Time is Money (Only if You’re Getting Paid for It)
Do you believe time is money? Well, money absolutely equals time. If you want to get somewhere fast, you can pay up and take the toll road. Want to get there even faster? Take a helicopter. Not fast enough? Then get a jet.
I like the jet option the most, especially when it’s private. Not having to show up hours early for your flight is a real time saver. And if we’re lucky in the future, we’ll be able to get places even faster with rockets. I always knew Wile E Coyote was an underappreciated genius.
The point is, with enough money, you should be able to get anywhere lickety-split, preferably in style.
Money Equals Time
Money also saves time in other ways. Don’t want to wait in line for the club? Flash enough cash at the bouncer and voila, no more waiting. I’m too old for clubs, so I’m using my experience at Chuck-E-Cheese as a proxy. You’d be surprised how far a stack of Lincolns (not the bills) can go at Chuck-E-Cheese. No more waiting in line at the salad bar and backstage access to the big cheese himself. Ah, the privileges of being a VIP.
Even if I wasn’t too old for clubs, you’d never catch me inside one. I’m way too frugal to pay a cover to get into a club. You want me to pay for the privilege of buying over-priced drinks??? I’d instantly lose my frugality-cred. Clubs are probably the main reason millennials don’t have much in savings. That, and avocado toast.
Money isn’t just equivalent to saving time. Money can also extend time. People with money live longer because they have better access to medicine, doctors, and everything else. The rich don’t need to decide between paying for medicine or paying rent. If you’re poor, you better hope you have great genes.
So we’ve established that money is time, but is the reverse true? Is the adage, “time is money”, correct? Not necessarily.
Time is Money (It Can Be)
You can convert time into money. Like when you begrudgingly go into work. Your employer pays you to sit there and pretend like you’re doing something. The more you work (real and pretend), the more you get paid. Ideally, anyways. Everybody understands that. Unless you’re some rich fat cat that has never worked a day in his life. Oh, how I would love to be a fat cat!
Time is also money when your money is being invested. With compound interest, your money grows exponentially over time. This is why it’s so important to save early in life. With a long enough time horizon, anybody can be a billionaire.
But just because you have time doesn’t necessarily mean you’ll get money. This is the concept some people don’t get.
Time is the Potential for Money
I find it funny when people justify paying somebody else to do something for them because they get paid more than what they’re charged on an hourly basis. For example, I know people that won’t cut their own grass because it’ll cost them $20/hr to get it cut, yet they make more than $20/hr at work. In their minds, it’s a waste of their time to do yard work because it’s beneath their pay grade.
If you want to pay somebody to cut your grass, that’s fine. But it has nothing to do with how much money you make, unless you’re missing work to cut your grass. If you had to choose between making $40/hr at work, or cutting your own grass, then it would make sense to have somebody else do it for you.
I do my own yard work. First, because I can really use the exercise. Second, I do it on the weekends, when I’m making $0/hr. I don’t get paid when I’m not at work. The math has nothing to do with how much I make at my job. The real question is would I rather do it myself for free, but spend an hour of my spare time, or pay somebody $20 to have it done for me? Again, if you’d prefer spending $20 so that you don’t have to do yard work, that’s fine, but don’t try to justify it by how much you make.
Don’t Think of Time as Proportional to Money
Now that we’ve established that time can equal money, don’t think the two need to be proportionally linked. If you’re working an hourly wage job, it will be proportional. But unless you’re a lawyer (some can charge $1,000/hr!), you’re not going to get rich this way. I’m going to use my work as an example.
I invest client funds for a living. Making any investment decision requires a certain amount of work, regardless of the size of the position. So the amount of time I put in a $50mn position isn’t much more than the work I do in a $10mn position, yet my potential return with $50mn is 5x greater!
It’s the same thing with an owner of a store. For this example, let’s say she owns a coffee shop. She’s there 14 hours a day (is that too low for a small business owner?), but her pay isn’t dependent on how much time she spends there. If she doesn’t sell any coffee, she’s out a lot of money. However, if she has a line out the door all day, she’s making bank.
This is what owner’s economics look like. You have downside risk, but the upside isn’t capped, unlike working at an hourly job. This is like my job, even though I get a salary. I have no limit on how much I can make. If I can effectively deploy capital and generate returns, the sky’s the limit.
Obviously being an owner carries significantly greater risk, but the upside potential is huge. If you look at the wealthiest people in the world, this is the path they took. And I suggest you take this path as well, since there are so many hours in a day and you don’t want that to limit how much money you can make by that.
Converting Money Into Time
This is where I come back to my point that time is the potential for money. Unfortunately, or fortunately, depending on how you view it, potential means it could happen. To realize that potential, you’ll need to put in effort to ensure time is money. Most people only work 40 hours a week. That’s less than 25% of the total hours in a week! With over 75% of the week available for other things, that leaves plenty of time to work on a side gig.
If you’re not happy with the amount of money that you’re making and you have excess time, then convert those extra hours into money!
For more tips on investing and saving, please visit Margin of Saving.
