Why is it important to convert dollars to time?

Why is it important to convert dollars to time?

For many, buying with credit is akin to paying with funny-money. You want something, you pull out a plastic card and shazam, you own it. By translating the number of dollars you pay for something into hours of your life spent working, you can make well-informed choices regarding what you’re willing to pay for with your life energy.


1. Determine your true hourly wage: Plug your numbers into this Time Value Calculator.

I am illustrating this Baby Step with an example. I entered a $37,135 annual salary (2005 median individual income for a person age 25+, employed full-time with some college education). I included typical work-related expenses: work clothes, commuting, etc. and daycare for one child. I used the defaults for work and non-work time. The calculator’s results tell me:

“Including time spent on commuting and work-related activities outside the workplace, you work an average of 47.12 hours per week. For that, you were paid a net $8.90 per hour after expenses, such as gasoline, child care, clothing for work and the like.”

Wow, $8.90 per hour. Based on salary alone, it would appear that this person is making $18.57 per hour ($37,135 by 2000 hours per year). The difference between salary and a true hourly wage can be significant!

2. Next, pull out your categorized list of expenditures (Baby Step 4). Take each monthly expense subtotal and divide it by your true hourly wage.

For example:

Car Payment: $250 by $8.90 = 28 working hours
Electronic Gadgets: $200 by $8.90 = 22 working hours
Dining Out: $175 by $8.90 = 20 working hours
Cigarettes, Chewing Gum: $150 by $8.90 = 17 working hours
Credit Finance Charges: $100 by $8.90 = 11 working hours
Shoes: $80 by $8.90 = 9 working hours

3. Take a deep breath and let your own numbers sink in. This is how long you spend working to pay for the things on your list.

4. Pull out your Treasure Map To A Rich Life (Baby Step 1) and your prioritized list of personal values (Baby Step 2). Compare the hours you work - to pay for the things you buy - with what you find most important in your life. Now, answer these questions:

  • Are they in alignment?
  • Are you working towards your dreams and values?
  • Are the price-tags of your life energy too high? In other words, are the things you buy worth the time you need to work for them?
  • What could you do with your life if you trimmed away some of the expenditures that aren’t on your Treasure Map or list of prioritized values?

5. Schedule a family finance meeting (Baby Step 3) to review your findings and reactions.

6. Write your true hourly wage on a piece of paper and carry it in your wallet or checkbook. Before you make any purchase, divide the sales price by your true hourly wage. Is the item or service worth the hours of work to you? If so, buy it. If not, walk away.

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