The Moment I Realized Time is Money

The Moment I Realized Time is Money - picture of alarm clock next to increasing stacks of coins

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Before we learned how to save money, we blew through money like it was going out of style. The funny thing is, we actually thought we were being thrifty. We wasted money on clothes. We shopped garage sales religiously, and we always bought used. But, while we were taking care of some of the small things, we really screwed the pooch on some of the big stuff.

As we came to terms with the fact that we weren’t saving like we should, we began examining all of our expenses. We both made decent money, so there had to be a reason why we weren’t saving any money. It didn’t take long before we found some big problems with our cash flow.

One of the biggest issues was our debt. In addition to my student loan payments and our mortgage, we were also paying about $700 a month on our two cars. To some of you, that might not seem like a lot. It certainly didn’t phase us at the time, and we could technically “afford” it. But, we soon realized that these cars were costing us in more ways than simple dollars and cents.

Learning that Time is Money

Before we got our finances in order, Holly read a great book called Your Money or Your Life by Vicki Robin and Joe Dominguez. The book helped us to start seeing money in a different way. Rather than thinking of money as simple dollars and cents, we began to consider what it took to earn that money. Instead of seeing just a sticker price, we started thinking in terms of how many hours each individual item actually cost us. This lead us to realize 5 important money values.

1) Time is Money and Vice Versa

When you work for somebody else, you are usually paid for your time. You punch a clock and the amount you make directly correlates with the amount of hours you put in. Even if you’re paid on commission, you are still paid for your time, not for any products that you create. Essentially, you are selling your time for money. Therefore, your time equals money and the amount of money you have and spend represents time you gave up.

2) When You Waste Your Money, You Waste Your Time

Look, you only have so much time on this planet. Nobody is making any more time for you to gobble up. In fact, I’d argue that time is the most valuable thing you have. And, since we’ve already determined that your money represents the time you traded to make it, your money should be considered valuable too.

At the time, $700 represented both a lot of money and time for me. Once I added in insurance, gas, taxes, and repairs, I was spending almost a full third of my take home pay on vehicles every month…and I’m not even a car person! That meant, every month, I was working from the 1st through the 10th just to pay for two cars that we didn’t even like! I was busting my butt, using huge amounts of patience and energy, and for what? Overpriced cars? Wasting my money was bad enough. But, when I realized what that money had cost me in time, it stung even more.

3) We Were Working to Buy Stuff, Not Build Wealth

Even though we were making pretty decent money, we still weren’t able to save. It didn’t make sense. When we finally started to relate to money in terms of time, it became clear that we weren’t working to build wealth. We were working to buy stuff. We were wasting our time to earn money so we could buy stuff we didn’t even want or need. Yuck!

4) Depreciating Assets are the Worst Kinds of Waste

What’s worse than failing to use your time to build wealth? Wasting it on things that lose value, that’s what.  At $700 a month, we were spending $8,400 a year on two cars that were quickly losing value. Instead using that money to get ahead and build wealth, we were stuck shelling out thousand of dollars a year for depreciating assets. Oh…my…gawd. That’s some serious hours, just gone. Vanished. Poof…I’m getting sick just thinking about it.

5) Our Spending Reflects Our Values

When we began thinking about purchases in terms of time, we realized that our spending should reflect our values. Our time, our lives, are our most valuable asset. Why should that asset be wasted with out even considering the consequences? Once we understood this concept, we knew we had to make a change.

We quickly paid off our car loans and vowed to drive them into the ground. We decided that we’d never borrow to buy a car ever again. Any cars we bought would be paid for in cash. Then, we made a list of the things that were important to us. Saving for retirement, paying for college, and traveling the world went straight to the top. If we were going to sell our time for money, we were going to make it count! We’d keep those goals in mind every time we thought about a purchase. We would work to live instead of live to work.

Wrapping Up

Once we learned that our money represented our time, we turned a financial corner corner. This way of thinking instantly put each purchase into perspective. We no longer consider costs in just dollars and cents. We consider how much time it took us to earn that money. Looking at it that way, its easy to say no to overspending.

How do you view money? Do you think about how much time each purchase costs you? Let us know in the comments below!

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  1. “We weren’t working to buold wealth..we were working to by stuff,” definitely drives this pointment home. I’m not a big fan of stuff just for the sake of having it, but understanding other ways I may be wasting time/money is proven when you think about other ways money may be traded for stuff you don’t really need verses things you value, like junk food, wasted travel trying to catch sales etc. I have this book, Your Money, Your Life, just hadn’t had time to finish reading it. I need to get on it. Thanks for sharing your thoughts:)

    1. Thanks Latoya! When I think about how much money I wasted, and the time that money cost me, it makes me sick. But, I can’t change that now. All we can do is move forward! (And you really should read that book 🙂 )

  2. You are right, looking at cars as investments doesn’t make a whole lot of sense because they depreciate in value. That would definitely be a dumb investment. Instead look at it as something that has utility, it transports you. The way you go about transportation can be cheap (a bike) or expensive (a BMW) or anywhere in the middle like public transportation. But no matter what you do, you are putting in money for that utility. To your point though, you have to exchange time and money for that utility so it is just a matter of how much you want to spend and what it is worth to you. Thanks for post!

    1. Yeah, spending on cars was just one way we were wasting money. It’s easy to forget how much it cost you to earn that money.

  3. We went through a very similar process ourselves. We were making ok money and didn’t have any debt, but we were making very little traction financially. It was largely because we were just spending on things bringing little value to our lives and not moving the needle on growing our net worth. Thankfully that hasn’t been the case for some time. The time is money idea really cemented itself for us once we started our business. We see what goes into making money and the last thing we want to do is be wasteful and causing us to work more.

    1. I totally agree. It became even more important once we started working for ourselves. You realize how much work each and every dollar takes. Wasting it is just foolish.

  4. I really enjoyed that book. Your Money and Your Life was a great book and I’m lucky to have read it during professional school. Ramit Sethi’s book also taught me a lot, especially about the importance of automatic saving. I combined the ideas from those two books and make sure to automatically save the max into my 401k, Roth and HSA before everything else. This creates a sort of “scarcity” mentality so I have to make sure to spend my remaining money wisely.

    Time is money, and money is time! Great post and essential reminders.

    1. Thanks Syed! Automatic savings is huge. It was one of the first ways we really started to build wealth. When you start saving automatically, you don’t even have a chance to spend it. Thus, you’re building your savings without ever having to think about it!

  5. I’ll have to share this article with my fiance. They say in each relationship, one person is the saver is one is a spender. He would much rather have “things” while I want to build wealth. It takes a hard look at yourself to see where you land, so great job on figuring it out! Thanks for a great post!

    1. It took me a long time to understand that by building wealth and saving money, I could get the things I really wanted. I used to blow soooooo much money on stuff that didn’t really matter to me. Once I learned how to prioritize what I really wanted, I started being able to get the big stuff – like real estate, travel, etc. I stopped wasting money on stuff that didn’t matter so I could spend on the things that do.

  6. I try not to think too much in terms of my hourly wage because it leads to frustration. It’s hard to tell your husband to stop buying/cut way down on $1 energy drinks if you’re paid a relatively decent amount. Instead, I try to look at it as a percentage of our weekly budget. Given that it’s relatively low these days, that helps spur me on to put my foot down more often.

    Thinking of things in terms of an hourly wage is one reason I don’t freelance, though. I know I can usually pick up overtime if I really want it, and I spend way too long on stuff I write for other people. So it just doesn’t make sense.

    1. That’s a good way to look at it too! One of the things I love about personal finance is that there isn’t just one “right way.” You have to find things that work for you. We’re basically getting to the same result using different techniques. Love it!

  7. My parents once defined working for wages to me as hiring out my labor and my time for a wage in return. That meant that my time and skills, during that period, belonged to my employer, not to me. I don’t think it was the lesson they tried to impart but my takeaway was that the more money / assets I could save, and not waste on Stuff, the less I would need to hire out my time to employers and thus I would have so many more choices in life. It took a while for the full meaning of that to sink in over the years but it was pretty awesome when I started to put it into practice.

    We’re not at the threshold of financial independence yet but we’re definitely accumulating appreciating assets as a high priority over the Stuff.

    1. Yep, that’s a great way to look at it. When you waste less on stuff, you get more of your own time back!

  8. Such a good book and one of the first books I recommend to someone if they want to learn more about personal finance. It made me think long and hard about all the small items I would purchase whether it be lunch out with co-workers or a coffee on the way into the office. All needless expenses!

    I saw item number 4 – Depreciating Assets are the Worst – so TRUE! I just did a post on the very subject; depreciation versus appreciation.

    Thanks again for another great read!

  9. What always really baked my noodle was thinking about how people buy expensive cars, in which they mostly use to drive to their job everyday. So a lot of your time working is spent to make money in which to pay for your transportation.. to work? Some weird messed up cycle people get caught in.. And if most of these cars are used to get to work, the whole auto industry starts to look weird because it mainly(I would argue a big chunk) exists because people have to get to work in the first place. And people spend tons of money on entertainment and going out because they’re burnt out at work, relationships fall apart because of stress of various things including money and work. It’s a wasteful weird cycle we’re caught in. Just seems like if we didn’t work 40 hours+ 5 days a week a lot of our societal problems would start to go away. When I think about all we really need; housing, clothing, food, social interaction; the system and society I was born into seems really bizarre.

    1. Yeah, the systems we have set up can be bizarre. When you pull some of it apart, its just a giant hamster wheel…

  10. Hello Greg,

    I do believe I’m at liberty to recommend you for this lovely post and of course to add my own 2 cents as well. Time is one valuable assets we all have but unfortunately a minute lost can never be regained. I do spend most of my time wasting it in front of the TV set playing PRO 16 football game.
    I guess I am wasting money as well as you rightly stated time is money and vice versa.

    I am really grateful for this post of yours. It’s of course time to sit up and do something really meaningful with my time.

  11. Very informative article with the potential to change the way people think about money. I completely agree – I always see purchases in relation to the time I spent earning that money, and it has been an extremely effective money saver for me. Great article!

  12. Hi Greg, time and money are really important. These two are as well a test, and the way we make use of these two can really tell who we are as individuals.

  13. I definitely think about how many hours an item requires, but I also think about how much value a purchase can add to my life. Contributing to my IRA is one of my favorite purchases. I feel like I buy so much because of it. It gives me dopamine that is enviable.

    1. Value is certainly important too, and I think it goes hand in hand with time. I ask myself, “Do I value this enough to spend 7 hours working for it?”

  14. I’m so glad you had your “aha” moment about how wasting money is wasting time, and have been able to change and help so many other people, too. Car loans are such an amazingly popular phenomenon, it’s tempting to take them without even thinking twice about it because it’s so mainstream and acceptable. But when you think about the money you’re spending on a depreciating liability (really), hopefully it becomes clear they’re not worth that much time or money.

    1. You’re right. And, car loans were just one of the most obvious ways we were killing ourselves. I’m just glad we saw the light 🙂

  15. Greg, I couldn’t agree more. Time is money! We have to strike a balance between the two so that we can enjoy life more.

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