Yesterday, as I was taking my daughter to a birthday party, I started thinking about the value of an hour. What is an hour of your time worth? When I was younger, I considered my time to be worth $25/hr. Eventually, I started making more than that at my day job so I bumped it up to $50/hr. Recently I discovered that the going rate for a Web Programmer is $65/hr so I raised it to that.

However, my thoughts turned to what I am really trying to describe with putting a value on my time. Is that what I charge to do extra work? Is that my goal for passive income? Is my time only worth money while I’m awake? What about entertainment, should I be adding my hourly rate on to that? How come I accept that my employer doesn’t pay me that?

Naturally, my thoughts continued on to lofty goals and I started thinking about the value of an hour for a millionaire. What would the hourly rate be if I made a million+ a year? I discovered that the numbers weren’t nearly as high as I thought. Maybe that’s a good sign. Maybe I’m finally cultivating the wealth mentality. So, how many hours are we talking about in a year?

Hours for a typical 8 hour a day job 2000
Average awake hours per year 5840
Total hours per year 8760

Stats Canada seems to list two primary average income totals. Economic Families, two or more people at $78,400 in 2005, and Unattached Individuals at $32,300 in 2005. That translates into:

  Day Job Waking Hours Total Hours
Economic Family $19.60 $6.71 $4.47
Unattached Individual $16.15 $5.53 $3.69
Millionaire $500.00 $171.23 $114.15

So, what do these numbers actually say? To me, they say that the average person doesn’t place much value on their time. It also made me realize that earning a million dollars a year really shouldn’t be that hard. These numbers seem realistic to me. Of course, I’m sure if we could find some way to measure actual productivity in hours spent on value producing activities, a completely different picture would be painted. That leads to the question, what is value? I think that question deserves an entire post to itself, but in summary, in addition to whatever someone is willing to pay me for, I see value in spending time with my family, in personal development, and in entertainment. Basically, anything that makes my life better. Granted, this will vary widely between people, but my point is, that you should think about it.

Based on the numbers, it seems my value thinking is on track. During my original driving/thinking session, I randomly picked a value of $1000 per hour since it didn’t seem that outrageous. Having calculated the numbers now, I see that it actually takes substantially less. Now I have something to shoot for. It’s good to have specific numbers in mind to compare your results against. I still have a long way to go, but every journey proceeds one step at a time.

- Dave