An education in personal finance promotes a carefully examined life. Once you create a system for the money problems, it makes sense to re-use it. You've heard the expression: time is money. But sometimes I treat time like my private vault and guard it with my life. Other days, it's like a worn punching bag. I abuse it with no regard.
Tracking time is tough. It's arguably the most precious resource in the world. This is compounded by the fact that each person's time is unique to their own life. You could have been Gram Parsons or Keith Richards. If you knew beforehand, I imagine it would change the way you use this precious resource.
I am someone who tends to over-subscribe himself. Thus, my wife & I have started an exercise. We now track time the way we track our household budget. Here's a comparison utilizing the same expense categories:
|Category||In Money||In Time|
|Fixed||Mortgage, Rent, Groceries, Utilities||Work, Chores, Errands, Commute, Sleep|
|Investment||Stocks, Bonds, Investment Real Estate, Business Development||Education, Date Night, Household Projects, Business Networking|
|Charitable||Charities, Tithes, Family/Friends in Need||Religious Gatherings, Helping Friends, Volunteer Work|
|Variable||Fun things, Vacations, Desired Possessions||Fun things, Vacations, Desired Experiences|
Let's run the numbers:
Total Hours / Week: 7 * 24 = 168
- Work: 40 Hours / Week
- Commute: 7 Hours / Week
- Chores & Errands: 10 Hours / Week
- Sleep: 7 * 7 Hours = 49 Hours / Week
- Total: 106
For the sake of simplicity, we'll assume that the fixed costs are the same every week. This leaves 168 - 106 = 62 Hours or 36% of your week leftover for allocation.
I find it intersting that the remaining percentage of time is not too far off from the 40% many financial advisors target for 'leftover income.' This is the kind of money it would be nice to have after all the fixed expenses are paid.
For my plan, I am going to prioritize investment at the same rate for variable time, and investment/variable time at roughly 4x the rate of charity. Here's how that shakes out with the remaining 62 hours:
- Investment: 27.5 Hours / Week
- Variable: 27.5 Hours / Week
- Charity: 7 Hours / Week
Despite only being 36% of your week, this actually seems like a tremendous amount of time. The plan works for me because it makes way for a full weekend of leisure should I choose that route.
Alternatively, I may spend my time out and about tasting beers, watching movies, and hanging with old friends during the week. If so, I may turn my attention to a household project during the weekend.
This week, Chris Sorenson at Macleans of Canada wrote: Working hard, hardly working: Our problem with productivity. Despite the long hours we put in, we're not getting the job done. US productivity is only up 1.3% in the last 8 years, and this is despite the rising hours demanded from workers:
A lot of people spend a lot of hours at work, but aren’t necessarily working a lot of hours.
If you know me, you know I live and die by the ways of Getting Things Done (David Allen). What is not written down cannot possibly be quantified or managed. Use your calendar, use your task list, empty your inbox.
If you're caught up in busywork for your fixed or investment time expense. It will inevitably come out of your variable time.
The Importance of Limits
I have found that the most powerful aspect of this calculation is placing a cap on the things that are bound to cause stress in excess. Most people tend toward either leisure-holic or work-aholic.
You'll have to set limits based on your weaknesses. Too many business meetings? Spend more time with friends. Too many TV binges? Learn a foreign language.
There are also times you have to break the rules. Sometimes you're studying for a big exam or certification. Other times you have two weddings on a single weekend. Whatever your reason: be prepared to pay the debt when you return. When the budget goes out of balance, the difference is eventually called due.
We're not running a short term race here. There is no sense crafting a great financial life you're not allowed to live it.