There is no way to become an expert in time. Meaning? It is difficult to know with 100% certainty if you’ve made the right decisions until you’re 80 and look back saying “I have no regrets”. If that is the case then you’ve absolutely made it (visit a hospital and you’ll see that the vast majority are unable to say this). Time can only be understood or bucketed into segments and we’ll take a stab at outlining some key things we’ve learned (or think we’ve learned) about time.
Time and Value
Time is Second Only to Health: Largely speaking, the only thing more important than time is your health. Why? It can buy you more *valuable* time. If you’re eating healthy, working out and avoiding unnecessary stress (probably the most difficult of the three) you’ll increase your health. By increasing your health you’re elongating the amount of time you have and also increasing the quality of the time you have left! A year of life in a hospital bed at 40 is definitely not equal to a year of life for a man who can still play every single sport on the planet. In addition, time is certainly more valuable than money since $$$ can eventually become perpetual (Financially Independent).
Time is Not Valued Equally: Now many of you see the conundrum here! Why do we focus on making money early if time is more valuable than the money? Well, if you get rich early on you can take advantage of *more valuable time*. A full year of free time to do as you please at age 30 is not equal to a full year to do as you please at 60. There is no real debate there since the human body degrades over the years. Knowing that time is not treated equally, somewhere around 40-45 (guesstimate) is when each subsequent year is less valuable than the prior year (capacity for new life experiences). To avoid negativity, yes there are millions upon millions of things you can do at 45+. Ignoring the fact that you’re less malleable when compared to 30 is preposterous.
The Masses Do Not Value Time: The masses value their time at nearly zero. They will look at the highest “hourly wage” as the best way to earn income and the best way to maximize their time. In addition, instead of looking at ways to create recurring income, they will look for ways to reduce one-time costs. This is the exact opposite of the correct way to get rich. If you’re creating nothing but recurring long-term income the one-time costs become meaningless… For fun here’s a quick way to see if your colleagues understand the value of time. Ask them the $5K question “Would you rather work all day today and make $5,000 or would you rather work all day and generate $1 per day forever?”. The correct answer of course is $1 per day forever. At a 4% interest rate assumption (not even risk free!) $365 a year is equal to $9,125 vs. the $5,000 one time outlay. Now… ask yourself if you can work all day today and create something that makes you just $1 a day forever (if you can your “annual wage” is $3.33 million!). The fact that no one reading this blog will trade their time for money (long-term) is the greatest thing about time (others are willing to happily do so). Another way to put it? If you can really find a way to generate just $1 a day for life and do this for a year… Your income is $133,225 for life.
Time Can Increase Your Long-term Value: The second greatest thing about time is that it rewards you handsomely for making the right decisions. If you made the right moves early then the rewards compound for you. This is pretty simple and the rule of 72 is the best way to do back of the envelope math. All of your assets should double in value every ~10 years assuming it gets a 7.2% growth rate. Taking it a step further, correctly used time allows your future utility to increase since it works in your favor to increase leisure and increase the set of items you can do with your leisure time.
Time and Risk
Risk is Almost Always Related to Time: We don’t know if we’ll wake up tomorrow and get hit by a bus. We don’t know if we’re making the right decision at all times (long-term utility). What we do know is that risk is primarily related to time since you could be doing something else. Given that backdrop, the biggest risk people take is doing nothing. Indecision is the worst use of your time since it leads to a 100% failure rate. The faster someone can make quick risk adjusted decisions, the more likely the person is to maximize their time over the course of 80 years.
As Time Passes Activity Risk Increases: If there is something you want to do today, we suggest doing it now if you won’t be able to do it ~3-5 years from now (stated this many times in the past). This is specific to anything that won’t ruin your financial life forever. The reason? Activities go away as years go by. If there is a specific recording artist you love, it is best to go and see them ASAP (their careers are shorter) similar to sports if that is your hobby.
Reliance Risk Increases: As time passes by your employment risk will increase. You’re going to be earning more money (more cost effective to be fired!) and you’re less likely to replace that income at another company. To put it another way… reliance risk goes up over time. Even in items outside of employment if you rely on any single item for either happiness, sense of life meaning or income, the risk of it going away goes up over time. Many people become suicidal after earning large sums of money and seeing their company go bankrupt or being let go from their high paying investment banking career. Risk related to *Reliance* on one specific item (for anything) goes no where but up over time due to a large amount of psychological factors.
Risk to Adaptability Increases: As time passes by our ability to adapt decreases. This is also due to psychological factors. If someone believes they have made the right decisions their entire lives they would have to admit they made a large mistake over 5, 10, 15, or 20 years. Stuck in their own minds. This works both ways. If we try to convince a retired millionaire that he wasted his time working a career for 50 years just to retire at 70…. It wouldn’t work. Similarly, there is no point in telling him such a rude thing because there is nothing that can be done to reverse the decision in the first place! When you’re in your 20s? You’re a jet-ski that can move and change directions rapidly. In your 30-40s? You’re a standard boat… and by 60? You’re a tanker ship with the decision already made. As a rule of thumb, if someone is hard set on a belief and has maintained the same thoughts for more than 5 years… go with “smile, nod, agree” to avoid confrontation.
