How much is your time worth?

How much is your time worth?

Lockdowns have caused many of us to reflect on the value of our time. Life is short.  Kids really do grow up fast.  How do you want to enjoy the valuable resource of time to live a meaningful life?

People have been wondering how we can make the best use of our time long before COVID lockdowns occurred.  In 1910, English novelist Arnold Bennett wrote a self-help book called ‘How to Live on 24 Hours a Day’.  Over 110 years later, his insights are still resonant:

Newspapers are full of articles explaining how to live on such-and-such a sum…but I have never seen an essay ‘how to live on 24 hours a day.’ Yet it has been said that time is money. That proverb understates the case. Time is a great deal more than money. If you have time, you can obtain money-usually. But…you cannot buy yourself a minute more time.

You have to live on this 24 hours of time. Out of it you have to spin health, pleasure, money, content, respect and the evolution of your immortal soul. It’s right use…is a matter of the highest urgency.

Perhaps one of the starkest and most memorable lines in his book is this:

We shall never have more time. 

After reflecting on our counterintuitive tendency to value money over time, Bennett strongly encourages his readers to pursue their dreams, even if they fail. When we listen to the regrets of the elderly and dying, they invariably lament on what they neglected to do, not what they did. It is, however, the trying which matters, the journey which fulfills us.

So why are people hesitant to pay for their time?  Some people may feel guilty spending money on “unnecessary” services they can do themselves.  It is, after all, often difficult to put a price on your own time.  Others just like to think they’re always busy – and complain about it to others! (Try not to be that person who, when asked how you are, replies “I’m so busy”!) 

Being busy all the time can make you feel like you’re accomplishing something, but most of the time it’s those little day to day hassles that cause the most stress in your life. Unfortunately, many people strained for time find it difficult to enjoy themselves because they always feel rushed if they’re not going directly to the next item on their To-Do list.  I have certainly been guilty of this myself.

Many of us complain about being busy yet fail to understand buying time is an investment, not an expense.  And it’s never too late to start.  As Bennett said:

You can turn over a new leaf every hour if you choose.

The idea you can reinvent yourself at any hour of the day is quite liberating. We can get stuck in ruts and tell ourselves we cannot change, but these are only excuses.  Bennett reminds us that just as money can be spent on anything, so can time.

We often tell clients ‘money is an enabler’.  If you can think about money in this context, it can be a game changer.

There are many ways you can buy yourself more time:

  • Pay someone else for tasks that bring you no joy.  Outsourcing gives you more time with family and to do stuff you want to do.
  • Budget your time as well as your money.  Most people don’t like budgeting because it has a negative connotation in terms of the stuff you can’t do. But budgeting your time can be a positive thing because it allows you to define the things you want to do.
  • Double down on the things you love to do. Research shows spending money on experiences, helping others and buying time can increase your happiness. Others are happy doing nothing in their down time. Some like working all the time.

Whatever it is you enjoy doing, the goal should be to do more of it and cut back on everything else when possible.  Define how you want to spend your time. 

The independence of doing things on your own terms changes everything in the same way that sleeping in a tent is fun when you’re camping but miserable when you’re homeless.  For many, the highest form of wealth is not the size of your portfolio but being able to control your time. 

Wealth can lead to time independence, but it’s never assured. It can be the opposite, as whatever created the wealth – whether a company or an inheritance – creates a claim on your time in equal proportion to its financial reward. A great number of CEOs fall into this category – they have an abundance of wealth and not a moment of free time or scheduling control even when it’s desired.

Charlie Munger, an American billionaire investor, summed it up: “I did not intend to get rich. I just wanted to get independent.” It’s a wonderful goal, and harder to measure than net worth.

There are two important things to keep in mind:

  • Desiring money beyond what you need to be happy is just an accounting hobby.
  • How much money people need to be happy is driven more by expectations than income.

A person whose expectations relative to income are calibrated so they don’t even have to think about money has a higher form of wealth than someone with more money who’s constantly thinking about making the numbers work.

This is another way of saying if you organise your financial affairs to achieve ‘peace of mind’, that delivers you a gift worth more than dollars and cents.  When clients tell us the greatest benefit they get from working with Stewart Partners is ‘peace of mind’, it is the most meaningful and rewarding feedback we can receive.

Once you begin prioritising your time it becomes much easier to pay for it because you understand how valuable it is.

One of the reasons our clients use an adviser is to achieve the gift of time.  This is one of the intangible benefits of financial advice.  The tangible benefits vary from client to client.  One recent study by Russell Investments concluded throughout the pandemic, financial advisers coaching clients to maintain a disciplined approach to their investment strategy added approximately 5.2% in value to their portfolios[i].

“Throughout the COVID-induced market dislocation and recovery, the most critical mistake non-advised investors made was to not hold the line on their investment strategies and sell out of equities after dramatic market falls – and then find it hard to time a re-entry as the market roared back to life,” Russell states.

While advisers largely prevented their clients from being among those that pulled an estimated $40.5 billion out of the superannuation system when valuations were at their lowest, Russell says the 5.2% savings figure comes from several sources.

“The value of an adviser calculation is drawn from five key elements: preventing behavioural mistakes (2 per cent); advising on appropriate asset allocation (1.1 per cent); optimising cash holdings (0.6 per cent); tax-effective investing and planning (1.5 per cent); and the priceless value of expert wealth management knowledge derived from years of market experience,” Russell states.

It’s worth remembering after the Australian stockmarket fell 33% during February and March 2020, it has since increased by 58%. 

Imagine missing out on that journey.  Think of all the time that financial independence and peace of mind could have bought.


Author: Rick Walker

[i] 2021 Russell Investments Value of an Adviser Report , Russell Investments


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