I don’t find prioritizing easy. Many things at once seem important. I dive into something to only later regret spending time on it. Like in any decision-making process, what helps, is to have a system.
There are many decision-making systems but one that I found quite effective is putting a price tag on my time. Setting a realistic hourly rate for myself allows me to quickly decide which day-to-day tasks I should do, which ones are worth delegating and which ones I should simply ignore.
How to set a price tag?
If you have a 9-5 job, as I do at the time of writing, it is fairly easy. Let’s say I earn $4000 a month doing a 9-5, which is 8 hours a day and approximately, 160 hours a month. $4000 / 160 = $25. This means that an hour of my time, at the moment, is worth $25.
I could stick with $25, of course, but we all want to progress and increase our economic output, right? Thus, setting an aspirational rate is what we shall aim for. In this case, if my actual rate is $25/h, I want to actually set it to be $50/h.
Now that I have my hourly rate, let’s see it in action.
When it works
Let’s say I am buying a bicycle. I have two options - either buying a new one for $1k or a used one for $700. First, I calculate the difference $1000 - $700 = $300. $300 is what I can potentially save. Now, that I know how much my time is worth, I can do the following maths: $300 / $50 (your hourly rate) = 6 hours. This is the maximum amount of time I will spend on looking and arranging for a second-hand bike and if I see that I am approaching the limit, I will just stop. Of course, there are many additional factors such as environmental or the benefits of having a warranty, which might reduce (or increase) the gap even further.
As you can see, the method is perfect when you are dealing with actions that involve money.
When it doesn’t work
The truth is - there are things that you cannot simply put a price tag on. For example, spending time with your family or friends. It is one of the few joys in life which are almost always free and invaluable at the same time.
Building a business or investing is another example. Although effort and time put into these ventures might not bring an immediate return - the projected return (in terms of cash and learnings) might be exponential.
It is important to make that distinction between things that can be decided on using this method and the things that are better left to either other systems or your gut.
That being said, even though price tagging your time does not help in certain cases directly, indirectly you can use this system to say no to things that would eventually take away your time from the things that matter the most.
Ending notes
The reason I like this system is that it is fairly simple. A few mathematical calculations which can be done in one’s head at any given moment will help you to save money and, most importantly, time.
What’s more, I have also found that constantly applying the rule, forces me to value my time even more. If I have just skipped hunting for a new deal on shoes (which almost I never do anyway) - I know that I am better off spending that time on something important.
Finally, kudos to Naval Ravikant and his now famous thread on Twitter which inspired me finally apply this to my daily life.