Relationship between Time and Money

November 5, 2024

Understanding the True Relationship Between Time and Money

If I could go back 15 or 20 years, I’d focus more on understanding the real relationship between time and money. Many financial struggles could have been avoided with this knowledge early on, and it’s something the wealthy often understand sooner, which is why they get ahead. But it’s never too late to start! Once we grasp this concept, we can act right away to improve our finances and quality of life.

Books to Guide You

Over the years, I’ve read books that have shaped my financial thinking, and a few standouts are essential reads:

  • The Psychology of Money
  • The Complete Guide to Money by Dave Ramsey
  • I Will Teach You to Be Rich by Ramit Sethi
  • The Total Money Makeover by Dave Ramsey
  • The Richest Man in Babylon

These books dive into the psychology of managing money, living within our means, and ultimately achieving financial freedom.

Three Levels of Time and Money Relationship

  1. Time Equals Money: The Basic Level Many of us start at this level. Say you make $100,000 a year and live comfortably, covering bills and enjoying vacations. With a job or as an independent contractor, you trade time for money. For example, if you work 40 hours a week, that’s 2,000 hours a year. Dividing $100,000 by 2,000 gives you $50 an hour, which is decent.Here, our skills, knowledge, and experience make our time valuable, and we trade it for money, allowing us to live comfortably. This is a balanced state, but it’s just the start.
  2. Time Is Less Valuable than Money: The Struggle Phase Many people find themselves here, especially early in their careers. They’re working multiple jobs, maybe 60–70 hours a week, just to cover their bills because one job at 40 hours doesn’t pay enough. This situation is tough, leading to burnout and financial strain.The goal here should be to cut costs, live below your means, and avoid overworking just to stay afloat. When your income aligns with your needs, you can focus on developing skills to increase your hourly rate, moving into a healthier “time equals money” balance.
  3. Time Is More Valuable than Money: The Growth Phase This is where you aim to leverage your time for greater value. When you reach this level, you can focus on high-value tasks and delegate lower-value ones, allowing you to make more money with less effort. Skills, experience, and systems are crucial here—they increase the worth of your time.Now, instead of trading all your hours for dollars, you’re saving and investing. This builds freedom—not just financial, but also time freedom—so you can live life on your terms.
  4. The Investor Level: Money Works for You At this stage, you’ve built up savings, investments, and assets that earn money even while you sleep. Your time is no longer tied directly to your income. This is financial freedom—the ultimate goal where you no longer trade hours for dollars, and you have both time and money to enjoy life.

Final Thoughts

The relationship between time and money is essential to understand, especially for anyone looking to improve their finances and life overall. Each phase has lessons to offer, and by understanding where you are now, you can work toward more financial freedom.

What do you think? Let me know in the comments, and don’t forget to like, follow, and share if you enjoyed this. I’ll keep bringing you insights to help improve your relationship with time and money. Thank you!