Time Is Money

Know What Your Hours Are Really Worth

TL;DR

• If you earn £20/hour after tax and want a £4 coffee, it will cost you 12 minutes of your life

• Track 1 week of transactions and see what your time buys

• Compounding is when interest earns on itself over time - make sure it works for you, not against you

*Coming January 2025

The New Question

Here's a task for you the next time you are considering buying something - consider asking this question:

• "Is this worth X hours of my life?"

Phrasing it in this way means that you get to decide if it is worth buying and have that clarity of thought, with no guilt or judgement.

If you decide "yes", then brilliant, you've earned the money, enjoy it! If "no", then you've empowered yourself to make the choice, epic!

Here are some examples for a person who gets paid £20/hour after tax to give you some ideas:

• £4 latte = 12 minutes

• £9.99 Netflix subscription = 30 minutes

• £600 phone = 30 hours

• £3,000 holiday = 150 hours

Here is how to calculate your time wage using the figures above:

• £20 per hour = 33p per minute

• £4 latte = 400 pence

• Therefore, 400 pence divided by 33 pence per minute = 12 minutes

The Compounding Effect

Compounding is when your interest that you have earned from your first year then starts to earn interest on itself in following years.

Over time, this earned interest grows more on itself and can end up being exponential if you have given enough time for this to happen.

This is typically the case with long term investing over 20 years and beyond but it is never too late to get started.

Even though the best time to start would have been 10 years ago, the next best time is to start today. Beware that your capital/money is at risk but we cover more on this in the "Investing" section.

You can play around with different compound interest calculators online and see how the numbers really add up.

Be wary that compounding can also work against you if you are not careful with debt and paying off credit cards. Getting hit with 20%+ credit card interest each month is not the compounding effect you want to experience.

Action Plan

Here is your 3 step action plan, now you know more about the concept of time and money:

1. Track every £ spent this week with no judgement

2. Work out your real hourly rate using the calculation above

3. Ask yourself "is this worth x hours of my time?" on one purchase