Understanding the Importance of Time and Money

One Simple Hack to Understand the Importance of Time and Money

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We’ve all got different financial situations and we’ve all got different lengths of time that we are given on this earth. But one thing we all have in common is having only 24 hours in a day. So what is the importance of time and what does that have to do with money?

It goes well beyond the old cliche about time is money, indeed, I’d say the opposite is more true. Whether you are Bill Gates or the guy living in a van down by the river, they both have the same number of minutes and hours in the day.

Time is our most precious asset. It is finite, it is not renewable. Yet many people fail to truly analyze how they spend this most precious asset and end up wasting much more than would probably like.

One Simple Hack to Understand the Importance of Time and Money armchair-alpinist

Failing to Understand the Importance of Time

A day in the life of a former desk jockey: I would get up at 7:30 in the morning, quickly shower, shave, put on my suit and tie, then walk a half an hour to arrive at the office by 9 am. There I’d grab breakfast and eat it at my desk as I went through emails. The next 5 hours were spent in meetings, doing memos, and other work things.

By 2 pm I’d grab lunch downstairs and once again eat it back at my desk. Another four or so hours would go by until I left at 6 pm (if there wasn’t any other pressing work or fires to put out), and I’d be home by 6:30 or 7.

One Simple Hack to Understand the Importance of Time and Money armchair-alpinist

If I was feeling motivated I would go out for a run or maybe head to the climbing gym across town. If I wasn’t, I’d microwave my dinner and then watch something on Netflix. I’d have between 7 pm and 11 pm to do my own thing—oh, but let’s not forget the Blackberry and work emails that continue to stream in through the evening. That was my typical Monday through Thursday schedule.

I’m not saying my job was bad. My job was interesting and there was always something happening. There are certainly worse things I could have been doing with my time. But at some point, it just felt a little silly. I go in, do this thing, get paid decent money, and then what? Is this all there is for 40-plus years? I don’t feel like I had a true understanding of the importance of time at that point, nor what the true costs of my job were.

The True Hourly Wage

The average American, let’s call him Joe, makes about $60,000 per year as his salary. That sounds like a pretty good amount and if we do the back of the napkin calculations of 40 hours per week, that means that Joe is making about $31 per hour. Nice!

Of course, that number is before taxes, but for simplicity, we will ignore that. Even so, that number is still an illusion because it ignores the Real Hourly Wage and fails to take into account the importance of time in that wage.

The average American, aka Joe, spends at least 8 hours per day at the office or on the job, add in an hour lunch break (still often taken at the desk), along with time to get ready for work (an hour), and then the commute to work (the average is an hour per day), you are talking about at least 10-11 hours per weekday in work-related activities.

One Simple Hack to Understand the Importance of Time and Money armchair-alpinist

That’s to say nothing of a survey by the Center for Creative Leadership which found that working professionals who carry a smartphone report work-related activities for 13.5 hours per workday, or 72 hours per week if you include the weekends! In today’s world, we are always connected by technology and our smartphone addiction. Meaning that we are never more than a quick message or email away from our boss and colleagues—no matter whether it is 10 PM on Tuesday night or Sunday afternoon. And also not considering the times he has to work overtime (unpaid, of course, since he earns a salary).

Let’s ignore the variables of overtime, work from home, and emails, and stick with the more tangible figure of commute, preparation, and time at work of roughly 11 hours. That means the true hourly wage of Joe has now dropped to $22 per hour.

He lost $9 per hour when you account for his actual time invested to receive that salary.

But It Gets Worse

Joe’s real hourly wage is actually even less than that because you need to account for expenses that he wouldn’t otherwise have… To determine those, let’s say he could do the same job 100% remote or he had a different type of job, so what expenses would he save? Obviously, gas, auto wear & tear, perhaps professional attire like suits and ties or dress clothes, having to buy lunch out, professional memberships, social/networking needs, etc. Perhaps he wouldn’t have to live in this same expensive neighborhood or city?

These figures are a bit more difficult to calculate, but it will undoubtedly drop the True Hourly Wage below $20. The cost of the average commute is $2,600 per year which by itself takes away $1 per hour of the True Hourly Wage (that’s calculated on a true 11 hour day, rather than an 8 hour day).

One Simple Hack to Understand the Importance of Time and Money armchair-alpinist

Funny epitaph.

