Your money or your time: Put your life on a ledger

by Paul Goodchild on July 15, 2010

Cat calculations

If Betty the cat can calculate what her time is worth, so can you!

In the 21st century, as I’m sure you’re well aware, there is much emphasis placed on our finances – how much we earn, what we can afford, how much savings we have, what our investment portfolio looks like, etc.  There’s money coming in (hopefully), but equally, there’s money heading out the door just as quickly, if not more quickly in some cases.

A ledger is the name given to a type of book upon which transactions, typically financial, are recorded.  So how do you record your life’s transactions?  Well it’s actually quite straight forward.

Probably my greatest financial mentor while I lived in Japan taught me a very straight forward principle (amongst many others), that has stuck with me ever since.  It goes very simply like this…

Word count: ~1100. Approx. reading time: 10 minutes. (picture credit)

Your money is your life!

You work.  You earn money from that work.  With that money you buy things.  You not only buy things, but you make investments with that money.  You buy food, you buy clothes, you buy shoes, make up, beer, wine, coffee, books, cars, houses, stocks & shares, retirement funds, and every other possession you have that wasn’t given to you as a gift (except those gifts received in return for other gifts).

So money is your pseudo-physical currency with which you can either buy more stuff, or more money (through investments).  But what is your real currency?  What do you possess that you are really exchanging for all these things?


We could alternatively say your life.  But that’s a little abstract, or a least more abstract than the concept of time.  You are exchanging your time for money. So why are many of us so frivolous with our money so much of the time?  Why don’t we take the time to research and understand where our money goes with our investments?  Why when we make huge outlays such as a electronics, cars, and houses do we do it without the due diligence and consideration of the time in our life spent to obtain them, and also, the time of our lives that will be required to maintain them.

As an experiment, you should attempt to break down your purchases instead into units of time, versus money such as dollar/pounds/yen.  I’ll illustrate with an example…

An example

For simplicity of calculations let’s say you earn gross $48,000 per year.  I’m sure no-one earns this exactly, so substitute for your own case and follow along with this example. (if you like, you can download an excel sheet to help you work out the calculations quickly for yourself and to follow along: Life on a ledger spreadsheet)

You work 8hrs per day, and an average of 20 days per month.  At a glance that would put your hourly rate at $25.  Not bad.  If you decide to go and buy that digital camera you’ve been hankering for at $300, you could expect to spend 12hours (a day and a half) working it off.  But reality is a little different as we’ll see.

First up there’s the social insurance, council tax, income taxes, etc. that are deducted out of your salary.  This isn’t the highest base salary in the world, so the tax bracket isn’t going to be extravagant, so I’ll round it to 20% in this case, but if you’re working this out yourself, be sure to apply the correct tax deductions.  So after deductions, your salary in this example is $38,400 making your hourly rate $20

You sit in your office for 8hrs a day working, but you also have to get there and back.  It’s not uncommon to take an hour to get to work, but I’ll bring it down to 30 minutes each way, and add another 1hr spent to get ready.  So already, if you weren’t going to work, you’d save 2hrs per day.  That brings each shift to 10hrs, and reduces your hourly rate to $16.

Let’s take a rough estimate that you spend an extra $10/day on lunches, and you spend $50 per week on driving to work.  This brings your hourly rate down to $14.  I haven’t even started on the extra costs you are having to pay in order to rent/buy property in the city closer to the office, and even childcare costs if applicable.

So for $48,000 per year, you’re earning $14 into your pocket (at most) for every hour that you dedicate to your work.  That digital camera is now costing you nearly 22hrs versus the 12hrs calculated earlier.  If you decide to buy a nice car at say, $28,000, you’re looking to dedicate 2000hrs of your life to paying it off.  2000hrs of your time for a car that you use mostly to facilitate your transport to and from the office that you go to in order to earn the money to pay for it.  It’s all a little too circular for me. 🙂

What’s the point of all this?

Simply to raise your awareness – so that you know you’re spending your time, not money.  Everything you own has been attained through transfer of the units of your life’s only currency.  This is of particular importance when you’re exchanging your life most days for a terrible job, terrible conditions, or a prick of a boss.  Much more significant is when you’re subjugating your true desires for the pursuit of money and a false sense of security.

I threw together a little spreadsheet so you can easily plug-in your own figures for your salary – download the Life on a ledger here.  It’s very simple and easy to use.  One column, the pink, is the example that you should leave as-is so you have a point of reference.  The green column is yours to edit and change values as you see fit.  The darker cells in your green column are ones you do not edit – rather, watch as they change when you put in your personal hours spent working and your own costs associated with where you work.

This is a very simple exercise to allow you to define very clearly and be specific about how you’re spending your time next time you go shopping.

What is your money?  Your money is the value that you, not anyone else, have placed on your own time.

Thank you for reading.  Have you ever done something, like painted a picture, taken a photo, made a speech, or written an article and sought feedback on it?  Of course.  It’s how we improve ourselves and while we all want positive feedback, we really only improve when we get both.  So please feel free to provide some feedback below in the comments section about this article specifically, or about anything else.  I welcome it and I will respond.  I hope you enjoyed this article and if so, please feel free to share it with your friends either in email, or using the Facebook button below.  Thank you! 🙂

← Previous Article:

→ Next Article: