We’re told from an early age that time is money. Unfortunately, this is a terrible equation.
I had an interesting conversation with my accountant today. According to the IRS, as a business owner I need to pay myself a “fair and reasonable salary”, so we were trying to determine what my time was worth.
We were calculating my value to the business based on the common equation we’re all taught when we’re children.
Time is Money (or so they say)
And in many ways, even as an adult, this idea that time equals money it’s an inescapable truth.
- We pay a set amount of money that gives us the right to live in our home or apartment for a single month;
- We hire contractors (plumber, electrician, handyman) who charge us by the hour;
- Many of us our paid an hourly wage for our daily work;
We are coaxed into putting a monetary value on our time since it is a fixed commodity (i.e. we all get an equal amount of hours per day). It seems like a rational train of thought, but there’s nothing about this equation that I like.
“Time is money” is one of the most misleading metrics we use in our lives.
How can we possibly justify paying an NFL player $10,000+ per hour when the minimum wage is only about $12 per hour?
Such a large disparity should be the first indication that our formula for tracking the value of time is wrong. It’s far too simple and only accounts for the here-and-now.
A myopic view of time and its relation to money is extremely dangerous. Just ask the CFO of any publicly traded company how they feel about being graded on short term gains versus long term value. Thankfully, these growth strategies are shifting, but it’s still a struggle.
While we don’t have control over how others view time and money, we can shift our own focus.
So instead of thinking that “time is money”, what if we started by shifting the paradigm in our own lives first.
Money An Investment
This change from money as time to money as an investment may not seem big at first, but it has dramatically altered the way I allocate and assess my time.
For example, when we think of time as an investment…
- …we no longer see that NFL player getting paid $10,000 per hour, we see the thousands of hours invested in practice, time in the gym and college ball;
- …we no longer see time spent playing with our kids as “charity” or “what I’m supposed to do”; we see it as an investment in their future and the legacy we leave behind;
- …we no longer assess a project by its short-term gains; we give ourselves permission to look ahead toward long-term dividends;
- …we no longer see an hourly-wage job as a means to just pay the bills, but as an investment into the development of skills that could propel you into a better, higher-paying career.
Wealth is not built with money; wealth is built with well-invested time.
So what is my hourly rate?
Honestly, I refuse to calculate it. A lot of the work I’m doing now won’t pay me a dime for a few years down the road. And most of the revenue my company receives now is directly tied to the blood, sweat and time I invested five years ago.
It may not work in every situation, but as much as I can, I’m trying to see my time not as money, but as an opportunity to invest.