How valuable is your time?

This little exercise will give you an idea for when you set a goal to make a million dollars per year. Imagination is important here, so let’s play with this.

Oh, before I get started, my definition of a millionaire for this exercise is anyone who makes a million dollars per year. It is not really a practical definition. That is not going to stop me here!

First, calculate how many hours that you work in a year. If you want to use a reasonable number, use this typical information for the United States:

A normal work week for most jobs is 8 hours a day for 5 days. There are 52 weeks in a year, and most folks get a two week vacation. So, 8 X 5 X 50 = 2000 hours worked in a year.

Many companies also give 10 holidays, which brings it down to 8 x 5 x 48 = 1920.

Many companies also give 5 days of sick/personal time per year, which brings it down to 8 x 5 x 47 = 1880.

My buddy, Larry, who is self-employed and charges by the hour for his services, says that this number is pretty realistic. So you have 1880 hours to earn an hourly wage each year.

Converting Work Time Into $1,000,000

Repeat the phrase above in a Dr. Evil voice, with your pinkie pointing to the corner of your mouth.

Now for the conversion: $1,000,000 in 1880 hours means $531.14 per hour. Check my math.

That’s all it takes!

The take-home lesson is that, if you are not doing something ever workday to bring in at least $531.14 per hour, then you will fall short of making a million dollars per year.

Wasn’t that fun? Of course, one variation on the above calculation is that you can work one hour for a million dollars, then take the other 1879 hours off. This may seem like outrageous thinking. However, this is clearly the direction that makes the most sense. People at the top of the heap do not work hourly. Revisit Robert Kiyodaki’s Cash Flow Quadrant to see what I mean. Or just play his Cash Flow 101 and see what it takes to get out of the Rat Race.

Okay, that’s it for now. I just wanted to share a little bit of fun with you on a beautiful Sunday morning in Tempe, AZ.