How do I calculate an hourly rate for myself?

To calculate an hourly rate for yourself, you should set a theoretical dollar amount in your head that represents what your time is worth to you. Rather than using a strict mathematical formula, the sources suggest using this rate as a psychological and practical filter to determine how to best spend your time.

You can establish and use this rate by following these principles:

• Evaluate Opportunity Cost: Consider whether the time you spend on a task could be better used to create more value or earn more income. For example, if you spend three hours trying to save $10, you are effectively valuing your time at approximately $3.33 per hour. If you believe your skills could generate more than that in the same timeframe, the activity is a poor use of your resources.
• Use the "Outsourcing Filter": Once you have a rate in mind, you should outsource any task that costs less than your hourly rate. This allows you to stop focusing on minor savings that have a finite limit and instead redirect your energy toward your "infinite" earning potential.
• Prioritize Value Creation over Incremental Saving: The sources argue that since there is a limit to how much you can save but no limit to how much you can earn, your hourly rate should reflect your ability to solve problems and add value to others.
• Factor in Your Current Reality: While setting a rate, keep in mind your current income and goals. For instance, someone earning $100,000 a year may have a different "normal" for their time's value than someone just starting out, but the goal is to consistently increase the value of your output.

By establishing this rate, you shift from a mindset of "spending time to save money" to one of "using money to buy back time" for more impactful activities.