The idea behind the expression "Time is money."
Time and money are arguably life’s most valuable resources. One of the great laws of economics is that time equals money. What really matters is to spend it wisely. In fact, you can spend no money but your time as a gift, such as time spent with family.
The phrase "time is money" is usually credited to Benjamin Franklin, who used it in an essay (Advice to a Young Tradesman, 1748, scroll down to the bottom to read the essay). It means time is a valuable resource. He encouraged people to treat time like money. However, most people think about time and money in vastly different ways.
1. Time is our most scarce resource. Time is the ultimate scarce resource, yet we act as if we have unlimited time. Poor or rich, we all have 24 hours a day, 7 days a week. Thus, each of us faces the choice of how to spend our time. In a world of scarcity, choosing one thing means not being able to do something else.
2. The price of convenience. In economics, price is a much broader concept. Price includes not only the monetary cost of purchasing a product but also the time associated with buying that product. For example, overnight delivery, and convenience stores all charge premiums because of the inherent value we place on our time.
3. The value of time varies from person to person. Time is relatively scarce for people with higher incomes, partly because their time is more valuable. So, to have lots of time, rich people hire other people to do their, say, household chores. On the other hand, a nonworking person may spend more time on household chores.
4. The value of time in good economic times. The value of time is higher during good economic times. Evidence shows that people tend not to take care of themselves in boom times (Ruhm, 2007). For example, a 1 percent decrease in the unemployment rate corresponds to an additional 3,900 deaths in the United States in a given year. People tend to drink too much, eat out often, exercise less, and skip medical check-ups because of work-related time commitments. So people work more and do less of the things that are good for them. On the other hand, in bad economic times health-enhancing activities such as exercise and social interactions increase.
5. Price of delay. People are not equally patient. Some like the present, others like the future. A myopic person ranks immediate pleasure much higher than valuable delayed rewards. For example, social media is immediately available, and it is the cheapest way of avoiding boredom. In contrast, reading and conversation are demanding in terms of effort and motivation.
6. Cultural attitude toward time. Attitudes toward time and its value differ across cultures (Levine, 1997). For example, being late for an appointment, or taking a long time to get down to business, is the accepted norm in most Middle Eastern and some Asian counties. People in bigger cities walk faster than their counterparts in smaller cities. And while in a grocery store, they spent less time chatting with clerks and other shoppers.
7. Time cannot be stored. One of the reasons we give little thought about how we use our limited resources is that we cannot save time. Time moves on whether we choose to spend it or not. You can’t bottle time and exchange it for an object or event. However, when people are made aware of their mortality they wonder if they did make the most of their lives.
8. Buying time to promote happiness. What you do with your time also matters for your day-to-day moods. You can improve your happiness by putting your money where you spend most of your time (Whillans et al., 2017). For example, buying a new pillow or a nice bed could help you to get a good night’s rest. You can also outsource “disliked” tasks. This can allow you to maximize the time you get to do the things you love (e.g., cooking) and minimize the time you have to spend doing what you hate (e.g., gift-wrapping, housecleaning).
In sum, time is anything but free. As a nonrenewable resource, time is quite expensive. Some people fail to realize that time is scarce, hence oblivious about its opportunity cost. They do their best to think of their time as unlimited, and unlimited goods have little value. Knowing that time is finite encourages us to ask how we are using our time. Do we want to spend these precious moments on social media or spend that time learning something new? Skills and knowledge take time so the more time you spend on them, the more you improve.
References
Levine, R. V. (2020). Time and culture. In R. Biswas-Diener & E. Diener (Eds), Noba textbook series: Psychology. Champaign, IL: DEF publishers.
Ruhm CJ. (2007) A healthy economy can break your heart. Demography. Nov;44(4):829-48.
Whillans, A. V., Weidman, A. C., & Dunn, E. W. (2016). Valuing time over money is associated with greater happiness. Social Psychological and Personality Science, 7(3), 213-222.
