Business Owner Many HatsWhat price would you put on the gift of life?  Priceless?  Beyond measure?  No way to put that value in dollars?

But we attach a price tag to ourselves every day.  How much do you charge for an hour of your life?  How much for your knowledge, experience, physical and technical skills?  What are you worth?

Let’s work through a little exercise that will help you figure out what you’re worth.  The work you do takes time.  And time is the most precious resource.  Time reflects your life, sands through the hourglass.  When you exchange your time, your life, to go to work, you should be justly compensated.  How much do you need to charge to make this business worth your while?

For the sake of keeping this exercise simple, let’s assume that you are 40 years old and run a one-person heating company:  YOU.  You wear ALL the hats…the exquisite heating systems, running around for parts, general janitorial work around the shop and all the accounting and administrative work.  (Whew.)

Now, follow along and fill in the blanks as you go.

For one year of your life….

  1. How much after tax dollars (take home pay) do you need to pay all your bills?  This is the bare bones amount. Feed, clothe and shelter your immediate family. Hmmm.  How about using $35,000 for this number. Of course, your answer will depend on your definition of ‘bare bones’.  There is no right answer! I’ll plug in some numbers so you can follow the math as you read.
  2. How much more money would make life much more satisfying? Make it easier to sleep at night?  If you were to pay yourself a bonus for the year, what would it be?  How about another $35,000?  Life would start to get fun with $70,000 take home pay, yes?
  3. How much is your knowledge and expertise worth? How many people on this planet know the things that you do?  Significantly less than 1% of the world’s population.  Man, we should be carrying you around on a silver platter!  How about a $20,000 rare-and-useful knowledge bonus?  (Seems like peanuts doesn’t it?)
  4. How much money would you like to contribute to worthy causes? You know, if you don’t support the good causes, who will?  This is your responsibility so pony up!  Let’s use a very modest $10,000 for our tithing contribution.
  5. Is there anyone outside your immediate family that may need your financial support?  How much for them? Aging parents, disabled relatives…that’s what families are for.  Add $10,000.


  • What do you need to contribute to your retirement funds for the year? How does your back feel?  Are your knees snap, crackle, popping?  If you are 40 years old and have been a physical phenom for the last 20 years, you are on borrowed time.  Just how long do you think you can take?  If you don’t have a retirement fund started (most folks don’t) you will have to contribute pretty heavily to avoid retiring as a homeless person. Say your bare bones per year is $35,000.  Assume you retire at 55 and live to be 75.


20 x $35,000 = $700,000.

A financial adviser can map out a savings plan for you.  And I haven’t bothered with details like interest and inflation – this is a quick and dirty formula.  But can you see that you must create the money now.  Otherwise,  you’ll be living where you don’t want to live and driving what you don’t want to drive.I’ll put in $20,000 for this year’s contribution.  Plus $1 for a lottery ticket.

  1. Add in insurance and any other benefits that seem appropriate. Use a Fed Ex driver for inspiration.  What does his benefit package look like? Plug in $15,000.
  2. What else?  College funds for the kids?  Major orthodontia?  Weddings and Bar Mitzvahs? You know a really top-drawer shindig can set you back.  Let’s put in $5,000.

OK, let’s total up the take home pay you need to live the way you want to live___________.

My dollars add up to $150,001.  Not extravagant….

Now, inflate that amount to create a pre-tax figure.

___________________ / .70 = $______________________

Remember, this is just a simple little exercise.  Lots of things can influence your actual tax burden.  That’s what accountants are for.  I’m going to as