If Time Is Money…

Now that we are working on our proper view of money, lets think a bit about this age-old saying, Time is Money.

Buying Time

Examining this topic a bit beyond the simple fact that many of us get paid by the hour, there are two ways that I find myself thinking about this concept. 1. How long will this money last me? 2. How much of my time would I need to get this money again after I spend it?

How Much Money Does Time Cost?

We all know that money has a way of running out. Yes, there are ways that we can make money last longer, or there are ways we can get rid of it very quickly. Either way, this stuff has a way of going away. Theoretically, if we have a certain amount that will last for the rest of our lives (see the 4% withdrawal rate), we no longer have to think about making more. We would be free to waste time together, to create freely without worrying about what any feels about the art, and we could love and serve our family and friends with all of our time. We would have bought our time.

If you aren’t yet at the point where your money will last forever, maybe you have enough saved up so that your accounts will still be positive after a year. Then that buys a freedom (again theoretically) where you could set an alarm to go off in a year, and you could take a “mini-retirement” until that time runs up and then go back to work.

So to calculate how much it costs to buy an amount of time, you need to look very closely at every time throughout the year that your money goes away. Every payment for food, housing, and transportation, then all utilities, tax bills, gifts you plan on giving… this is a big list. There are some great apps and websites out there to help with this, or you can use a good old spreadsheet or pad of paper, but it is important to account for the expensive months as well. Then, if I were you, I would make a nice factor of safety for that based on where you are at in life and how easily you could adjust either your spending or income in the future.

Example:

Spending: $40,000 / year

Amount Saved for Mini-Retirement: $30,000

If this person wanted to take time off for travel, family, or just a break from their day job to explore new ideas, they could probably easily take 6 months off and spend around $20,000. However, they should account for how they plan to live those six months. Any expenses beyond their normal, everyday life should be added to what they expect to spend on that time. Also, if an unexpectedly expensive month falls in that time, it can throw things off.

So for this person, time costs about $40,000 / year, or $3,333.33 / month, or $109.52 / day.

How Much Time Does Money Cost?

I am going to start this one with an example.

Johnny’s wage is $20 / hour at his job. Readily, many of us would say that he makes $20 each hour, but wait!

Because of this job (which Johnny likes, but doesn’t love), Johnny has to wake up at 6 am, spend 30 minutes packing his bag and thinking about his meetings for the day ahead. Then he commutes 20 mins and walks 10 mins to his desk to start work at 7.

After an 8.5 hour day (no paid breaks), he heads home with the same 30 minute trip, takes 30 minutes to decompress with his feet up before he changes into more comfortable clothes and starts living his life around 5 pm. So this 8 hour work day, is actually an 11 hour work day that consumes his hours from 6 am to 5 pm, Monday through Friday.

So Johnny gets paid $20/hr (after taxes) for 8 hours, or $160/day. This comes out to getting paid $400 for 11 hours of actual work, thus, $14.55 / hour.

But there is more! Johnny’s 40 minutes of driving wouldn’t happen if he didn’t have to go to work each day. That 40 ish miles consumes 2 gallons of gas, $6 nowadays. That is also extra wear on the vehicle (maybe $0.20 / mile) so $8 of wear… that $14 of car expenses is almost an hour of Johnny’s workday to pay for… and actually lowers his wage to $13.27 / hour! Imagine if Johnny had a lower paying job that he was commuting to!

With this mindset, Johnny might look at a $10 cocktail differently next time he is out with friends. Where as before, he may have shrugged off the expense because his checking account doesn’t look to bad, now he may ask himself, “Is this drink worth 1 more hour working?“

Balancing the Scale

Of course there is a balance between being cheap and frugal. That balance is being intentional. We should all strive to live examined lives where we know exactly what actions we are choosing and why we are choosing. We don’t want to live in auto-pilot just to wake up somewhere we don’t want to be in a few years.

So maybe we will still choose to get a $10 cocktail every now and then, and that is okay as long as we understand what it really costs and are not putting on blinders just because it is what others do. What is the actual value of that $10 to us and how does it add up over time?

10 drinks could buy you a whole day of a “mini-retirement” or it could mean needing to work another day at the end of your career.

Live an Examined Life

Running the numbers, you are more free to make actual decisions in your financial life. You will know exactly how much time you need to give to have money, and how much money it costs to buy your lifestyle. My belief is that if more people looked honestly as their lives, many would change their lifestyles, even if just a little bit.

Some people might realize that their commutes are lowering their wage so much that it is worth it to move or find a new job! Some might recognize that they are spending years worth of cash on coffee and cigarettes. Others might see that the joy of flying out of state to go to a friends wedding is worth the expense because joy weighs heavily on the scale.

Let’s all live intentional lives and put our time and treasure where it means the most to us.

After all, if time is money, wouldn’t that mean eternity is of infinite value?