You have probably heard the phrase, “Time is Money.”
Yet, how many times just today have you said, “I will do this tomorrow, or another day.”
In the world of investing, time is your best asset. When it comes to investing, the longer timespan you have, the less you need to consistently invest to reap enormous financial rewards later.
Did you know that time can make you a million dollars by just investing $150 starting from zero at age 18?
This probably sounds absurd to you, it definitely seemed absurd to me. I always thought that we can only make more money and become rich by earning more money through a better paying job or by successfully negotiating a pay raise.
This is not wrong and we will touch on this at another time. But, the single most important asset that everyone has in becoming wealthy has nothing to do with our employer or our salary. It is actually time. Let’s go back to that example above.
Let’s say upon finishing high school Joe works at a fast food restaurant to help pay for college.
If at the same time he simply invests $150 a month starting from zero into a simple index fund giving him an average annual return of 8% when accounting for inflation, and he doesn’t stop investing this same amount until age 67, he would have over a million dollars.
If however, Joe waits until he turns 30, by the time he turns 67, that total that he will have will be just slightly over $500,000. That is still a lot of money, but only half of what he could have had if he simply just understood that time is money.
But time is money not just when we look at the clock from the lens of investing, but when it comes to every aspect of our personal and professional lives. When we delay a decision we incur a cost.
In fact every delay we make incurs a cost from starting a business, or starting on our journey to financial freedom, or even when it comes to advancing our careers. Essentially we are all procrastinators.
When it comes to money we see the urgency to act quickly because we see the large reward that we can potentially earn, but with time we take it for granted. Just as we have until now, we feel that we have time, and that there will always be tomorrow.
But this goes back to what if tomorrow never comes?
The crazy thing is that we can lose money and still recover all of it if not more through hard work and discipline. However, no matter what we do, we can never recover the time that we have lost.
We think that we have so much time and therefore do not see its real value. To a grandma diagnosed with a terminal illness, days, weeks, and months with her family and friends is priceless. This is because she knows of the limited amount of time she has left.
This is why time management is a concept that business leaders and management experts talk and write about constantly. But with the abundance of information out there we get overwhelmed with the details, and then simply say, “I just don’t have enough time to manage my time.”
Instead let’s take some steps to first simplify time management into three important ideas.
Look at Time as Money
When we buy a pair of jeans for $100 we want to make sure that we are getting durability, and something that will last for a while. We are looking at value. Look at time the same way. Whether we are watching a Netflix documentary, reading a book, learning a new skill or spending time with family, pick and choose what we do, and when we do it with purpose.
If we are not getting any value in what we are doing, why are we doing it?
Balance Work and Play
Overwork and burnout are real. Just because some else is doing something a certain way, doesn’t mean that it is the best approach for you. Time does not care whether you spend it trying to advance your career or by spending quality time with friends and family. We need to create a balance so that we make the most of the limited time that we have on things that matter to us the most.
Compounding
This is the one most amazing thing in the world. We just saw in the example above the power of compound interest when it comes to investing. The same principle applies to acquiring new skills, nurturing relationships and building businesses.
It takes time to make mistakes and it also takes time to learn from those mistakes. If we delay our start, we are also delaying our time to make mistakes and as a result delaying the time needed to achieve success.
If money is lost it can be gained again through the course of time. But time that is lost cannot be bought again using money. No matter how rich you are, you will never regain lost time. The key to time management is not in micromanaging our schedules down to the hour, minute or second.
That’s a lot of work and personally I would be burnt out within a day. But instead we should actively choose what we do and when we choose to do it based on the value it plays for us. For many it is spending more time with family, for others it is exploring the world and for some it is learning new skills, that decision is yours as you control how to manage this most priceless asset!