Spending Time Wisely

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