Benjamin Franklin
“Advice to a Young Tradesman” (1748)
Advice to a young Tradesman, written by an old One.
To my Friend A. B.
As you have desired it of me, I write the following Hints, which have been of Service to me, and may, if observed, be so to you.
Remember that Time is Money. He that can earn Ten Shillings a Day by his Labour, and goes abroad, or sits idle one half of that Day, tho’ he spends but Sixpence during his Diversion or Idleness, ought not to reckon That the only Expence; he has really spent or rather thrown away Five Shillings besides.
Remember that Credit is Money. If a Man lets his Money lie in my Hands after it is due, he gives me the Interest, or so much as I can make of it during that Time. This amounts to a considerable Sum where a Man has good and large Credit, and makes good Use of it.
Remember that Money is of a prolific generating Nature. Money can beget Money, and its Offspring can beget more, and so on. Five Shillings turn’d, is Six: Turn’d again, ’tis Seven and Three Pence; and so on ’til it becomes an Hundred Pound. The more there is of it, the more it produces every Turning, so that the Profits rise quicker and quicker. He that kills a breeding Sow, destroys all her Offspring to the thousandth Generation. He that murders a Crown, destroys all it might have produc’d, even Scores of Pounds.
Remember that Six Pounds a Year is but a Groat a Day. For this little Sum (which may be daily wasted either in Time or Expence unperceiv’d) a Man of Credit may on his own Security have the constant Possession and Use of an Hundred Pounds. So much in Stock briskly turn’d by an industrious Man, produces great Advantage.
Remember this Saying, That the good Paymaster is Lord of another Man’s Purse. He that is known to pay punctually and exactly to the Time he promises, may at any Time, and on any Occasion, raise all the Money his Friends can spare. This is sometimes of great Use: Therefore never keep borrow’d Money an Hour beyond the Time you promis’d, lest a Disappointment shuts up your Friends Purse forever.
The most trifling Actions that affect a Man’s Credit, are to be regarded. The Sound of your Hammer at Five in the Morning or Nine at Night, heard by a Creditor, makes him easy Six Months longer. But if he sees you at a Billiard Table, or hears your Voice in a Tavern, when you should be at Work, he sends for his Money the next Day. Finer Cloaths than he or his Wife wears, or greater Expence in any particular than he affords himself, shocks his Pride, and he duns you to humble you. Creditors are a kind of People, that have the sharpest Eyes and Ears, as well as the best Memories of any in the World.
Good-natur’d Creditors (and such one would always chuse to deal with if one could) feel Pain when they are oblig’d to ask for Money. Spare ’em that Pain, and they will love you. When you receive a Sum of Money, divide it among ’em in Proportion to your Debts. Don’t be asham’d of paying a small Sum because you owe a greater. Money, more or less, is always welcome; and your Creditor had rather be at the Trouble of receiving Ten Pounds voluntarily brought him, tho’ at ten different Times or Payments, than be oblig’d to go ten Times to demand it before he can receive it in a Lump. It shews, besides, that you are mindful of what you owe; it makes you appear a careful as well as an honest Man; and that still encreases your Credit.
Beware of thinking all your own that you possess, and of living accordingly. ’Tis a Mistake that many People who have Credit fall into. To prevent this, keep an exact Account for some Time of both your Expences and your Incomes. If you take the Pains at first to mention Particulars, it will have this good Effect; you will discover how wonderfully small trifling Expences mount up to large Sums, and will discern what might have been, and may for the future be saved, without occasioning any great Inconvenience.
In short, the Way to Wealth, if you desire it, is as plain as the Way to Market. It depends chiefly on two Words, Industry and Frugality; i.e. Waste neither Time nor Money, but make the best Use of both. He that gets all he can honestly, and saves all he gets (necessary Expences excepted) will certainly become Rich; If that Being who governs the World, to whom all should look for a Blessing on their honest Endeavours, doth not in his wise Providence otherwise determine.
Source: Founders Online, a project of the National Archives http://founders.archives.gov/documents/Franklin/01-03-02-0130
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