What’s your time worth?

Value of money is always tied to time element. If you work, you need to understand the basic concept that you’re trading your time for money. Time is a nonrenewable resource, but money? You will be able to make much more money if you understand the relationship between time and money. That’s why one of the fundamental subjects of financial planning is “Time Value of Money”.

Simple Method to Calculate Your Hourly Wage without using the Calculator

Take your total gross income per year, remove the last three zeros and halve the result, so RM100,000 becomes RM100, which halved is RM50. So your wages is RM50/hour. This is a very simple way to calculate your hourly rate in a blink.

It is based on 8 hours workday, 5 days workweek, and 4 weeks of working month. Try calculate the real number, it won’t be too far away.

RM100,000 / (12 months x 4 weeks x 5 days x 8 hours) = RM52.08

Hourly Rate = Annual Salary / 1000 / 2

Considering Tax

However, some portion of the money you make is contributed to the Income Revenue Board (IRB) (Income Tax). If you hourly rate is RM50 and your highest tax bracket is about 20%, your actual hourly rate wages is RM42 only.

It will be more practical to use your net income to estimate your time worth.

Photo by saffi

Knowing the Application

1. Should you outsource, or do it yourself (DIY)?

People love DIY. But we can’t be expert in every field. If you DIY, it might cost you more than hiring an expert to do it for you.

In Malaysia, a house cleaning foreign maid costs about RM8/hour. Let’s say you are trying to save money by doing all the cleaning yourself. You spend the whole day from morning till evening, 8 hours in total to complete the job. If your hourly rate is RM50, you have just spent RM400 to keep your house clean. On the other hand, you can employ a temporary maid and pay her RM8/hour. She might get the job done in 4 hours. She is a professional housekeeper and I bet that she can do a better and faster job than you can. You only spend RM32. If you make use of your time for productive job, you might have earned the difference of RM368.

Most of the time, I would hire someone else to do the low value job and free myself up to do the things I love to do.

So ask yourself these questions:

  • should you cook or buy take-away packed food?

  • should you wash your own cloths or send it to laundry service?

  • should you type the letter, print the invoice or hire a secretary?

Forget about all those non-core function that you hate to do. Stop it immediately. There are people who are much more skillful. By outsourcing them, you will have more resources to be better utilized.

2. How many hours it worth?

When you buy something, you’re trading minutes or hours or days of your life to possess that thing. So before you buy that nice cloth, do a simple calculation using your hourly earning to see whether it is worth your time spent (on working for it, not the time spent buying it).

If you make RM10 an hour and something costs RM50, you can figure that it takes five hours of your life to pay for that thing.

Next time when you are making a decision to buy something, ask yourself, “How much time is it worth?

Beside that, the hourly rate also apply to other things you do that’s not productive.


  • You spend one hour waiting for your turn to get that free toy

  • You drive 30 minutes to a supermarket to get milk that is 50 sen cheaper than the groceries store just nearby your area.

  • You spend an hour contesting a RM10 mistake on your Celcom phone bill.

3. Increase your hourly rate, and build income on top of others people’s time.

Since time is a limited resource, we should try hard to increase our hourly rate. Tiger Woods earned $111 million in 2006 alone. His hourly wages is $55k per hour!

However, there is always a limit on a person’s earning. In order to grow your income further, try imagine that you have a bunch of associates that make money for you. Let’s say whenever they make RM10, they will make another extra RM1.00 for you. I can see that now you are starting to think “rich”. Indeed, helping others make money is one of the fastest way to get rich.

I’ve been working hard to help others make money. The more people I help, the more money I will get. When your perspective change, it is a whole new world waiting for your exploration.

Can you suggest any method to help people make money?


Further reading:



Personal finance author and trainer

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