Money Is Time
Money Is Time
- July 12, 2020
- Posted by: Daniel McGregor
Money makes the world go round… or so the saying goes. I’d argue there is one thing far more valuable than money – time!
When it comes to your money, it’s something you have to work for. You give your time for money. It’s an eye-opener to start to think about how much time is involved in earning the income you then spend.
I’m going to use the average annual Australian income of just under $85,000 to tell a story, you might earn more or less, but the same principles of time and money apply to everyone.
Bob earns $85,000 a year, which equates to around $43 per hour.
Bob wants to take his family on a holiday which will cost $2,500.
At $43 an hour, Bob would have to work for 58 hours, or almost 8 days of work, to earn the money to pay for the holiday.
But that’s not the full story… $43 is Bob’s pre-tax income. On his income, his after-tax hourly rate is closer to $32. This means that Bob actually has to work for 78 hours, or a bit more than 10 days of work to actually earn $2,500.
When Bob realises this, he still takes his family on the holiday and they create memories that will last a lifetime. However, the way he now purchases less important things changes. When we start to measure the things we buy in terms of time, our perspective changes and we immediately start to value things differently.
There’s a saying I love, ‘Money doesn’t buy stuff, it buys choices’. The choices we make with how we spend our money are a reflection of what we value. And value is magnified once we start to think of money in terms of time.
Time is important in other ways. If you want to retire at a reasonable age, then you have a certain number of years you will work (how many have passed by already?) and during that time you need to somehow put enough money away to fund 25+ years of retirement.
One of the things I love about my job is helping people to see how money works and changing preconceived ideas that people often have. From there, we can work together to make better financial decisions that move people closer to achieving their goals rather than taking them further away from what’s important to them.
It can seem daunting, but there are so many things you can be doing to make a difference. Perhaps the start of a new financial year is the time to put together a financial plan?
If you’d like some help to put together a plan for you and your family, and you value independent financial advice, perhaps we should have a chat.