Recently I ran a poll on Twitter to see whether people would prefer having an extra $500/month or 2 extra days per month. Now I didn’t specify any rules for the days or the extra money you are getting every month. However, most people would choose to receive an extra $6,000 a year than an extra 24 days a year to do with as they please. This creates an interesting dichotomy regarding time vs money. Do we as a society really value money that much more than our free time?
The Sorry State of Paid Time Off
According to a report from Tsheets, workers receive an average of 11 days of PTO (Paid time off) per year in the US. 16% of employees receive no PTO while 21% receive between 6 and 10 days. Also according to this report 74% of employees would rather receive more money than more time off. This to me is astonishing.
I personally believe that this is one of the contributing factors leading to the unhealthy level of stress in our country. When you are constantly running on the hamster wheel, it can be easy to get burned out. When we look at how the US compares to other countries with minimum PTO standards it becomes even more apparent.
This chart provided by Statista shows minimum PTO days by government guidelines. The US government guarantees none to individual workers, even though most employees have come to expect to get at least some. When we correlate this data with the happiness index it makes more sense why the US ranks so low. This all makes sense but how can we improve the situation? How can we change our relationship with time vs money?
Understanding the Benefits of PTO
One of the most confusing aspects of PTO is that it’s value increases as your salary does. If you get paid $10 an hour then an hour of PTO is worth $10. Same goes if you are making $50. However, you reduce some of the capital costs of working that hour. This may include things like transportation, both gas and time, clothing and meals among other miscellaneous items. There is also an opportunity cost to not being at work.
You can utilize the time to improve your skill set to increase your hourly wage. Or perhaps learn another skill to make money on the side. No matter what, there are thousands of ways to utilize your time to improve your financial situation. The question is how are you going to use that time.
PTO also has a benefit that is difficult to directly measure, the mental aspect. When you working long hours, day in and day out, sometimes you need to take the mental break to recharge. This can include vacations, staycations and mental health days. This also fails to mention that many industries lump sick time in with your PTO. If this is the case then you even need to use your PTO when you aren’t feeling well.
Time Vs Money: Breaking the Dichotomy
Using all of this information, we would think the opportunity cost of a free hour vs a working hour would outweigh the benefit. Hence why I proposed the above twitter poll. Let’s assume that the average workday is approximately 8 hours per day. That equates 16 hours worth of work to $500. This would give you an hourly wage of approximately $31.25 per hour. Judging by my twitter poll, it looks like most people aren’t receiving that since they felt the more valuable choice was the extra $500 per month.
However, there are some unforeseen factors here. We said 2 extra days per month rather 2 extra PTO days per month. That means you receive an additional 48 hours instead of 16. Now things are a little different. We also haven’t discussed whether the $500 per month is pre or post tax. Everyone knows the taxman always gets his cut.
If we take a look at the opportunity benefit of an extra 48 hours we see how the time really outweighs the extra money. Now let’s assume half of that time is taken up by necessities, things like sleeping and eating. This still leaves us with an extra 24 hours of opportunity. So those 2 extra days turn into 3 ‘work days’. If we now use the 24 ‘work hours’ for our calculation this would equate to $20.83 hourly rate. Looks like in the battle of time vs money, time is starting to come out ahead.
The Untold Value of Time
Time is the largest nonrenewable resource that we have. When we simplify processes and expedite activities we create more free time to create the life we want. Whenever given the option to create more time, we should be seizing it immediately. The question becomes whether or not you are willing to bet on yourself. Are you able to use the time you are given to create the life you want? Or are you willing to accept the life that you are being given?
If you have ever spent time with someone right before the passed, this is especially evident. No one ever wishes that they worked more hours or that they have a few extra thousand in their bank account. One of the most common regrets is spending more time with loved ones. So when you have those opportunities, the rare chances to create time on your schedule, you should capitalize immediately.
Time should also be used for more than just money. It should be used to be revitalized, reinvigorate, and re-energized. Time should be used for building and deepening relationships. In the US we have an unhealthy addiction to working without progressing. How can we get better if we don’t use our time wisely?
Creating More Time at Work
When we think about creating more time, we often don’t analyze our current working situation and how we can optimize it. There are a few ways that we can do this. The first is to simply negotiate more PTO time. After all, this is part of your compensation package. If you can add additional PTO days to your compensation package, your hourly opportunity cost through your job.
Another way would be to renegotiate your working hours. Most jobs expect you to work at least 40 hours per week. If we change this from the traditional 8 hour work day to a 10 hour work day we are freeing up another day during our week. This also has the benefit of eliminating commuting costs for one day each week. Another opportunity here would be to negotiate some work from home days. Without the distractions of being in an office, you may even be more productive.
Time Vs Money : Summary
Whether you are looking to increase your annual income or just take some more personal time, it is important to understand the value of time. PTO fluctuates by country and by industry, but the US does not guarantee any. It is up to use to negotiate and find companies that offer comprehensive PTO policies. Then when you have time to yourself it is important to use it wisely.
Would you have picked the 2 extra days per month or the $500? Let me know in the comments below!