DIY or Outsource? Here’s the Simple Formula I Use to Decide Every Time

Personally, I believe poor time management comes from people not knowing how to correctly value their time rather than it being an issue of not knowing how to complete a task within a certain time frame. For me, more free time means more of the things I love, including spending time with family, and I wish others would see it this way, too, rather than always being after “the bottom line.” This is why it has always been crucial to me to discern when to outsource and when to invest my time (my most precious resource) into something myself.

Knowing the value of your time is crucial. For me, knowing how much one hour of my time is worth helps me in everyday decisions both big and small and it helps me balance all the different things on my plate: a baby, a new business, freelance clients, this website, and everything in between. 

You too can juggle your life better once you’re clear on how much your time both earns and costs you. Below is the very, very simple formula I use that helps me to always make the right decision of when to outsource vs. when to DIY.

(And here's my guide on how I find houses to flip and save money doing that.)

First, figure out how much one hour of your time is worth.

First, calculate how many hours you work in a year. Then, take how much you earn annually (pre-tax). Divide your income by how many hours you work, and you’ll get how much one hour of your time is “worth” in dollars and cents. 

So, for example, if you work a standard 40-hour-a-week job, with two weeks off each year, you work around 2,000 hours. (40 hours a week multiplied by 50 full working weeks.) If you earn $100,000 pre-tax, then one hour of your time is worth $50. 

But keep in mind that more money doesn’t mean your time is worth more (although usually it does). Using an example from my own life, I made $60,000 last year (2020) working only 15 hours per week, and I took three months off for my maternity leave. 

This would make one hour of my time worth $108 an hour.

When to outsource: Examples (and how I use it in my own life)

I use the rough estimate of $100 an hour when I am bidding on freelance writing projects.

But, most importantly, this number helps me figure out how to use my time wisely — and when to outsource domestic, business, and personal tasks.

• For example, I can spend four hours cleaning my house every Sunday (worth $400), or I can outsource to a cleaning team at $50 an hour. If I spend that time on a Sunday writing, I’ve “netted” roughly $200. 

• I could save money on my flip houses by painting them myself, but when factoring in how much an hour of my “time” is worth, the cost would be astronomical. Let’s say it would take me 40 hours to paint an entire house for a total of $4,000. Even though it would cost the painters roughly the same amount (maybe a little less) I still opt to outsource to professional painters who could do it better and faster than I could with significantly less stress to me. 

• When I used to travel (ha! Remember those days?) I would factor in how much an hour of my time is worth when considering whether to fly or drive if the distance was, in fact, driveable. 

• Knowing the “value” of my time also helps with purchasing decisions, too. If I want a pair of Apple Airpods, for example, I know that I need to work an additional two hours to get them. If I want something worth $3,500, I know I”ll need to hustle an extra 35 hours (YIKES) or completely rethink my decision to buy. 

$100 an hour is pretty steep, but in my mid-twenties, an hour of my time was worth about ¼ of this.

So decisions between hiring out chores, getting grocery delivery, or fixing something myself vs having a contractor do it, were all a very delicate balance between how much I could earn or save with that time. 

Often, the cost of something wouldn’t justify it, so I’d have to do it myself.

The TL:DR

You may choose to “weight” your time per hour a bit differently based on what’s going on in your life. If your life is jam-packed, you may choose to value your free time over saving money. 

Vice-versa, if you are swimming in free time, it may be worth it to do the task yourself, no matter how much an hour of your time is worth. 

One of my core money values and something I always preach is to emphasize ways to earn more in your own life (as opposed to couponing or an intense focus on frugality). For me, figuring out how to best use my time and free up more hours for earning is one of the most important ways I’ve been able to build wealth over the last 10 years.