What do you see?
That Money = Cost x Time ?
Or, that Time = Money/Cost ?
Many of us simply push through our weekdays, waiting for weekends to arrive. It gives us an opportunity to decide how and when we want to spend it. 71% of each week can be written off for those working only to make ends meet. It’s a sad statistic. Why do we spend our entire lives in this state of disarray?
Naturally, we approach life with the view that money comes first, and at a direct personal trade off, according to this standard work-life formula:
Money = Cost x Time
Whether it’s working extra weekend shifts or moving your way up the company ladder, with more money comes greater personal cost: more energy being drained, more opportunity costs being lost, more obligations to fulfill — in addition to more quality time being given up. A piece of our lives must be lost. But that’s the price we must pay for money, right?
We believe that to be “richer” we need more money. We must be prepared to spend more and give up more time if we want more money. We often want a promotion in our job to increase our weekly income. Oh… and let’s also raise those overtime hours, weekend call-ins, daily responsibilities, pressures and stresses along with it! Are you looking for more money? Yes. A richer life? It is not possible.
Most people don’t believe so. We have all known this about our lives, from our grandparents to our parents and on to ourselves. Could there be any other way to approach The Money Game?
Money vs Real Financial Success
There is clearly a connection between having more money and potentially gaining more value out of life. As we know, money is not the only thing that defines a better life. Because what about the cost of money?
Money is always contextualized. For every dollar we earn, there will be a personal cost. Not all money is created equal. Therefore, real financial success cannot simply be based on being a millionaire or a billionaire.
It is clear that a millionaire working 10 hours a days at a job he dislikes is less successful than the millionaire who was able to quit his job of 10 years ago. And, of course, the millionaire who made his fortune doing what he loves really hit life’s jackpot! The same money, but different degrees of success.
You can’t have a billion dollars and live your whole life in a corporate cage. A big stack of cash is nothing more than an endless pile of sacrifices and stress! So, what is financial success, really? What is financial success? It’s not about the amount of money in your bank accounts or how many cars you drive. But, it does depend on what effect the money has on your life.
Forget about the “big bucks” because real wealth and success are simply about experiencing a life with greater positives and fewer negatives. Money should only serve one purpose, to bring positive value into our lives. How can we begin to see our finances as a reflection of what we truly want?
One Formula to Rule Them All
To experience real financial success, our aim for the future is not to simply focus on money, but to instead focus on time. When it comes to our time value, money is a key factor. What is the relationship between time, money and financial success?
Financial success means having enough money to do what you love and less to worry about money. Why do we chase after money when our lives are so full of stress and lack of fulfillment? Real financial success can only be achieved by someone with a completely different outlook on life. This perspective is what it looks like.
To change our future finances and lifestyle for the better, it starts with taking life’s standard formula: Money = Cost x Time and flipping our natural view. It’s now time to see that: Time = Money/Cost
As you can see, the value of your time is equal to your money divided by your life costs – simply, all the negatives that revolve around getting money. Your time is less valuable if you have little money. And when earning more money at a much higher personal cost, unfortunately life doesn’t get much better! However, when we approach life with the aim to increase our money AND decrease our cost, what do you get? More valuable time!
Forget about money alone, because the richer you really are, the greater the value of your time. This imbalance between money and cost is the key to experiencing real financial success.
“The rich invest in time. The poor invest in money” – Warren Buffet
The “Average Joe” may believe that frugal investors are boring cheapskates who don’t know how to enjoy their money. They often miss the point. As Henry David Thoreau once said: “The price of anything is the amount of life you exchange for it”. The true cost of every purchase is not a number
on a price tag, but rather, a period of time spent working. Some might even say a period of time wasted.
It is true that time is money. Every expense equals an amount of our life being exchanged…or lost! The real profit we have to use is what you can actually make. We call this our “real pay rate”, which for the average earner may only equal a few measly dollars for each hour given up on the job. So what is that lazy, Friday night food delivery really costing you?
The Price of Life
In the wise and misquoted words of Benjamin Franklin: “a dollar saved is a dollar earned”. Saving a dollar earns you a dollar at your actual pay rate, literally for doing nothing. For smart investors, the saved dollar is just the beginning. Because of the passive income nature and compound growth power, each dollar saved can make you more money in the long-term at very low cost. The smart investor will see a shift in the balance of wealth as they save more money.
Therefore, if you spend half your weekly disposable income, it is equivalent to half a week and possibly MONTHS of your future time. You can have huge impact on the future of your money and your life by making small changes to your routine. Avoiding unnecessary spending will give you the chance to increase your future wealth and decrease the time spent on routine.
Time is Of the Essence
Money is clearly what fuels the journey of life. Are you planning to stay at the station filling up your gas tank for the entirety of your journey? If you’re truly ambitious, life can often feel like a race against the clock. Many frugal investors are like you and have many things on their to-do list. Of course, slaving in an office cubicle to do paperwork isn’t one of those things.
Our true aim for the future can only be to maximize the amount of our “life time” that we spend in a way that we consider most personally valuable. Why not work for financial freedom? Remember, Time = Money/Cost. To achieve financial success, you must maximize your income while minimising your expenses. And it takes a natural focus in life towards:
- Making money doing what you truly enjoy
- Creating passive income
Think about the lifestyle of someone who is truly financially successful. They are paid from their passions while their money is making money at little personal cost: thereby giving them much greater satisfaction, freedom and opportunity to gain more value out of life — the total sum of their time! All money has lifelong potential, and those who are on the path to real financial success recognize the value of every dollar…and every day.
This is the secret to real financial success!