Featured, Financial Psychology, Life

The Cost of Trading Time For Money

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There are a lot of things I noticed when I realized “I’m an adult now!” A few of them being:

  1. I have to work for my money. Money ain’t growing in the form of online transfers from my parent’s bank account anymore.
  2. I get excited about mundane stuff. I get excited about buying things like appliances, plants, and organizational things. I get excited when I have no social obligations on the weekends so I can do 4 loads of laundry guilt-free.
  3. Time passes really quickly. It feels like I went to Thailand 2 months ago but it was almost half a year ago. And I’m only 27, whaaat.

Time Flies

There are many theories about time perception, but I want to focus on one. The theory says that the reason we perceive time speeding up as we age is due to the decreasing proportion a chunk of time means in respect to our entire life.

So when we’re a baby and we’re 1 years old, a year is 100% (1 year/1 year lived) of our life.

When we’re 25, a year is 4% of our lives (1 year/25 years lived).

When we’re 50, a year is 2% of our lives (1 year/50 years lived).

When we’re 75, a year is 1.3% of our lives (1 year/75 years lived).

And so on…

See this great visual project showing how this affects time perception by Max Kiener that inspired this post.

So what struck a chord after I heard this theory about time perception? Well, mainly the mental reality that the older we get, the faster our life will be lived. The value of a passing year becomes “cheaper” in our minds the same way the cost of a $10 sandwich is “cheaper” if our salary increases.

Not only will we have fewer years left to live, but those years will also feel shorter. Even if each new year feels cheaper, each passing year becomes more and more valuable to us for this reason. It’s the opposite of the exponential growth we experience in our money.

That’s the basic concept we plan our retirement around. We plan it around the idea that time is even more valuable when we have less of it so we want to trade less of it for money. When we’re younger, it’s easy to trade time for money. In fact, it’s really all we can do. When you don’t have much else (no experience, no money, no career), the one thing you can trade is time in exchange for cultivating the things that will meet your basic needs and bring security.

Too Much Of A Good Thing

On one end, there are the super frugal savers. They will trade time for money 90% of the time. They prefer to DIY every time even if it takes 5x as long. They don’t mind the inconvenience of doing a task that could be done much faster by someone else.

On the opposite end, there are also people who never trade time for money. They value their time so much even at 22, that they will always pay the premium which saves time. It’s #yolo. It’s saying yes. It’s entitlement saying “Yes, I deserve this because I got up and went to work today.” It’s the idea that even if you don’t think something is worth the dollar value, you’ll do it because why not? Life is short. Carpe diem.

Most of us are in between, or we skew more towards one end. There’s a very very fine balance of trading time for money. Money is a finite resource that we need to keep replenishing. Money is a finite resource we need to set aside to grow. But time is also finite and it can’t be replenished or extended, at least not in any significant way.

What Is Valuing Time?

Because it’s finite, time is arguably the most valuable. But we can’t always default to trading money for time, though there’s absolutely value in doing that.

Valuing time is not the same as doing what feels good now. Valuing time takes into account the overall time we have. Valuing time is doing some stuff that feels good now, doing some stuff that feels meh now, and opening up the option to doing some stuff that feels good later. Valuing time is understanding when trading money for time today is just borrowing both time and money from the future. Valuing time is understanding when trading money for time today is adding value to you today and tomorrow.

Not valuing time is doing only what feels good now. Not valuing time is downplaying the rest of your life in your mind because you’re lazy now to invest in your future. If you only live once, why the hell do you want to resign yourself to only be alive for 50 of those years? It was statistically reported by the CDC in 2014 that the average US life expectancy is 78.8 years. So even if you don’t think you’ll be alive at retirement age, you’re statistically likely to be. Don’t end up like the granny running out of money from this story I overheard in a coffee shop! Not valuing time is spending a disproportionate amount of time to save a few dollars.

There’s This Thing Called Lifestyle Inflation…And It Ain’t All Bad

The original post that initially got me thinking about time was “Why I’m Embracing Lifestyle Inflation” from The Green Swan. It made me think of the ways I’ve embraced lifestyle inflation since making my salary jump, and how upgrading your lifestyle in certain ways are completely worth it even if you haven’t reached financial independence.

Financial independence, at the end of the day, is just an event. Your life before FI is still your life. And your life after FI is still your life. You need to find ways to make your time valuable and meaningful to you on both sides of FI. That means deliberate trade offs, the key word being deliberate.

I’m grateful my income now allows me to call a car home instead of walking + waiting + taking 2-3 bus/train transfers + walking which takes 3 times longer. I’m so glad I don’t harrow over the decision to turn on my heater when it gets cold, or cringe at the idea of buying the next most expensive fish sauce (seriously, I would sometimes waffle in the aisle for 10 minutes debating whether I should save $2!). I’m so glad I can now save more of my time by paying to work in a space that makes me more productive.

At the same time, I haven’t just gone out and bought a brand new car or eat out everyday because ultimately my time and money can be doing better things.

The Balancing Act

It’s all about balance.

