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It starts with knowing what your time is worth. For instance:
Understand that there will be tradeoffs, but that it can be managed.
We all have some idea of how much our time is worth. On extreme ends, it is easy to know if a task is worth your time. For instance, if someone offers you $0.07 per hour and another $7,000 per hour, you would have no problem to decide.
However, in the middle of the time-value spectrum, it is less clear if a particular task is worth your time. While everyone has an hourly value, few people know the exact amount.
Use the Realized Income Methods to calculate the value of your time. It is based on the income you received and will help you make better decisions on how to spend money day-by-day. You need two numbers for your calculations.
Measure the total amount of time you invest each year to earn money. It includes the time you spend to commute to and from work, and time spent working on a side hustle or dropping your kids at daycare.
If you're unsure how much time you spend working, use 2,500 hours per year as a starting point as most full-time employees or entrepreneurs will fit around that amount.
If you're an hourly worker or a salaried employee, look at your latest paycheck and multiply it by the number of paychecks you receive per year. Also, include money from side hustles and freelancing gigs.
You are trying to calculate your take-home pay.
Divide your total money earned by your total time spent.
For example, let’s say you spend 2,500 hours per year earning money:
If you are surprised by the numbers, remember that we rarely calculate how much time goes into earning money outside of the working hours.
Expected Valued Methods are based on the value you expect a given hour of work to create in the long-run. This method can help you make strategic decisions about where to spend your time.
This method calculates how your work of today will pay off long term, but does not tell you how to use your time more effectively. It works on the assumption that your actions from this year will continue to drive growth over the next 12 months, so the real value of your time is higher than your realized income today.
Take your net income from the previous year and multiply it by a reasonable growth multiple.
This method is highly individualized.
SIMILAR ARTICLES & IDEAS:
Your net worth gives an overview of your financial situation at this point. It is the difference between what you own and what you owe.
Your net worth is positive if your assets exceed...
Assets are anything of value that you own that can be converted into cash. Examples include:
Your liabilities represent your debts, such as loans, mortgages, credit card debt, medical bills and student loans.
Determine your target net worth - where you want to be in the near-term and long-term future.
The following formula is helpful:
Target Net Worth=[Your Age−25]∗[1/5∗Gross Annual Income]
A 50-year-old with a gross annual income of $75,000 might aim for a net worth of $375,000 ([50 - 25 = 25] x [$75,000 ÷ 5 = $15,000])
Your net worth can be much more or much less than the amount indicated by the guideline.
While frugality is undoubtedly important in personal finance, boosting your savings can also be done by earning more money.
Whether you're self-employed or working for somebody else...
Your education has a greater impact on your earnings than other influences such as age, race, gender, and location. According to the U.S. Bureau of Labor Statistics, the average college graduate earns twice as much as someone whose education ended with high school.
If you can't commit to college, you can still improve your knowledge and skills with self-directed life-long learning. The best time to pursue education is at the start of your career. The next best time is now.
Your pay is also based on the quality and quantity of your work. If you've been making forty sales calls each week, find a way to do fifty.
The quickest way to boost your income is to increase the number of hours you work. It can be done by working full-time, working overtime, or finding a second job.
Investing is about laying out cash or assets now, in the hope of more cash or assets returning to you tomorrow, or next year, or next decade.
Most of the time, this is best achieved th...