What Is an Hour of Your Time Worth? A Deliberately Low Number, and Where to Use It

The exercise of pricing your own time has a bad reputation, and it deserves some of it. Taken literally it leads to invoicing your family for lifts. But most people are already pricing their time, constantly and inconsistently: driving across town to save a few dollars one day, paying a delivery fee to save ten minutes the next. The question is not whether to have a number. It is whether the number is explicit and honest, or implicit and whatever your mood says it is.

This piece sets out one way to calculate it, why the calculation should produce a lower figure than you would like, what the published research actually supports, and the short list of decisions the number should be allowed to touch. There is no diary of mine in here; the worked example is a stated hypothetical.

The calculation, and why it halves

Take what you earn in a year. Divide by the hours you actually work, including the commute and the unpaid overrun, not the contractual figure. Then halve it.

The halving is the part people resist, and it is the part with the best support. A saved hour is not a worked hour. Nobody is offering you overtime for the twenty minutes you did not spend in a queue, so valuing that twenty minutes at your full wage assumes a market for your spare time that does not exist. What the hour is worth is what you would pay to have it back as free time, which is less than what an employer pays to direct it.

That is not just intuition. When the US Department of Transportation values the time a road or transit project saves travellers, its guidance sets personal travel time at 50 percent of hourly household income, calculated as median annual household income divided by 2,080 hours. Business travel, where the hour belongs to an employer, is valued at the full hourly compensation. The Federal Highway Administration’s most recent conditions-and-performance report applies exactly this: $14.20 per person-hour for personal travel against $27.56 to $34.96 for business travel, with sensitivity tests at 35 and 60 percent of hourly income because, as the report says, the personal-travel values are “subject to considerable uncertainty” and vary between people and between trips (FHWA, 24th C&P Report, Chapter 9, checked September 18, 2026). Transport economists have spent decades on this question and settled on roughly half. That is a reasonable place for a household to start too.

A worked hypothetical. Say you earn $52,000 and, honestly counted, work about 2,200 hours. That is $23.60 an hour, and $11.80 after halving. Twelve dollars an hour is lower than most people’s ego wants. It is also the point of the exercise: an inflated number justifies every convenience purchase, and you have then simply bought yourself a rationalisation.

What the number is for

The value of an explicit rate is not that it changes how much you spend. It is that it resolves one category of decision you are probably making badly in both directions.

Decision type	Without a rate	With a $12/hour rate
Drive twenty minutes round trip to a cheaper shop to save $3	Feels like being careful	Costs $4 in time to save $3: a loss, repeated weekly
Decline an $8/month service that saves about ninety minutes a month	Feels like avoiding an indulgence	Buys ninety minutes for $8, or about $5.30 an hour: clearly worth it
Spend an evening comparison-shopping a $40 item to save $6	Feels like diligence	Three hours to save $6 is $2 an hour: stop after the first two prices
Assemble flat-pack furniture yourself rather than pay $60	Depends on mood	Worth it if it takes under five hours and you do not mind it; otherwise pay

The figures in the table are illustrations of the arithmetic, not a record of anyone’s purchases. What they show is that the same person can be over-frugal and over-convenient on the same day, and that a single explicit rate catches both. It is a tool that improves the ratio of the spending, not the level; nothing here predicts that your total goes down or up.

What the research supports, and what it does not

The strongest evidence that buying time is money well spent comes from Whillans, Dunn, Smeets, Bekkers and Norton, published in PNAS in 2017 (full text via PMC, checked September 18, 2026). Across surveys of 6,271 adults in the United States, Canada, Denmark and the Netherlands, people who reported spending money on time-saving services (cooking, shopping and household maintenance were the main categories) reported higher life satisfaction, with a small effect size (d = 0.24). In a field experiment with 60 working adults in Vancouver, each person was given $40 on two consecutive weekends, told to spend it on a time-saving purchase one weekend and a material purchase the other, and phoned at 5 pm each day; the time-saving weekend produced higher end-of-day positive mood (d = 0.33), and the effect ran through reduced feelings of time pressure. The effect was not moderated by income, which is worth underlining: the benefit was not confined to people who could easily afford it.

Two limits. The paper reports that only about 28 percent of respondents made a time-saving purchase in a typical month, so most people are not doing this; and the correlational part cannot rule out that happier people buy more time rather than the reverse. And the effect sizes are small. This is evidence that buying time is not a frivolous category, not evidence that it is the best use of money.

What the research does not do is tell you your rate. The 50 percent rule is a national average used for infrastructure appraisal; the Whillans study measured mood, not dollars. Both point the same way, that free time is worth real money and less than your wage, without fixing the number. The calculation above is a starting point you should adjust downward if money is tight and time is not, and upward if the reverse.

Where the rule breaks

The formula works for decisions that are genuinely trades of time for money, and it works badly for everything else. Run “cook dinner from scratch” through it and you get an instruction to order in every night, which is wrong if you like cooking, and wrong on health and cost grounds even if you do not. Run “read to your child” through it and you get nonsense.

So the useful rule is narrower than “price everything”: apply the rate only to things you would not do if you were not saving money. That is a small and clearly bounded set. Travel to a cheaper option. Queueing. Comparison shopping past the first two prices. Administrative errands. DIY of the kind you do not enjoy. Everything outside that set is not a time-for-money trade, and the formula has nothing to say about it.

A second failure mode is subtler. The rate tells you that a convenience is worth it; it does not tell you that you will use it. A subscription that saves ninety minutes a month is a good buy at $8 only if the ninety minutes are actually saved, which is a cost-per-use question, and the fastest way to lose that bet is to stop tracking whether the service is still doing the work. The same goes for time-saving purchases that turn out to be things you bought and defend rather than things you use.

Why this is a psychology topic

The reason I would file this under psychology rather than budgeting is that the effect is not about the arithmetic. Before there is a number, choosing the expensive convenient option feels like a small failure of thrift, and choosing the cheap slow option feels virtuous, and neither feeling has anything to do with whether the choice was good. A number is not virtuous. It removes the decision from the realm of self-image and puts it back in the realm of trade-offs, which is where a decision about twenty minutes and three dollars belongs.

The way to find out whether this does anything for you is cheap: calculate the rate, write it on a note, and for one month, when you catch yourself about to drive across town or about to pay for delivery, do the multiplication. Do not change anything else. At the end of the month you will know whether you were leaking time to save money, leaking money to save time, or, as the table suggests is common, both.

Sources checked September 18, 2026: the FHWA 24th Conditions and Performance Report, Chapter 9 (linked above; it restates the 2016 US DOT value-of-travel-time guidance), and Whillans et al. 2017, PNAS 114(32) (DOI), read in full via PMC. The dollar figures in the worked example and table are hypothetical. This article is general information, not financial advice.