Thursday, 12 June 2014

Value Your Time: The Case for Outsourcing

A few weeks ago I wrote a review of The 4-Hour Workweek (see my review here).  That book had several themes but one of the main ideas was that you can free up your time by admitting that it has a value.  When your time has a value then you can work out whether you can outsource activities or chores which eat into your free time.

The focus of this post will be on encouraging you to think about how you value your time and how you can free it up by outsourcing.

Your time IS valuable

The thing you should always remember is that your time is valuable.  Most people (especially those of us who are focused on saving and budgeting) often forget this.  We often find ways to save money by doing things ourselves however we forget that the time we spend doing various tasks could be spent doing something that we actually want to do.

An easy way to value your time is to work to answer the following question:
"If I could buy an hour (or a day) away from my job...and still get paid - how much would I pay for this time?"
If you are willing to pay $20 for an hour off at work then you should value your time at $20 per hour.  Obviously the more you earn, the more you would be willing to pay for that extra hour off.

As savers we are conditioned not to 'waste' money.  If your
time has a value then you should not be wasting it.  Yes outsourcing has a cost but your time should also have a cost.

Stop valuing your free time at $0

Most people are intuitively able to understand the above equation....however they then go and value their free time at $0 / hour.  Here is a personal example of this:

I iron my business shirts every three weeks.   I have 15 shirts to iron and it takes me 4 hours to wash and iron the shirts.  If I had them washed and ironed at the laundry under my office it would cost me $4 per shirt (or $60 for the 15).  So by ironing the shirts I am effectively valuing my time at $15 / hour.

Would I rather be doing something else for those 4 hours...yes!  Would I pay more than $15 an hour to take some time off work?  Definitely!  Therefore it doesn't make sense for me to iron those shirts myself.  I could work another job and get paid far more than $15 an hour and be ahead on a net basis.

Focus on the hourly rate you are outsourcing at

Most of us are more than willing to outsource tasks we don't like doing...even if they don't take much of our own time.  This is not the right way to look at it.  What you should be comparing is the cost of outsourcing the task on an hourly basis!

For example I hate cleaning my apartment (vacuuming, mopping, bathrooms, shower etc.) but it only takes me ~2 hours every fortnight.  If I had to get a cleaner it would cost me $60 (i.e. $30 an hour).  Before I started thinking about my time as having a cost I would have definitely hired a cleaner instead of getting my shirts laundered even though the cost per hour is double.

How to work out what you should outsource

Now that I've (hopefully) convinced you that you should value your time at a rate that is right for you and that you should outsource some of your life...the next question is 'what should you outsource?'.  Here is the process you should go through
  1. Work out what you can outsource
  2. Work out the effectively hourly cost of outsourcing this task
  3. Rank the list from cheapest to most expensive
  4. Outsource from the cheapest item first and start freeing up your time

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  1. Hey 90 M,

    Posted up a long comment and it didn't follow through :O.. Oh well I'll look to remember what I wrote ha.. Great post and very topical for me at the moment as well.. I consider that exact same thing about if you should do your own ironing or not especially given that I am growing my brand and it is quite cheap to get it done by someone else..

    Given that from memory you travel a bit you may want to check out Tim Ferriss podcast, called The Tim Ferriss show, he has some very interesting interviews although some of them are a bit long.. There's a whole heaps of inspiring podcasts out there about business and entrepreneurship

    1. Hi Jef! Thanks for the heads up - I'll definitely look into it.

      I mentioned this concept to one of my friend recently and he mentioned a couple that used to do the same thing. They would trade tasks (whether it be cleaning, ironing etc.) based on the market value of those tasks and there would be a netting at the end and an exchange of cash. I thought it was a brilliant idea but can't see my girlfriend ever agreeing to it!

  2. It's cool, I'd say it was probably because I wasn't signed in so nothing to do with the site :)

    Well, I'll probably consider a bit more seriously once I get back from Brazil/South America.. You won't see much of me around here in July but looking forward to touching base once I'm back :)

    1. Hi Jef! Have a great trip! Very jealous that you're getting to go to Brazil during the world cup :)

  3. Yeah it'll be pretty sweet :).. Looking forward to it and will fill you in once I am back.. Is it my turn or your turn to email.. Thought I emailed you last haha