How Much Money Is Your Time Worth?

The Self-Assessment Every Business Owner Needs

Time is the most valuable resource for any business owner. Yet, when you’re working 60-hour weeks to keep everything running smoothly, it often feels like there aren’t enough hours in the day to create, improve, and sustain your business operations.

Your time has real monetary value, so we’ve created a tool to calculate the exact dollar amount you may be losing to tasks like 401(k) plan management.

These calculations were built and developed by Shelton Capital Management.

Use these formulas to determine the worth of your efforts and estimate the real impact of choosing to manage your 401(k) plan’s management versus handing it off to an expert.

Step 1: How many hours do you work a year?

Fill out this formula: Weekly Hours Estimate x 52 Weeks = Yearly Hours. 

  • For example: 40 hours/week x 52 weeks = 2,060 yearly hours

Step 2: What is your hourly rate?

Fill out this formula: Annual Revenue / Yearly Hours = Hourly Rate. 

  • For example: $200,000 / 2060 hours/year = $97/hour

Step 3: How much time do you spend on 401(k) plan management a year?

Fill out this formula: Hours Estimate on 401(k) Admin x 52 Weeks = Yearly Hours Spent on 401(k) Plan Management. 

  1. For example: 4 hours/week x 52 weeks = 208 yearly hours spent on 401(k) management

Step 4: Calculate potential earnings lost by choosing to do your own 401(k) admin work.

Fill out this formula: Yearly Hours Spent on 401(k) Admin x Hourly Rate = Potential Earnings Lost to 401(k) Admin Work

  • For example: 208 yearly hours spent on admin x $97/hour = $20,176/year

If your numbers were similar to the examples, that’s more than $20,000 annually in potential earnings you could reclaim by outsourcing this responsibility.

***Nothing in these examples above constitutes advice. All numbers used in the calculations are both hypothetical and estimates from prior survey research that should be tailored specifically to your unique situation as a business owner.***

The Hidden Costs of Time Working on Your Business

Interestingly,  63% of small businesses report underestimating the time required to process payroll. If more than half of business owners are already struggling with this, imagine how much unaccounted time is spent on other tasks. These time-intensive necessities can end up significantly draining your productivity, leaving you with less time to focus on growing your business.

As a small business ourselves, we have first-hand experience in overestimating productivity and then having to put in overtime. So, what’s the common ground shared by so many companies that misjudge the amount of time spent on their business? 

They don’t have a dedicated vendor or person to outsource some responsibility to. 

Understanding Your Time Equals Success

Fortunately, small businesses like ours have learned from trial and error. After 40 years as an independent investment firm, we know one essential truth: time is a finite resource. It’s critical to not only understand how much your time is worth, but at what point it’s time to consider outsourcing certain time-intensive functions like 401(k) management.