I Worked Out What an Hour of My Time Is Worth and It Changed What I Buy, Not How Much

I resisted this exercise for a long time because it sounded like the sort of thing that leads to charging your family for lifts. What changed my mind was noticing that I was already pricing my time constantly and doing it badly — spending forty minutes to save four pounds on one day, and then paying nine pounds for delivery on another to save ten minutes.

The calculation I settled on is deliberately crude. Take what you earn in a year, divide by the hours you actually work, and then — this is the part that matters — halve it, because a saved hour is not a worked hour. It is an hour of your own life, and I am not able to convert those into money at will; nobody is offering me overtime. Mine came out at a bit under twelve pounds.

Twelve pounds an hour is a lower number than my ego wanted. It is also, I think, roughly honest, and the exercise stops being useful the moment you inflate it to something flattering, because an inflated number justifies every convenience purchase and you have simply bought yourself a rationalisation.

What it changed, immediately and permanently, was the category of decision where I had been reliably wrong: small savings that cost significant time. Driving to a different shop to save on a weekly shop, at twenty minutes round trip, to save about three pounds. At my rate that is a four-pound loss, and I had done it most weeks for years, and it had felt like being careful. It was not carefulness; it was a habit that had never been priced.

Equally, it changed some in the other direction. I had been refusing to pay for a service that saves me roughly ninety minutes a month at a cost of eight pounds. That is clearly worth it at twelve pounds an hour and I had been declining it on a vague sense that it was an indulgence. The number replaced the vague sense, which is the whole benefit.

What it did not change was my overall spending, and I want to be clear about that because the framing usually implies you will either save money or spend more happily. Neither happened. The composition changed and the total did not, which in hindsight is what you would expect from a tool that improves the ratio rather than the level.

There is a limit to this that took me a year to articulate. The calculation works for decisions that are genuinely trades of time for money, and it works badly for everything else. Cooking a meal from scratch is not a bad time-for-money trade that I should outsource; it is something I enjoy, and running it through the formula produced an answer I correctly ignored. So the rule I use now is to apply it only to things I would not do if I were not saving money, which is a small and clearly bounded set — travel, queueing, comparison shopping, and DIY of the unenjoyable kind.

The reason I think this is a psychology topic rather than a budgeting one is that the effect is not about the arithmetic. It is that having a number removes the decision from the realm of self-image. Before, choosing the expensive convenient option felt like a small failure of thrift, and choosing the cheap slow one felt virtuous, and both of those feelings were unrelated to whether the choice was good. A number is not virtuous. It is just a number, and it turned out I had been paying quite a lot for the feeling of being careful.