can be more efficient both at your job and at home.

One of the biggest ways to lose time and money is to delay starting an important project. As writer Edward Young said, “Procrastination is the thief of time.” Do you have an idea for a business venture but left it languishing in the concept stage for years? Have you postponed starting an investment account to save towards buying a house or building your retirement fund? Every day that you put off your plans equals lost time that you cannot recover, and potential income that will not materialise.

So think carefully; are you really making the best use of your most valuable asset – your time?

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, October 15, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl