You Aren’t Spending Money, You’re Spending Your Life

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Every dollar you spend costs you a certain amount of time working to acquire that money. In Your Money or Your Life, Vicki Robin asks you to calculate your real hourly wage in order to appreciate the real cost of stuff. For an average 40-hour-a-week job paying $1,000 a week ($52,000 annually/$25 an hour), your real wage is closer to $10 per hour. This is accounting for time and money spent participating in that job (i.e., commuting time, gas, wardrobe). So, every dollar spent equates to six minutes of your life. As a result, that $20 takeout meal didn’t actually save you time. Instead, it cost you 120 minutes of your life. That $30 cardigan costs you at least 180 minutes of your life. 

Most people don’t factor in all the real costs when they buy something. If people calculate costs at all, they typically calculate the expense of something based on their gross salary, not the take-home pay, let alone the real wage in terms of life hours spent. It’s an eye-opening exercise and a simple way to slow down the urge to shop. Do you really want to trade your precious life for that gimcrack or object? Because that is exactly what you are doing. 

Now, if you love what you do to earn a living and have found your true calling in life, then you won’t mind working so much because you are happy earning that money to spend. The litmus test: if you won the lottery or suddenly inherited millions, would you continue working or would you quit immediately? If you’d continue working because you love your job, then you are already free. So, your goal is simply to acquire retirement funds for the day you’ll be unable to work due to old age or getting involuntarily retired. (This may happen sooner than you think, so I’d urge you to save at least 20% of your gross salary for retirement). 

On the other hand, if you hate your job, then you have two options. First, you can find a better, more enjoyable job. Second, you can save enough money to become financially free so that you can live off your investments, essentially creating your own lottery win!

Now, there is another interesting thing that Robin doesn’t account for…time is actually much more valuable than money for one very important reason. Your time is finite. You have a limited lifespan and even if you live a very long, healthy, and active life to 120 years old, that is still a fixed number of days (42,720).

Whereas money has the ability to compound over time with unlimited growth, creating a legacy that could continually grow beyond your life, your lifespan does the opposite and eventually shrinks to zero. Yes, you can try to extend your lifespan by doing all the right things (i.e., eating well, exercising). However, there are real limits until we can bioengineer our bodies and reverse aging. Until the science of longevity improves, we do our best with a healthy diet and exercise plan. That said, you can immediately buy more time by delegating the time-consuming tasks you don’t enjoy.

I make a point of buying as much time as possible by hiring people to handle the tedious life admin (i.e., house cleaning, bookkeeping, ironing). Because I know that time is much more valuable than money, this instantly improves the quality of my life. Plus, it frees up several hours a week so that I can write, coach, and read. These are much more interesting and creative pursuits that are more likely to increase my wealth than ironing. I don’t have more hours than anyone else, but the hours I have are used in more productive and fulfilling ways. 

I knew a waiter in NYC who had a house cleaner clean his studio apartment. He said that he earned $2 more an hour than the cleaner, so it was a cost-effective use of his time. I’d argue that even if the cleaner charges more than your hourly rate, you might still hire a cleaner just to convert that time from drudgery to enjoyability. Of course, if you enjoy cleaning the house, carry on! 

I’ve left you with much to consider. What will you now delegate to improve the quality of your time? Are you on the path to financial freedom? If not, turbocharge your results by taking the Financial Freedom Retire Early course online. You won’t need to win the lottery to quit your job if you’ve become financially free. And, if you really hate your job, it would be well worth looking for more fulfilling and rewarding work. Life is too short, even if you live to 120, to be doing work you hate.


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