Somewhere along the line you’ve probably heard the expression “time equals money.” It seems simple and obvious enough, but have you thought about how true that statement really is?
After reading this post I think you’ll see how the “time equals money” phrase applies to you and why it’s important to take the phrase into consideration whenever you purchase something.
Most of us earn our spending money by showing up to work each day and punching the clock. By doing this, we are trading our time -however many hours you work in a given day – for our employer’s money, which becomes our paycheck. In simple terms, we’re giving them our time with the expectation that they will give us their money in return.
When you spend the money you’ve earned, you are essentially using the time you spent at work for whatever it is that you’re buying. Sound a little bit confusing? Let’s take a look at a real world example:
Jane works as a store manager and makes $25 per hour. After all of the taxes and benefits are taken out of her paycheck, Jane’s take home pay is $18 per hour.
Now, let’s look at some typical purchases Jane makes relatively frequently and without much thought:
Large Starbucks specialty coffee – $4
Lunch at McDonalds – $8
Case of Beer – $20
Tank of gas – $30
Happy hour with friends – $40
Now, let’s look at these rather mundane purchases in terms of how much time Jane had to give up in order to get the money necessary to make these purchases:
Large Starbucks specialty coffee – 14 minutes
Lunch at McDonalds – 27 minutes
Case of Beer – 1 hour and 7 minutes
Tank of gas – 1 hour and 40 minutes
Happy hour with friends – 2 hours and 13 minutes
(Math Formula: $ spent / $18 * 60 = # minutes worked to make the spent $)
When you look at these ordinary purchases by how much of your life you have given up in order to have necessary money, it puts things in an entirely different perspective. When Jane buys that Starbucks coffee, she has given up 14 minutes of her life to be able to make that purchase. While 14 minutes may not seem like much, if she bought a $4 cup of coffee every day of the year, she would have “traded in” roughly 3 days and 12 hours of her life.
Now, let’s look at what some less ordinary but more expensive items will cost Jane in terms of time:
Blu-Ray Player – $400, which equals 22 hours or just under 1 day
Widescreen LCD TV – $1,800, which equals 100 hours or just over 4 days
New mid-level car – $14,500, which equals 805 hours or roughly 33.5 days
When you look at Jane’s spending in terms of time, it certainly seems like she’s giving up quite a lot in order to make these purchases. For me personally, if you told me I had to give up 4 days of my life in order to buy a new TV, I would definitely think twice about making the purchase.
Don’t get me wrong, I’m certainly not telling you to not spend your money or occasionally splurge on yourself or your friends and family. After all, what’s the point of having the money if you’re never going to do anything with it?
That being said, I think that if you were to realize what you were giving up in order to make these purchases you’ll be a little more careful with your money.
