As the age old adage says, ‘time is money and money is time’. If you consider this for a moment, time is really the great equalizer in life. In actuality, it is the one commodity that we all have exactly the same amount of each and every moment of our lives. While we all have varying levels of responsibilities, we have the unbelievable power to make choices every single day on how we invest, spend, or just simply waste our time. However, most people don’t fully appreciate how much money they may be wasting when they don’t have an idea where their time really goes.
One calculation worth going through is to figure out what an hour of your time is worth. If you get paid a salary (and bonus) through work, one quick analysis would be to take your annual income and divide it by 2000. In this case, I just used 50 work weeks at 40 hours a week (and I understand that most of you are putting in more than 40 hours). If you really work 50 hours a week then put in 2500, but keep in mind you might be wasting time at work as well so don’t confuse time at work with actually working. If you have a business or are a consultant, you might already know your hourly rate. With this information in hand, let’s review three types of your smart money moves scenarios:
- TIME WASTING- It seems to me that with those young and old alike, the game Candy Crush is the latest of entertainment fads to sweep the nation. Video games, televison, or even simply browsing through Pinterest can all be viewed as ‘wasting’ time. If you wasted 10 hours a week on these activities and your hourly rate is $100 an hour, it is possible you waste $1,000 a week on video games? What if that time was turned into revenue generating time? Some may view this notion of wasting time as ‘spending time’. Since every one of us gets the same 168 hours a week, you may be happy with your total family revenue and spending this time simply gives you other pleasures or enjoyments that far outweigh the alternative. According to the Nielsen numbers, Americans spend an average of 34 hours a week watching TV. That is almost a full workweek!!!
- EXCHANGING TIME FOR MONEY- One of the challenging decisions to make as your income increases in when you exchange time for money. In theory, you could figure out how to do most of the things around your house. Fix the leaky faucet, mow the lawn, or fix the electrical switch, but the question is how long would it take you? If you can hire someone at a rate lower than what you earn hourly or you truly lack the expertise which would make the work more time intensive, does it make sense to pay someone else to do this job? Even when families hire outside help for all types of services, often they do not analyze the hourly rate they are paying for the service compared to what their hourly rate of revenue is from a family perspective. This can be very important when making these types of decisions.
- INVESTING TIME- When we opened our office in Buckhead, I thought the traffic for a couple of days a week would really bother me. I then recalled what I was doing the first five years in the business, which was listening to books on tape and taking advanced financial planning education courses in the car. I actually began to get excited about the traffic again as the 5 hours a week I’d be spending in the car were going to allow me to read three more books this year and I’m going to be taking a college course in the car! Whether the time you invest is with your family, getting advanced education, or starting another business to create more revenue streams, how you invest your time is an important consideration.
Perhaps here in the beginning of 2014 you can find the answer to this question of how much time you really waste. Remember that time equals money and money equals time, so if your financial goal for 2014 is to create more family revenue what will be your best strategy to invest, spend, or exchange your time?
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