There’s a Target 10 minutes from my house. If I need to return something that cost $10, I’ll eat the cost instead of doing it.
Recently, I paid a plumber $150 to grab a $5 converter from his truck and screw a hose into a gas line.
I pay a $5 fee plus $5–10 tip to have everyday items picked up and delivered to me.
For me, making these decisions is like turning down a job that doesn’t pay enough money. And I don’t waste headspace thinking about them.
In life, we’re not constantly earning an hourly rate. A lot of us aren’t even earning one at work. I base my decisions on an hourly number, though. It’s like an hourly rate, but it applies to the whole work/life machine.
I’m fortunate enough to have a number of $150. Again, that is not my hourly rate. It’s more like “what an hour of time is worth to me.”
I factor in the rough amount of money I can generate in an hour, but I also factor in how much I love spending time with my son and how I value time for side projects.
Earning $10 for my Target return in 20 minutes is equivalent to $30/hour. I’ll skip that. It’s not worth it.
$150 compared to spending at least an hour learning something that could potentially blow up my house… plus travel to Home Depot? I’ll pay it.
$10–15 for delivery from 20-30 minutes away? That could be an hour round trip to save $10… not a second thought.
An important part of the hourly number concept is the sunk-cost fallacy.
For the Target return, 20 minutes would earn me $10, regardless of whether I spent it previously or not.
Most people overvalue $10 they’ve already spent compared to a new $10 they’d potentially earn. I do my best to forget any sunk costs and evaluate tasks without bias.
If a sunk cost is large enough (and easy enough to recover), it will make sense to spend the time to earn it back.
The field of neuroscience is phenomenal, and we’re learning all kinds of things about our brains. One of those things is that by reducing our general cognitive load- the number of decisions we make each day or minute- we give our brains space to better process and handle our most important decisions.
Steve Jobs had a uniform for this reason. He didn’t want to waste headspace deciding what to wear every day.
Your hourly number gives you a fast, black-and-white answer to a lot of everyday decisions. It saves you precious brainpower that can be applied to more productive things.
Whether your hourly number is $15, $150, or $1500, you get clear guidance and justification for how you spend your time.
Without this compass, I might feel guilt or anxiety about that $10 return. It’s sensible not to leave money on the table. I’ve been taught that my whole life.
But for me, 20 minutes is $50. I can say guilt-free that compared to sitting at my computer working or playing outside with my son for 20 minutes, that trip to Target is not worth $10 to me. I’ve got more important things to spend my time with.