I’ve noticed that I bring in tons of frugal habits into my current life even though I only really needed that particular habit or rule because I was so strapped for cash. At my old apartment, I had to build a closet door frame + install a bifold door to segregate my room from my roommate’s.

I didn’t want to (or feel like I could afford to) pay someone a few hundred dollars to do it. I didn’t even want to pay for the $15-$20 cab fare it would take to drop off all the materials from my shopping trip at Home Depot. So what did I do instead? I commuted the materials back to my apartment by subway via 5 separate roundtrip subway trips. Really efficient use of time eh?

Sometimes I’ll need to run an errand, and I’ll realize I have these crazy thoughts like, “I can run this errand for only $2.75 if I take the bus and do 3 transfers in the same 2 hour window! Carrying 30 pounds of crap on to the bus is nbd!” It’s great and frugal but seriously?! It is SUCH a major inconvenience of time and physical discomfort! To save something like $8.

Or I notice sometimes I just default to going window shopping because shopping when I was a child was such a special treat since my mother was so frugal! I know with my life now that shopping isn’t anything special, yet I still hold this idea in my mind that it is because I’ve been conditioned to automatically think that my entire life. If I want to treat myself, I need to ask myself, “what do I really consider a good reward for something I’ve worked hard at” instead of defaulting to an answer that’s just come to be through past circumstances.

Moderation. We need to constantly ask ourselves, is the time I’m spending doing ____ bringing value to my life? Am I spending time doing this because I [still] need to or because I want to or because I enjoy it? Sometimes we bring in old spending habits (whether on the frugal or spendy end) because we don’t realize we don’t need to keep doing what we’ve always done.

How do you value time vs money? What do you think is the ideal balance? What is the money you’re saving good for and what is the time you’re saving good for?

Jing is currently a software engineer based in Oakland, CA. She left her job in New York, moved to San Francisco unemployed, and more than doubled her salary in 4 months.

6 thoughts on “The Cost of Trading Time For Money

  1. Love this post! Moderation/Balance is the key all aspect of life and of course financial life. What you explained is a good balance of living in the present vs in the future. I think most of us FIers are natural planners so living in the future seems easier. So then it is more important to encourage ourselves to be more present even though FI is close. I feel guilty sometimes for thinking I wish the next 3 years will just fly through and then I will be FI, forgetting that the next 3 years are my final 20 something years and I am not getting any younger by day.
    Lots of happiness only occurs once in that moment, so I don’t want to delay it for later. A vacation in the middle of work will surely feel different compared to if we are full time traveling. A little purse I really like now acting as a treat will bring lots of happiness now vs 20 years now when I am a grandma 🙂

    1. Yeah, I definitely noticed after a couple months of blogging that I was dreaming so far off into the future, and I had to remind myself that I’m living today and still need to enjoy the present for what it is. I’ve had the exact same feeling–wishing the month would go by when I’ve had a tough spending month all for the sake of resetting my budget to $0! That’s not a good excuse at all to completely skip a whole month in my life! Congrats on being so close to FI!!

  2. My time vs. money vs. energy balance has changed along with my resources constraints. When I was a college student with little money but a flexible schedule, I could and would visit all the free food events, sign up for paid psych experiments, etc. But as I get older and have more money to my name, I am less pinched for cash and more pinched for time. And so, at least sometimes, I’m more willing to take the pricier but faster route: doing the wash/dry/fold service or taking a Lyft.

    It is definitely hard for me to talk down my inner frugal grandma when I feel my lifestyle creeping too much too quickly. And that acts as a natural check to make sure I am not going overboard.

    1. I was the exact same! I stood in line for SO long just to get a $4 Ben and Jerry’s! And I’ve done plenty of those paid psych experiments too! I try not to go too overboard as well, and I think the best I can say to avoid completely lifestyle creep is to never create a default rule for yourself. Even though I do take Lyft/Uber more frequently now, I still try to weight the option every time of taking the bus/BART vs. Lyft/Uber.

  3. Hi Jing,

    Now that I’m starting the second half of my life, I view time a different way. To me, my time is even more valuable because it’s limited. I’m 44 and hope to live until I’m 88. One year of my life is worth twice what it was as a 22-year old.

    I completely agree that we need to take a balanced approach to everything we do. Honestly, we really need to assess whether or not what we’re doing is worthwhile. I do not get stressed out about much although I have a greater sense of urgency to do things that are more valuable to me. That’s why I’ve cut certain things out of my life like TV. I don’t want to have lived my life watching others. I don’t want to reminisce about the best movies or TV shows. On my death bed, I want to reminisce about real life experiences.

    Thanks, Jing.

    1. Darren, that’s such a great approach to think of the time we have left! I just notice time is moving so quickly even at 27 that it scares me to think how quickly the second half of my life will move! Indeed, it seems like there’s such limited time to do everything I’m interested in.

      I’ve cut out a lot of TV as well, though I still indulge every so often when I’m just feeling burned out from filling life with too many activities, but I cringe at how much time I threw away just watching TV to check out of my own life when I felt powerless and unhappy a few years ago. I really wish I had spent that time improving myself and just getting myself to start something, anything!

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