Trading Time for Money

And finally, the 4th Financial Key.  The paradox of trading time for money.  This probably seems obvious, but it has been one of the most eye opening lessons for me.  

I am indebted to several people who have taught me, inspired me, and modeled how to live life both simply and abundantly.  These individuals know that our time is precious and that life is meant to be lived generously and wholeheartedly, not squandered away by the many expectations and demands of "The Norm".  

The Norm being trading our time for money.  Then spending all that money.  Then trading more of our precious time for more money... 

There is a way to escape this fate.

That is my one reason to keep reading. 


If there's anything I've realized in the last few weeks since graduation, it's that time really does go so fast when you've got a goal and you're trying to get something done.  I've had several goals lately... plant my flowers, find a used car, find a place to live, become an official resident of Tennessee... it feels like I blinked and now I only have 8 days left before I start my new job. 

And from what I hear, that's pretty much how the rest of my life is going to go.  I may only have a short time on this earth but I plan to make the most of it.  That means being very conscious of how I spend my time.

For awhile now, I have been disturbed by the advice to find a good job with decent people because I'll spend more time at work than at home, with the people I love and genuinely want to be with, with the thing in this world that matters the most to me... my family.  The whole reason I'm working to begin with.  Life seemed very cruel and unfair. 

The sadness was pounded in further when I read Rich Dad, Poor Dad and the author described the paradox of trading time for money.  We are trading away our life to cover the cost of living.  Would we spend so much time at work if we didn't need more money?  Would we work at the same place if we weren't scared of missing payments or not having enough money to cover our rising expenses?  What are we giving up by locking ourselves into debt over stuff?  And are we gaining enough to justify it? 

The sad truth is that our time is limited and many times it feels like our expenses are infinite.  I decided that there had to be more.  There had to be a way out of the trap.  A way to have choices and to be the boss of my own life.

I found my solution. It's called financial freedom, having enough passive income to cover your expenses.  Passive income is money that you don't have to work for (rental income, growth in investment accounts, dividends from your own business, etc).  The other component of this idea is cutting unnecessary expenses (or even those that simply aren't contributing to our real happiness).

The result of financial freedom: the freedom to choose how you will live your life.

(Another person I've learned so much from is Paula Pant, author of the Afford Anything blog.  Her post about this topic is incredibly helpful and inspiring!  You can find it here.)

Whether we like it or not, our lives are controlled by our financial decisions, many of which are made as soon as we enter the grown up world.  But the story doesn't have to be a sad one.  For the rest of the post I'd like to focus on ways to hack the time/money paradox.

  1. The most important thing is to know what kind of life will make you happy.  Once you know the end result you want, you can work backwards to build the plan you need.  For example, I know I want to have a passive income stream so I've created room in my budget for saving to invest in assets.
  2. Do what makes you happy.  Settle for nothing less.  Personally, I love working.  I find a lot of happiness and fulfillment in doing something that I believe is important and doing it well.  I know that no matter how much money I have, I'll always need something to keep my hands and mind active so I've included working in my financial plan.  The key is that I'm going to make sure that the work I'm doing is fulfilling.  If I devote any of my precious time to something, I want to know that it is worthwhile.  The only exception to this advice is if you are using a job purely as a means to an end, like to save up enough money until you can afford to start your own business, or you are trying to find a better job but still need to cover your expenses while you look.
  3. Live simply.  Some people have built their entire financial freedom plans off of the idea of living with very few expenses.  Jacob Lund Fisker, scientist and author of Early Retirement Extreme*, cut his expenses to one-fourth of the average Americans and was able to save enough in five years to quit is day job and work only on projects that he believed in.  While I find his story inspiring, I know that I appreciate nice clothes and vacations so I incorporate that into my plan.  The main thing is, only buy things that are giving you real happiness, not just fleeting excitement or just catching you up with the Joneses.
  4. Avoid payments (or debt in general).  While financing purchases seems freeing because we can purchase things we can't afford, these payments create a web of obligations that we are forced to find a way to meet.  Even if that means working a job (or two) that we don't enjoy.  One of my goals is to pay for everything in cash.  If I can't pay for it in cash, I can't afford it.  The exception to this is if you are financing assets and you have determined that the money they pay you will pay for the payments.
  5. Take advantage of compound interest.  Remember, invest in accounts that pay compound interest as early as possible!
  6. Pay off any debt you owe as quickly as possible.  Student loans, I'm coming for you. 
  7. Dream big now.  Cliché I know, but seriously... If you fail to dream early on, when you finally do it might be too late.  Time is the most valuable asset in any plan.
Failing to plan is planning to fail.
— Don't know, but my dad reminds me all the time!

In fact, I would go so far as to say that time is your most valuable asset in life.  Don't be content to trade it away for more money just to buy more stuff.  Protect the time you have.  Embrace it.  Use it for the most possible good. 

I guess to sum up this post and the entire financial keys series, the financial decisions we make early in life set us up on a path.  The popular, well worn path is demanding and stressful, littered by the things people buy and then forget about.  The path less traveled by is undoubtedly uphill, but the view from the top is endless and so worth the challenge of getting there.  I'm so grateful for the people who have taught me these financial keys to success.  I couldn't keep these lessons to myself.  If my words impact even one person's life for the better, the precious time I spent on these posts will have all been worth it :) Thank you for staying with me to the end!

 

Wishing you safety and happiness on the path less traveled!

M