If Joe’s got student loans (a prerequisite for most professional jobs), that number will drop even further. The average American is paying $382 per month for student loans. Meaning that with just the student loans and commute, Joe’s Real Hourly Wage has dropped to $20 per hour, without considering the other incidental expenses of the job (which every job has, but some more than others).

Different jobs have different necessary expenses. Consider a lawyer, for instance, driving a 1991 Toyota Pickup like me. You probably wouldn’t hire them because shouldn’t a successful lawyer be driving a nice, new car? Successful professionals also often have to spend like successful professionals. They go hand in hand.

So anyway, that’s $20 per hour for what was a perceived hourly wage of $32 and not considering tax implications. At this point, it might make sense for Joe to look at a different line of employment, one that offers lower wages but offers more time.

If you can reduce the time required or associated expenses, you can boost your Real Hourly Wage. If anything, that’s the true lesson about the importance of time and money.

People often fall into the trap of thinking that if they earn more now, then they can retire sooner and have more time in the long run. But most people only end up spending more (and thus need more to retire) while working the same. This is an important part of the Financial Independence and Early Retirement movement. It is more important to try and increase the percentage of money you earn toward savings and investments rather than spend every last dime you get.

The True Costs of Your Job

The costs of your 9-to-5 desk job goes far beyond those hours you spend at the desk, and even though you are making more money you are also invariably spending more money (yes, it is cheaper to travel).

Some have made the case that the real reason for the 40-hour workweek is that it keeps us all so busy that it creates a spend happy culture that prioritizes convenience, entertainment, and maximizes frivolous spending (which keeps the economy humming along).

One Simple Hack to Understand the Importance of Time and Money armchair-alpinist

An amazing side effect of having more time is a reduction in frivolous spending that we all engage when time is tight and the money is flowing in and which gives us a boost of happiness, albeit momentarily.

You have less time because you are working to make more money, and thus with the little time you have, you spend more money on take out food and restaurants because you don’t have time to cook, you pay for a gym membership to work off that gut you add by sitting at a desk and eating out, and you pay for other conveniences to maximize what little time you do have. You basically need to spend your limited time wisely by paying more for conveniences.

Money is Time

Let’s flip the old adage about time is money on its head. There may be some truth to that time is money saying, but the reverse is most definitely true: money is time.

You don’t buy things with money, you buy things with time. Money is a representation of all the life hours you exchanged to get it.

“The price of anything is the amount of life you exchange for it.” Henry David Thoreau

A $5,000 TV costs different things to different people. A $5,000 TV to Jeff Bezos is like nothing and represents about 2-seconds of his time (truly).

One Simple Hack to Understand the Importance of Time and Money armchair-alpinist

A $5,000 TV in the case of our Joe is 250 hours worth of his time or about 23 days at work (not calendar days, but actual days at work).

Is that TV worth 23 days of work? I dunno, maybe it is.

How about the $5 coffee? That represents 15 minutes of his time.

The $30,000 new car? That represents 1,500 hours of his time or 135 days at work.

I don’t know Joe to say whether these purchases are worth it for him or not, but it is important that he realize what he is actually spending his money on. Because his money is actually his time and his time is actually his life. It doesn’t matter whether he is trying to save money to travel or to buy a house, he needs to realize the relationship between money and his time.

Unless you can break the link between trading limited time for money (a central tenant of pursuing financial independence) then the value of your money is directly correlated to time. It helps to frame major expenses in life in a way that authentically portrays the importance of time.

In that way, you can manage your time properly, and spend time (aka money) in a way that best represents your goals and the future you want to create for yourself. 

Read Next: A Simple Guide to Financial Independence

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One Simple Hack to Understand the Importance of Time and Money armchair-alpinist


Head Writer and Adventurer at Desk to Dirtbag
Ryan is an author, adventurer, perpetual wanderer, and self-proclaimed dirtbag (but that might not mean what you think). Originally from Seattle, he headed to Washington D.C. where he spent five years working for Congress before heeding the call of the wild. He set out truck camping to road trip across the American West, and then across all of Central America and South America. When he isn't on the move, you can find him living as an expat in Colombia. He is also the author of the best selling book: Big Travel, Small Budget that will help you travel more for less. Follow the adventures on social media or read more.

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