Trading Time For Money

They say “time is money.” While it is true that you can trade your time for money,  it is an exchange that everyone should be very conscious of making because that exchange can only go one way. No amount of money can buy you a chance to re-live yesterday. Yesterday is gone.

We All Trade Time For Money

For most of us starting out, trading our time for money (also known as active income) is a requirement instead of a choice. We live in a world where nothing is given for free, so we must trade our time to earn enough to sustain ourselves. Past that level of sustenance we choose to make the trade. While there are a lucky few people that work doing what they love, most people do not feel that way. A few years ago Gallup released a study showing that only 13% of people actually liked going to work.

It is glaringly obvious that most people would rather be doing something else with their time than spending it at their current job. Finding a job doing something we enjoy, spending time with family and friends, or just taking time to explore hobbies and interests are all things that would add way more value to our lives than a few extra dollars.

Ending The Cycle

This cycle of trading time for money can effectively be ended in two very different ways.

  1. Finding work that you truly love: If you manage to find yourself in the 13% of people who actually like going to work then the cycle is over. While you may still be spending time at a job, if you truly love the work then it can be an important part of a fulfilling life, and likely doesn’t actually feel like work.
  2. Retirement: Sadly, for the majority of people this doesn’t become a reality until much later in life. With the average american retiring at age 62 according to another Gallup study.

retirement age graph


My Goal Is To Combine The Two Options

If someone gave me a million dollars today I wouldn’t necessarily stop working completely. I can’t imagine a life of purely leisure and feel like I have to add value to the world somehow. I would however have the financial freedom to use my time doing things that are not necessarily the most lucrative. I could try my hand at producing music, or maybe put more time into this personal finance blog. I’m not 100% sure what I’d do at that point, but the best part about it is that I’d have choices and could pursue them with no worries about whether or not I could provide for myself.

Not to get too philosophical here, but have we not all imagined different lives for ourselves? What if we had studied something else, made a different choice, or gone down a different path? I don’t think that it is natural for people to do the same thing for their whole life, when there are so many different parts of living to explore.

With that in mind, I plan to amass enough resources for financial independence as soon as possible. By working hard now, I can do whatever I please later. I’m not going to wait until I’m 62 though, I’ll aim for 32.

If Time Is Money…

I think of spending money in a very interesting way now. Each dollar I spend is like signing myself up for more time that I have to work in order to achieve financial freedom. Effectively, since I am working to earn that dollar, if I spend it then I must work to earn it again. Keeping this in mind allows me to stay motivated when it comes to saving and investing. I am always looking for the latest ways to save money.

How Much Time Should We Trade?

The amount of time that I spend working might not work well for someone else. Right now I don’t have a wife or kids, allowing me to devote 100% of my time to pursuing my goals. Don’t get me wrong, I want those things, but right now they are a moot point.

I still spend time with friends and do things that I enjoy, but I am happy devoting the vast majority of my waking hours to working for my future.The more time I trade away now, the less time I will have to spend working in the future when I do have a family of my own.  That is why I work multiple jobs for multiple sources of income.

Committing To The Future You Want

Whatever your financial goals may be you have to be willing to commit. You cannot give up before you even start just because you are in debt or you feel like you don’t make enough money to ever save up any substantial amount of money. If you need more inspiration or don’t believe me then just read about the janitor that saved and invested his way to $8 million dollars.

Just remember to make sure you have decided WHY you are trading your time for money, because if you don’t have a good reason, then maybe you shouldn’t be making that trade.

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2 thoughts on “Trading Time For Money”

  1. Interesting topic for a post! Bridging the gap between personal finance and philosophy is not something I see done very often. It is cool that you take into account the fact that hammering out work to make money ASAP and retire as early as possible is not the only option. I am curious why you expect to be financially independent at age 32. Is that the same as retired? If so, is this a realistic expectation given that <1% of people retire before age 50?

    1. It is worth pointing out that even though only 1% of people may retire before age 50 that adds no clarity to how many people may be financially independent by that age.

      I define financially independent as being able to cover your standard of living with passive income streams, usually in the form of investment income for most.

      After keeping track of my expenses over the past months it is looking like I can comfortably live on 20k or less. Of course, it is worth noting that I have a lot of advantages built into that when compared to the average person my age (no student debt or car payment.)

      Using that 20k or less figure, I would only need to build up $400,000 to be able to sustain that standard of living with a portfolio returning 5%. This is a feat I am more than confident I can accomplish by the age of 32 and one that is well below my goal of $1,000,000 by then.

      Once I can sustain my standard of living I am free to truly do whatever I please with my time, which is a point I cannot wait to be at.

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