Calculating the value of your time is essential for effective management, both personally and professionally. Do you know how much your time is really worth? What is your hourly rate? This is one of the first things that every freelancer should ask themselves when starting their business, and one that, in reality, anyone would do well to know.
The reason is very simple: the time you waste will not come back. In fact, one of the advantages of financial freedom is that it allows you to 'buy time' to do what you want and be free.
How to know how much your time is worth
To determine the value of an hour of your time when you are employed, simply divide your monthly salary by the number of days and hours you work. This will give you a clear idea of the monetary value of each hour you spend in the office.
For example, if you earn 1,500 euros net per month and work 8 hours a day, each working day costs approximately 68 euros and each hour worked 9.7 euros.
You can use this amount to make financial decisions in your day-to-day life. For example, you already know that going to the movies with popcorn is equivalent to one hour of work or that the pizza you order every Friday has a similar cost. This is a way to understand the relationship between your expenses and the effort required to cover them.
This approach doesn't change as a freelancer, but it does get more complicated. As a freelancer or entrepreneur, you must set the price of your products or services based on the cost of production, market value, and desired profit margin.
Most people find this calculation difficult, especially if they are still thinking about the salary they earned before starting their business. In addition, it is not always easy to keep track of all the costs associated with self-employment: Social Security, office supplies, work materials, telephone, among others.
Don't forget to consider the time spent on administrative tasks such as organizing budgets, making invoices, looking for clients or managing billing. All of these elements should be reflected in the price of your products or in your hourly rate.
To make things clearer, if you want to earn 1,500 euros a month as a freelancer, your hourly rate cannot be 9.7 euros for a 40-hour work week, as you would end up earning much less net. You must include your Social Security contributions, service and material expenses, income tax withholding, days off, and VAT. In general, to earn those 1,500 euros, you need to generate around 2,000 euros if your expenses as a freelancer are minimal.
Knowing the value of your time as a freelancer will help you focus your efforts on projects that cover your minimum hourly rate. To avoid common mistakes, here are some tips for managing your finances as a freelancer.
The importance of delegating tasks
Delegating tasks is essential to freeing up your time to focus on higher-value activities. By delegating routine or administrative tasks, you can focus on strategic and creative functions. Not only does this save you time, but it also increases the efficiency and productivity of your team. It allows tasks to be performed by those with the right skills and helps build team members’ skills and confidence.
Respecting other people's time
Respecting others' time is crucial in any setting, whether professional or personal. Efficiency and productivity increase when others' time is respected. Projects and tasks are completed in a timely manner and people feel more motivated and satisfied with their work. Punctuality and efficiency in communication foster healthy, collaborative working relationships.
Not respecting other people's time can lead to several problems:
- Project delays : Impact the timeline and can have financial and reputational consequences.
- Increased stress and frustration : Waiting unnecessarily or correcting others' mistakes can be very stressful.
- Additional costs : Lost time can translate into additional costs that negatively impact productivity. In some industries, it is common to bill for lost time due to inefficiency or delays caused by others, which underscores the importance of valuing and respecting the time of everyone involved.
Properly estimating and valuing your time is critical to efficiency and success both personally and professionally. Delegating appropriately, respecting the time of others, and considering the implications of wasted time are essential practices in any productive environment. By understanding and applying these principles, you can improve your productivity and contribute to a more efficient and satisfying work environment.
