Seven years ago, when we were deciding whether to buy a new house, I did a cost analysis. The drive to and from work was frustrating. I hate driving. When you throw in traffic, construction, and other inevitable delays, I couldn’t help but think there was a better way to spend my time. Ultimately, we spent about $200,000 more for a house that was roughly the same size as the one we lived in but 15 minutes closer to our respective places of employment. The issue I see over and over again is people place so little value on their time. Fifteen minutes for $200,000? It doesn’t seem like a lot. But what is the lost time, what is the lost opportunity cost? I did the math. It added up to an hour of extra drive time between the two of us. One hour equals 365 hours a year, or, since we have now lived here for seven years, 2,555 hours. For me, this meant I have gained over 31 full work weeks since then. It’s like getting back six months. This dividend will continue to pay. Everyone says that time is their most valuable resource, and yet almost no one treats it as such. If you treated your time like you did your money, how differently would you spend your time?
Everything Costs Something: Understanding the Real Value of Your Resources
The statement “everything costs something” often sparks immediate resistance, with many people countering that “the best things in life are free.” However, if we delve deeper into the concept, we’ll see that this isn’t true. Everything indeed costs something, and these costs can be categorized into two primary buckets: money and time. Often, the true cost of something involves spending from both buckets.
The Two Buckets: Money and Time
When we think about costs, the first bucket that comes to mind is the money bucket. This is the most tangible and straightforward cost to measure. We pay for goods and services with money, and the financial transaction is clear and quantifiable. However, the second bucket—the time bucket—is equally important, though often undervalued. Time is a finite resource; once spent, it can never be replenished. Despite its crucial importance, people frequently overlook the true value of their time.
The Misuse of Time: A Common Problem
Consider a common scenario: someone drives to three different grocery stores to save a few cents on a gallon of milk or gas. While this might seem like savvy money-saving behavior on the surface, it often results in negligible financial savings when considering the time and effort invested. The time spent on such tasks could have been used more productively or enjoyably.
The Irreplaceable Nature of Time
The critical difference between money and time is that you can always earn more money, but you can never earn more time. Every minute spent is a minute gone forever. This concept is known as opportunity cost, which refers to the value of what you give up when you choose one option over another. When you spend an hour driving around to save a dollar, the opportunity cost is the value of what you could have done with that hour instead.
Evaluating the Best Use of Your Time
To make better decisions about how to spend your time, it’s essential to assess the highest and best use of this valuable resource. Here are some strategies to help you evaluate the true cost and benefit of your time:
- Identify Priorities: Determine what is most important to you. Is it spending time with family, advancing your career, pursuing hobbies, or simply relaxing? Knowing your priorities helps you allocate your time more effectively.
- Monetize Your Time: Assign a monetary value to your time. For instance, if you earn $50 an hour at work, consider if saving a few dollars by spending an hour on a mundane task is truly worth it.
- Opportunity Cost: Always consider what you could be doing instead. Is the alternative activity more valuable or enjoyable? This perspective can help you make better decisions about how to spend your time.
- Time Management Tools: Utilize tools and techniques such as calendars, to-do lists, and productivity apps to manage your time efficiently. These tools can help you stay organized and ensure that your time is spent on high-value activities.
- Delegate and Outsource: If possible, delegate tasks that are not the best use of your time. For example, hiring a cleaner might free up hours that you can spend more productively or enjoyably.
Dollars & Days: Balancing Money and Time
Since that move I mentioned at the start of this article, I have used that time to help build a business to eight figures. I have more than made up for the financial cost of the move. Balancing the cost between money and time is a delicate act. While it’s essential to be mindful of financial expenditures, it’s equally important to respect and value your time. Striking the right balance between these two buckets can lead to a more fulfilling and efficient life.
Everything costs something, whether it’s money, time, or a combination of both. By understanding and respecting the value of both these resources, we can make more informed and fulfilling choices. Remember, while money can often be regained, time is irreplaceable. Prioritize your time wisely, evaluate opportunity costs, and strive for a balance that aligns with your values and goals. In doing so, you’ll ensure that both your money and your time are spent in ways that truly enrich your life.