A New Way to Measure Your Success
There are varying degrees of success and many different ways to define it. For example, in order to be a successful frequent flyer, you will probably need a lot of connections. 😀 And if you’re trying to lose weight, success is all about mind over platter, and winning that Nobelly Prize. 😄
Financial success is often evaluated in terms of income or wealth. But I often argue that time is our most precious resource. Unlike money, all our days are numbered. So given this reality, perhaps the best way to evaluate our success is to find out how much we value our free time. 🙂 This can be done with the following steps.
- Think of an activity that is neither pleasant nor unpleasant to do for you. It also can’t help you gain skills or make you smarter.
- Determine the minimum amount of money you would charge to perform that service for 1 hour for a stranger.
This mental exercise will reveal how much you value your time at an hourly rate. 🙂 For example, services I can provide that I neither like nor dislike include slowly folding laundry and walking around town for no reason.
I would have gladly accepted $20/hour to fold laundry 10 years ago. But things have change now. I would not give up my free time for any amount less than $40/hour today, because I can offer valuable skilled labour. Furthermore, I’m 10 years closer to death so there has to be an added premium on the remaining time I have compared to the past me. Due to simple economics, the fewer days I have to live, the more valuable those days are to me.
In a way, $40/hour is an indicator of my level of success in society. Perhaps a doctor or lawyer would value their free time at $120/hour. This wouldn’t be surprising given their place on the social economic ladder. It is not only a measure of their immense human capital compared to mine, but also their financial status.
How the Value of Time is Tied To Success
As self sustaining adults, the value of our free time should be the lowest at the start of our careers. But over time this value should increase to keep up with our growing human capital. Over time our demand for time is increased, and demand for money is reduced because we can earn money easier and more quickly.
But measuring success based on the value of time has some drawbacks. It is based on our subjective perceptions. Maybe our labour is worth less in the free market than we think it does. The measurement also falls apart for the unemployed. For example, a retired grandma may want to fold laundry for as little as $5/hour. But that doesn’t necessarily mean she’s not successful in life. She probably just has nothing better to do since she’s retired and has free time 24/7.
Nevertheless, the hourly rate can be useful to encourage self development and determine relative success. 🙂 For example, let’s say our free time is worth $30/hour now. If this grows to $50/hour in a few years then we are probably going in the right direction in terms of our career and finances.
A Loophole Around Sensitive Financial Discussions
Lots of people are uncomfortable talking about money with friends. But when I ask my buddies about their free time hourly rate I usually get a candid response with no awkwardness. So perhaps this is a suitable way to discover people’s financial situations without directly asking them to disclose private information. For example, if your friends put a lower value on their free time than you, then it could mean they earn less money than you do.
So, how much is your free time worth? 😉
Random Useless Fact: