I recently discussed how a dollar isn’t a dollar.
But I’ve also found, over time, that a year isn’t a year.
A Dollar Isn’t A Dollar
It seems that for some reason we tend to value things with a 1:1 ratio. And that’s true for both money and time.
We might compare what kind of money we could earn at a job we’d probably enjoy against an extra $10,000 or $20,000 per year at a job that’s kind of a bummer and automatically conclude that the latter must win out because it’s… just a lot more money. But is it that the right choice? Are those dollars one and the same?
I’ve realized over the last year that a dollar earned doing something I love and a dollar earned doing something I don’t enjoy are not one and the same. I value each one of them far differently. Just like a passive dollar is worth far more to me than an active dollar – due to taxes, effort, and time to procure – a dollar earned doing something I appreciate and take some pleasure in is worth much more to me than a dollar earned in an activity that kind of bums me out.
And just like a stock has both a price tag and intrinsic value – they’re rarely, perhaps never, one and the same – I’d argue so does money and time.
The Time Value Of Money
As investors, we’re all familiar with the concept of the time value of money, right?
The time value of money is basically the proposition that money in the present is worth more than the same amount of money in the future due to its potential earning ability. If money can earn a return of some type, then money is always worth more the sooner it is received.
This is basically why we invest our money and expect a reasonable rate of return on that investment.
As such, a dollar isn’t a dollar here, either. A dollar today is worth far more than a dollar in 30 years. Not only do you have the earning potential of that dollar today, but, due to inflation, a dollar in 30 years will be worth far less than a dollar today.
The Time Value Of Time
While the time value of money is a well-accepted and well-known concept in finance, the time value of time isn’t.
And that’s a shame, which is why I’m writing this article.
Just like a dollar is worth more today than it is in the future, I’d argue that, all the same, a year today is worth more than a year in the future.
Of course, you have the obvious relation to money there: You can earn money in a year now and invest that money, meaning that money can compound and very likely be worth more than the same money earned in a future year. That relates back to the time value of money.
But there’s so much more.
A Year Isn’t A Year
The future isn’t guaranteed.
As such, a year now is worth far more than a year in 20 or 30 years. After all, you might not even be alive at that point in time.
Not only that, but who knows what kind of health you might be in at some unspecified date in the future. Is financial independence more valuable at 40 years old or 70 years old? At which age are you more able to actually enjoy and maximize the value of your time?
Want to travel when you’re financially independent? How comfortable are those 20-hour flights across the world going to be in your 60s? Probably not as comfortable as they are in your 30s or 40s, which is still probably quite uncomfortable.
Walking around new cities? Tackling a 10-mile bike ride? Hiking? Getting in that afternoon jog? Staying up all night for good conversation? Checking in to a hostel?
How much easier are those activities when you’re 30 or 40 than when you’re 60 or 70?
What about just random adventure? Random chance?
I think we lose those random opportunities the older we grow and the more insulated we become.
I just recently turned 33. And I’ll tell you something. I’ve lost a bit of my edge. That sense of adventure. That sense of wonder. I don’t know if that comes with age, settling, or complacency. But I think it’s real. And that scares me. It scares me to think what kind of person I’ll be 30 years from now. Which is partly why I want to savor every minute now. Not only is the future not guaranteed, but you’re not even guaranteed to be the type of person you might expect yourself to be. And you’re certainly not guaranteed the physical or mental capacity to enjoy freedom as much in the future as you are now.
What you’re capable of – physically, emotionally, and psychologically – surely changes as you grow older. Thus, financial independence, and a year, holds so much more value for me today than it does in 30 years, when most people my age will finally be retiring.
It appears to me that there are two parabolas that exist in life. The first parabola is your age and overall capabilities. As you get older you simply become less capable. (Don’t mind the hand-drawn pics; I’m better at writing than drawing.)
And then there’s this other parabola involving your age and free time. Your available time – how much you actually own – is at its trough exactly at the same time the first parabola is at its peak.
(Notice the smile and the frown there?)
Isn’t that a shame? Isn’t it a shame that exactly when you’re most vigorous you have the least amount of free time?
And right at the time your capabilities start to kind of fade you then have the most freedom? Isn’t that backwards?
What if there were a way to change all that?
I’d argue that achieving financial independence early in life is the change.
Well, I’ve been able to sneak a peek at that change. And I think about the last year and realize how fortunate I’ve been. I’ve had just a tremendously fun time. I’ve been so busy writing, creating, inspiring, learning, sharing, and becoming a better person every single day. And I took that leap to full-time blogging because I felt I was far enough along the spectrum of freedom to leap without worry of falling.
The Value Of Becoming The Best Versions Of Ourselves
But what if I would have stayed at the car dealership? Sure, I might have a little more money. But I would have lost all of those experiences. And I’d probably be a worse person for it. How much value is in that? How much should I value each of those years – the one I lived and the other in an alternate universe where I stayed on at my full-time automotive job? Isn’t the former worth so much more?
Not only is the year I lived worth more than the one I didn’t, but it’s already come and gone. Time waits for nobody. If I didn’t take that leap of faith, the year would have passed by regardless. And I’d still be where I was. Thus, every year we have the opportunity to take ownership of in the present is worth far more than those years in the future that have not yet come to pass.
Furthermore, what value is there in becoming a better and more well-rounded person? I can certainly say I’ve learned way more working for myself than I would have ever learned staying at the car dealership. I already knew all there was to know at my old job. I mastered it. It was time to move on and try something new. Does that knowledge not also compound, like money? Think of every year you could learn something new, try something new, go somewhere new. All of those experiences add up and compound to make you a bigger and better version of yourself.
So every year you’re not making the most of every opportunity to own your own time and become the best and freest version of yourself is one less year you can compound all of that knowledge, experience, and happiness.
Thus, I think it’s important to not delay gratification.
No, not that gratification. What’s really gratifying. Freedom. Flexibility. Fun. Options. Chance. And the most important thing of all: owning our own time.
A dollar isn’t a dollar. And a year isn’t a year. Both of them are not only worth more today than they are in the future, but both have relative value as well.
Be the you that you want to be. And be that person as soon as possible. Opportunity is never greater than today. We’re never younger than we are right now, and it’s unlikely you’ll ever be healthier or more capable than you are today. If financial independence could be great at 60, imagine how amazing it could be at 40… or 30. Tomorrow isn’t promised. And that’s why it’s so important to take ownership of your time.
What do you think? Is a year a year? Do you value your time enough to aggressively pursue financially independence so as to enjoy your freedom as soon as possible?
Thanks for reading.
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