time is money

Time Is Money

In yesterday’s post I introduced the concept of the opportunity cost of your time, and how choosing to spend your time on one thing means you can’t spend it on something else. Today we will look at the relationship between time and money.

Effective Time

We all have 24 hours in a day, but how much is seriously productive?

The average day for you might be broken up as follows:

  • Sleep (8 hours)
  • Showering, clothes, etc (1.5 hours)
  • Gym (1 hour)
  • Eating (2 hours)
  • Cooking, cleaning (0.5 hours)
  • Travel to and from work/uni (2.5 hours)
  • Relax (1 hour)
  • Value-producing time left: 7.5 hours

Time spent sleeping, cooking, cleaning, showering, or getting changed, and most time spent travelling, is time not particularly enjoyable or fulfilling.

I say most of travel time because a lot of it is driving through traffic, getting in and out of your mode of transport, and not able to be spent doing something else. However, some of it can be used: if you’re on public transport, you can chat to friends, read a book, or do some work on a laptop; and, if you’re driving you can listen to an audiobook, listen to the radio, or listen to your own music. Let’s estimate this to be a 50:50 split between ‘shitty’ time spent in transport and ‘effective’ time spent in transport.

That means you have an average of 10.75 hours a day of Effective Time — time that can be spent on things that bring you happiness and fulfilment.

Trading Time for Money

You have roughly 10.75 hours of Effective Time per day and, in order to do the things you want to do, you likely need to exchange some of it for money.

We have explored the different ways of making money, but to keep things simple let’s say you’re an employee and you currently earn $20/hr. If you spent every moment of your Effective Time producing an income, you’d make $215 a day and $1,500 a week ($78,000 a year). However, doing this would be agony and you would have zero life outside of work. You would gladly trade two days of income ($430) to get your weekends off (bringing your yearly income down to $56,000).

This means that a weekend’s worth of Effective Time (21.5 hours) is worth more to you than the $430 you are giving up to get it. This is opportunity cost in action: enjoying your weekend doing the other things in life worth doing, you are giving up the opportunity to earn $430. Likewise, if you choose to work the weekend, you earn $430 but give up the opportunity to do more enjoyable things.

Ideally, you know the work-life balance you want to have based on your ideal lifestyle, so you know how many hours to work. Another factor is the goals you have — saving up for specific goals likely requires some extra work. Also, as your hourly rate increases, the number of hours of work required to achieve your goals decreases.

Trading Money for Time

The typical concept of time versus money is summed up in Rick Warren’s quote “Time is your most precious gift because you only have a set amount of it. You can make more money, but you can’t make more time.”

I think this concept of the value of time is a bit ignorant. This is why I talk about Effective Time in this post. I will tackle this from two angles:

1. You can make more time (in your day)

By using the Effective Time concept, you can actually buy more time. By definition, if we can reduce the number of hours spent on ineffective things (sleep, cleaning, cooking, etc) then you get more Effective Time. Here are some ways that you can do this:

  • Work closer to home, or work from your home;
  • Move to a gym closer to home (reducing transport time);
  • Hire a weekly (or daily) cleaner;
  • Hire a gardener, chef, handyman, personal assistant, accountant — any service that provides a person to do a boring job for you;
  • Do your shopping online and get it delivered straight to your kitchen;
  • Buy a robotic vacuum, buy power tools or kitchen time-saving tools — any product or service that makes completing a job take less time; or
  • Invest in a better bed (increasing the quality of your sleep, reducing the hours required to sleep to feel just as refreshed).

2. You can live longer with more money

At the moment, all other things being equal, you would live longer with greater access to money (and knowing how to use it properly). This is because you can better afford to:

  • have greater access to health care;
  • eat only healthy foods (and even have a chef cook them for you);
  • live in areas with less crime, pollution, natural disasters, etc;
  • not work stressful hours, nor would you have financial stress; and
  • spend time educating yourself regarding every aspect of human health and longevity.

Additionally, the traditional concept of having a “set amount of (time)” is slowly becoming obsolete.

  • Anyone (it’s not expensive) can sign up for cryonics, allowing you to pause your “natural” death until technology catches up to remove you from vitrification and eliminate the issue that caused you to decline in the first place;
  • Organisations like the SENS Research Foundation are attempting to solve the problem of ageing. I don’t know how long this technology will take to get to its goal, but I imagine it could be costly at the beginning and then come down in price over time (like any technology). If I’m elderly when this time comes, I may not have enough time to wait for the price to come down — if I am wealthy then I could afford it without having to wait.

Trading Time for More Time

Without going into too much detail, $1 now is worth more than $1 tomorrow.

This is for a number of reasons but particularly because you could have put today’s money into an investment which could result in you having more than $1 tomorrow.

Go to the ‘Investments’ section at the bottom of the post on the pros and cons of different money making methods and you will find an exercise that I set that shows how leaving $1,000 reinvested in an asset producing a 10% return each year results in that $1,000 turning into $16,000 in the 30th year.

Because money now is worth more than money later, it pays to work more hours than the minimum required to maintain your lifestyle and investing those extra funds. Eventually, your investments could allow you to work less as they provide an income.

If we extended the concept of Effective Time so that it’s split into ‘Expected Work Time’ and ‘Fun Time’, we could estimate that the typical person works 9am to 5pm Monday to Friday for 40 years of their life (a total of 80,000 hours).

By working, for example, an extra 10 hours a week for your first 5 years of work, you could save yourself from working, say, 20 hours a week for the last 5 years of your working life. This effectively trades (fun) time now for more (fun) time later.


Your time is valuable. Every hour you spend away from income-generating activities is time that is costing you your hourly rate. Make sure the activities you spend your time on instead are worth more to you than the money you could be making.

Time and money are somewhat interchangeable, and are becoming more so as health technology improves.

Because money and time and somewhat interchangeable, and money now is worth more than money tomorrow, this means you can sacrifice fun time now to get more fun time later.

Featured image modified from original image by Andrew Magill, CC BY

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