Unproductive Use of Time
Arguing With People: This is still prevalent on every single platform you can find from Twitter, to Facebook to internet forums etc. It takes a long time to master this skill since it requires “quitting”. This is not something in the vocabulary of ambitious people, so it is rarely mastered! Arguing with people isn’t a good use of time because at the end of the day around 50% of people just won’t like you anyway. The presidents (Trump, Obama, Bush or Clinton etc.) all of these people don’t have a 100% approval rating. Just call half of the population a wash and chalk it up to the “numbers game”. There are 7 billion people in the world, it is better to find one of those 3.5 billion who will at least be neutral to you and have a real discussion on any given topic.
Doing *Everything* for Money: The best way to burn time is to focus 100% of it on money. That’s a strange comment given our website draw but it is true. No one wants to be around someone who is constantly worried about earning more money from ages 20 to 50… It eventually becomes meaningless. These individuals usually have trouble socializing and making long-term friends which is not a productive use of time (there is an eventual cut off). This blog and our book are no different, earning a few bucks selling an e-book is significantly less productive (maybe we’ll blow it all on throwing a party for our favorite commenters!).
Giving Up Time to Cut Costs: Re-read the first paragraph under unproductive use of time and you’ll find that no frugality blogger will ever agree with us. This is fine. We won’t argue. We just outline the points here which show skills are learned when you earn; no skills are learned when you do nothing. If you’ve already cut your costs to the bare minimum it’s not going to go any lower… so why would five hours of research to save money on coffee outperform $2 spent meeting a potential customer for coffee? We give up.
Worrying About Opinions of Other People: Unless someone has what you want, their opinion shouldn’t be that meaningful to you. If you admire someone’s ability to earn money it makes sense to listen to their money advice. If that same person can’t do a pushup, probably best to ignore his fitness advice. So on and so forth. Lots of time is wasted worrying about living up to other people’s values. Create your own values and live according to those. If you’re not engaging with people who dislike you and you have some fun activities outside of making money, the chips will fall into place over a long period of time that will delete opinions from people you don’t respect in the first place. It’s a “win win”. The people who will never like you? Well they never get a chance to meet you either!
Thinking About the Past: It is one thing to learn from the past it is another thing to dwell on it. Everyone will make a wrong turn here and there. Maybe you take the wrong career or join the wrong firm. Maybe you jump at the wrong time. It doesn’t really matter anymore since it’s in the past. What really matters is learning if there was a “blind spot”. Find the blind spot and don’t let it happen again. Finally, maybe the decision was actually the *correct* move and it just didn’t happen to work out! If that’s the case, thinking about anything negative from the past is a colossal waste of time. Only positive things from your past should be remembered to improve your focus and emotions.
Time and Excitement
Time Spent to Achieve = Dopamine: Anyone who isn’t financially independent yet (but is serious about it) will receive an enormous amount of dopamine when they cross the finish line. We’re not joking when we say we’re jealous of those people that are on their way and have a clear path there. Becoming financially independent can take up to 10-20 years (standard version) and there are very few things in life that take such a long time to achieve. Think about other events where an immense amount of joy is shown and they are directly related to the time it took (athletes winning championships, parents watching their kids graduate college, so on and so forth). Once you experience something like this your views on time change forever.
First Time Experience Excitement: Generally, the first time you do something new from an experience perspective it has the most value. This is different from the large amount of dopamine obtained from achievement or success since it’s a repetitive task. If you go out and get drunk for the first time it’s typically a lot of fun… do this 200 times and it certainly wears you down. This is seen in drug addicts as well where they need more of it to achieve the same “high”. Knowing that dynamic, having a long list of interests is a great thing since you can get the “first time experience” hundreds of times over the course of your life (it also prevents you from developing a plain and boring personality as well!)
Time and Consistent Excitement: You’re a lucky person if you find five things you can do every day that constantly give a baseline level of dopamine rush. This can be anything from athletics to music to travel to reading. We only say “lucky” because it takes a good amount of effort to go through many first time experiences (second point) and find one that remains relatively constant. You’ll find that the main ones that create constant dopamine levels to rise rarely cost thousands of dollars to maintain.
Concluding Remarks on Time
Overall, life is a big balancing act. In order to obtain money you have to give up time (building recurring income streams of course!) and you also have to recognize that the time you’re using could be spent doing other exciting things that will become harder to do as we all age. We would really summarize this into 10 key points: 1) since health can improve both time and money we’d focus on activities that maximize this – athletics, clean diet etc., 2) consistently review activities to make sure life doesn’t pass you by and you don’t become a boring guy, 3) always look for ways to create recurring income and realize that 99% of people will trade their time for money happily – will fail the $5,000 question, 4) fail a bunch of times as early and as often as possible, this way as risk increases in the future you’ll be well positioned to avoid big mistakes, 5) diversify your life as there is no need to rely on any singular item for meaning, money or emotional support, 6) Don’t bother arguing with people – easier said than done!, 7) realize that money is only a tool and eventually loses utility, 8) the amount of time it takes to achieve something is directly related to the dopamine obtained, 9) have a growing list of first time experiences – things to try and 10) unlike money, time cannot be taken back choose wisely