Most of us understand that there are multiple ways to accomplish every task. We can enlist the services of friends, hire a professional, or do it ourselves. Many are under the assumption that if we do things ourselves, then we will come out ahead. In a strictly monetary sense, they are right. However, there are many factors to consider.
Fixing Your Own House
One of the many joys of being a homeowner is the fact that when something breaks, you get to fix it. For those that are handy its not as big of a deal, since they do their own work they can save the high costs of hiring a professional. Those that fall into this category often find working on a house relaxing and enjoyable; its not a chore but more of a hobby.
But what about those who arent as handy, and really dont enjoy the project. They spend a few hours and get the job done. They saved the money they would pay a professional, but lost 3 or 4 hours of their time. Did they actually save money? It all depends on the value they put on their time.
The Busy Professional
Now lets look at the situation from a business perspective. Suppose you are a business owner, and you are trying to get your business off the ground. Or maybe it is off the ground and you are trying to bring in as much income as possible. You can do everything yourself, or you can hire out for it.
For instance, you will have taxes that come due as a business owner. There are plenty of accounting programs that will help you through this complicated matter, and you can spend 10 hours on them. But if you value your time at $100 per hour; then you are spending $1,000 to do your taxes.
If you hire an accountant, you might spend $300, but you will save yourself 10 hours of work.
That concept applies to everything that you do. Whether it is doing your taxes, or hiring an accountant to do them; driving yourself around town to appointments, or hiring a professional driver to get you there; cleaning your building, or hiring a cleaning service to do that for you. No matter how you look at it, you are spending money either way.
Determine Your Value
In order to determine whether or not you should hire it out, or do it yourself, you need to determine the value of your time. If you are a business owner, you need to know that your time value is more than just how much you made last year divided by the number of hours worked. It includes all the costs of your business.
A quick and dirty way of calculating what you are worth is like this. Take your annual salary and divide by 2080. This will get you your hourly rate based on a 40 hour work week. Take that number and multiply by 2.5. This will help you cover taxes, overhead, and everything else. So if you made $75,000 last year, then you made about $36 per hour. Multiply that by 2.5 and you need to value your time at no less than $90 per hour.
Have you set a value on your time? Or are you working for far less than youre worth?