Time, Money and Life

As I progress in life, my daily schedule has become increasingly more hectic. As the years pass by, time seems to pass by even faster too. I realized that time is now the most important resource to me, as it is a non-renewable resource. Once it is spent, I can never get it back.

The good thing about time is that we do have the choice of how we want to spend it. In addition, everyone is given the same equal amount of time every day to make full use of it. Time can be used in different ways. We can use time to earn money, building family relationships or go exercise etc. Usually the way we spend out time is dependent on our value placed on the item. For example, if we place more value in relationship, so we tend to spend more time interacting with people. If we place more value in earning money, we may spend more time at work to make more money.

What goes along with the concept of time is also the concept of sowing and reaping. How you use your time (sowing) is what you get in the end (reaping). For example, if you spend your lifetime focusing on work only, you could make a lot of money compared to others. However, if you spend time on others, you will build many good relationships. For people who spend their time creating a flexible career, they can enjoy more freedom.

In this article, I shall explore on how time, money and knowledge are inter-related to one another and how you can use them together to gain more time in your life.


First, let us look at the relationship between time and money

Assuming 2 persons, John, and Andy. John started saving money when he enters the work force. He started saving in the first 15 years of his working life and then stop saving for the next 15 years. While his friend Andy decide to put off saving money in the first 15 years, but he starts saving 15 years after he had started working.

If both of them could save $10,000 per year at 3% interest, here is how their yearly savings will look like over the 30 years.

01 $                   10,000.00
02 $                   10,000.00
03 $                   10,000.00
04 $                   10,000.00
05 $                   10,000.00
06 $                   10,000.00
07 $                   10,000.00
08 $                   10,000.00
09 $                   10,000.00
10 $                   10,000.00
11 $                   10,000.00
12 $                   10,000.00
13 $                   10,000.00
14 $                   10,000.00
15 $                   10,000.00
16 $                         10,000.00
17 $                         10,000.00
18 $                         10,000.00
19 $                         10,000.00
20 $                         10,000.00
21 $                         10,000.00
22 $                         10,000.00
23 $                         10,000.00
24 $                         10,000.00
25 $                         10,000.00
26 $                         10,000.00
27 $                         10,000.00
28 $                         10,000.00
29 $                         10,000.00
30 $                         10,000.00
Savings accumulated at the end of 30yrs$289,765.02 $185,989.14


At end of 30 years, John would have saved $289,765 while Andy can only manage to save $185,989. Even though John and Andy had saved the same total amount of money, by starting early, John is able to accumulate 55.8% more than Andy at the end of 30 years.

This example has illustrated the power of compound interest. By starting early, John savings was able to grow for a longer period at 3% per year. Thus, his savings has increased exponentially over time.

Clearly, we can see that John is using time to his advantage compared to Andy. By starting early, John can accumulate more money. With more savings, John can use the money to do more things that he like. For example, he can retire earlier compared to Andy. Here, we can see how we can use time to help us. By starting early, we can actually “save” a lot of time in the future.


What if Andy wants to save the same amount as John?

Let us now look at the same example but from another angle. What if Andy would like to achieve the same amount of savings as John at the end of 30 years given that he started out 15 years later?

01 $ 10,000.00
02 $ 10,000.00
03 $ 10,000.00
04 $ 10,000.00
05 $ 10,000.00
06 $ 10,000.00
07 $ 10,000.00
08 $ 10,000.00
09 $ 10,000.00
10 $ 10,000.00
11 $ 10,000.00
12 $ 10,000.00
13 $ 10,000.00
14 $ 10,000.00
15 $ 10,000.00
16$ 15,579.67
17$ 15,579.67
18$ 15,579.67
19$ 15,579.67
20$ 15,579.67
21$ 15,579.67
22$ 15,579.67
23$ 15,579.67
24$ 15,579.67
25$ 15,579.67
26$ 15,579.67
27$ 15,579.67
28$ 15,579.67
29$ 15,579.67
30$ 15,579.67
Savings accumulated at the end of 30yrs$289,765.02$289,765.02


We can see that for Andy to save the same amount of money as John, he will have to save $15,576.67 per year. That is an additional 5,570.67 per year! That may mean that Andy will have to work harder or work longer hours at his job to gain that extra savings.

Sometimes, I hear the saying “Time is money”. I guess it could be referring to the concept of time value of money here. How we can achieve more by using time as the leverage.


How can we use time leverage to an even greater extend?

One way to obtain an even greater leverage from time is getting a higher return from our savings. What if John can save at 6% interest instead of 3% interest?

 YearJohn (at 3% interest)John (at 6% interest)
Savings accumulated at the end of 30yrs$289,765.02$557,822.16


With 6% returns, John will be able to achieve $557,822.16. That is $268,057.15 more compared to3% returns. He did so by leveraging time together with higher interest rate to help him accumulate more money.

It is like working hard vs working smart. While you work hard, is your money also working hard for you too? I am a firm believer of working hard, however adding some “smartness: in the work can greatly reduce the time taken to reach our desired results.


Is it so simple?

It seems easy to say that I want to have higher returns on my savings. However, to have higher returns usually entails taking on more investment risks. So, the key question here is: How do we get higher returns, yet being able to minimize our investment risks?

I firmly belief that by having the right investment knowledge, you will know where to put your money, make informed decisions and invest safely.

However, getting the right investment knowledge requires your time. You should set aside some time to read, attend courses or seminars to get the right investment knowledge. I have personally seen people who wants to get rich quick and skip the whole learning process. They got themselves into risky investments in hope for a quick and huge return. In the end, they lost all their investments or a major part of their life savings. To me, these savings signify the years of hard work and savings of these people. It is painful to see them wasting all these “time” through such risky investments.

Of course, there is a dilemma here. Due to our hectic schedule, we may not have the time to read or attend all those investment courses. Yet, we still need to invest smarter. Is there another way to do it?

Instead of using your own time to learn, you can choose to leverage on other people’s time and expertise. For example, if your water pipes are choked, you can choose to learn how to clear it yourself or you can get a professional plumber to do it. The tradeoff here is between time and money. The professional plumber should do a much better job than me, and I just need to pay him a fee, but I get to free up my time to do other things. Similarly, you can also engage a trusted professional in managing all your investments so that you can leverage on their professional knowledge.


A simple formula you may want to take a look

This is how I look at the relationship on time, money, and knowledge:

Money = Time x Knowledge

Do note that the accumulation of knowledge is like the accumulation of money. It can compound over a period. Thus, by starting early, you will be able to accumulate a lot more knowledge than someone else who started out late.


Time remains a non-renewable asset

We can use time to make money, but no amount of money can buy back any of our time. Hence, it is important to use every minute of our time well and use it to our advantage. By using time smartly, we can leverage on the usage of time to help us gain an advantage in our savings. With more savings, we can possibly use it to do the things that we like or retire early. Of course, life is not just about money, it is also about having meaning too. There is no point in having all the money but poor health or not doing the things that you wanted to do in life. Having a balance is important in life. So, let us all use our time wisely and to its fullest potential.

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