The importance of knowing your hourly rate

August 11, 2023

Thanks to James Clear we now all understand the importance of habits:

- You do not rise to the level of your goals. You fall to the level of your systems. -

Agreed James. But how do we know when a "good" habit has turned "bad"?

Every wealthy person I meet understands the importance of consistent habits.

But they also have a skill even more impressive than strong habits:

They know when to drop a habit so they can get to the next level.

The Raft Parable

(yes.. we're breaking out some Buddhist philosophy to explain this point)

A man traveling to safety came across a large, dangerous river. There was no bridge in sight, so he decided to build a raft. With the raft, he paddled across the perilous river, avoiding hazards and reaching the safety of the far bank.

Once he had reached the other side, the man was extremely thankful for the raft. He thought to himself, "This raft has been so useful to me. Shouldn't I hoist it onto my back and carry it with me wherever I go?"

Eventually, the man came across a dense forest. With the raft on his back, every step was a struggle. The raft which once helped him get to safety was now holding him back. He had to drop it to get through the next leg of his journey.

Just as the man can leave his raft behind once it has served its purpose, so can you let go of views, practices, and objects that no longer serve you.

In 2020, I quit my job. My income cut in half, I moved from Chicago back to my hometown and moved in with my mom. All to start over, so I could finally bet on myself.

In Chicago, when I first discovered the FIRE movement, I had been semi-frugal. But when I left my job and my income dropped dramatically, I went even further.

Living with my mom, driving a family car, never buying clothes, and rarely going out to eat were all survival methods.

Because I knew if I needed a paycheck, I'd have to go back to a traditional job.

Within 1 year, I was back to the same income I had in Chicago. Within the next year, my income had doubled. I was on track for a 7-figure income in 5 years.

But my mindset was stuck.

My business (and income) were growing, but I was still terrified of spending money.

My savings rate was out of this world (60%+) but I was time-poor.

I continued doing everything: the operations for my business, marketing, prospecting, client relationships, cooking at home, cleaning.

You see, years ago when I was stuck in a job I hated I found the FIRE movement.

The FIRE movement was my raft. It was my way out of the 9-5.

And it was, for the time, a "good" habit. The frugality allowed me to buy enough time to try my own business.

But now the extreme frugality in the FIRE movement was holding me and my business back.

That's when I found Naval Ravikant.

Naval is a successful investor and entrepreneur in the tech industry.

I learned a lot of important things from him but one of the most important was how to value my time.

At the time, I had no respect for my time. I was willing to do all of the work just to save myself a few dollars.

But your expenses have a cap. Your income does not.

So I went through a necessary mindset shift to get me through the next level.

Set Your Hourly Rate

Naval believed his worth was much higher than what the market was currently paying him.

He set his rate high ($5,000/hour) and did his best to stick to it.

So if he needed to return something he bought for $100, but it required him to drive across town to do it, he wouldn't do it.

He thought about the mental hassle of everything.

If a bill came in the mail and you knew it was wrong, is it worth saving the $10 to call customer service and have it corrected?

Maybe right now it is for you.

Maybe you're in the survival mode I was in. And you should never go into credit card debt to meet a high hourly rate.

It's not worth it.

But I do wish I had spent less time trying to save a few bucks because that's time I could have spent creating, prospecting, or just thinking.

No one will value your time until you start valuing it. Set an hourly rate and stick to it.


You're talented. Your time should be spent wisely on your talents and your strengths.

Operations was never my strength.

But sales and financial planning? I thrived here.

Hiring a virtual assistant to take care of the paperwork and back-office tasks is one of the best investments I've ever made.

If you can outsource a task at less than your hourly rate do it.

Hire the cleaners, the assistant, the chef.

It's worth buying your time back.

Final Thoughts

Some people think my calendar must be a nightmare. That I do these things to maximize every minute for revenue potential.

This could not be further from the truth.

I value an empty calendar. My business requires a lot of thinking.

I need hours of uninterrupted focus for financial planning.

I need time to be creative for marketing.

I can't afford to have a busy calendar.

I've turned away lucrative opportunities because it would have filled up my calendar.

Remember when I said I was on track for a 7-figure income?

I got off that path. It was filling my calendar and my mind.

For the benefit of me, my time, and my clients, I've said no to a lot of things.

The frugal version of me could not imagine turning down these opportunities. But the business owner in me knows I have to.

And in the long term, it will benefit me.

Not just for freedom, but for earning potential as well.

When the best opportunities come up, you're going to wish you had the time to say "yes".