How to Balance Time and Money

By | 12/05/2016

Finding the Appropriate Work-Life Balance

Benjamin Franklin once said that “time is money.” I think he was being metaphorical. Otherwise ATMs would also be called time machines. 😄 But time is certainly like money in many ways. When we have it, we don’t know what to do with it all. And when we don’t, there’s a million things we need it for.  😀

In the corporate world we certainly treat time as money, which is why overtime means more money. 🙂 But finding the proper work/life balance can be challenging for many people. If a new mother wants to stay home to look after her baby for 3 years then she could potentially leave $500,000 or more on the table.

Consider an American who starts working at age 22 and then takes a 3 year break from her career, where her salary is $50,000. According to this marketwatch article, “that 3 year break would cost her roughly $506,000 due to a combination of lost wages ($150,000 over those three years), lost retirement and Social Security contributions ($158,000 over the life of her career, assuming she retires at 66) and lost future wage growth ($198,000).”

Studies show a household with at least 1 stay-at-home parent is the ideal environment to raise children in. Many parents also feel their kids are better off if their first 5 years are spent close to their mothers. But on the other hand, $500,000 is a lot of money to pass up. 😕 Often people face the difficult decision between making more money or spending more time with their children.

16-12-playing-catch-with-children

Unfortunately there’s no silver bullet that can solve this dilemma. But the good news is we can plan for these kinds of choices. 🙂 By building up a financial portfolio when we’re young, we can use these assets once we’re older to subsidize our lifestyles and offset the drop in active income for when we have children. Luckily investors have been able to ride the tailwind of this current bull market for the past 7 or 8 years. It’s not hard to build up six figures worth of investments over this period, especially when financial leverage is used.

I started investing in 2009 and have about $300,000 of financial assets now, which generate ~$1,000 of income each month. By the time I have children I hope to increase this revenue stream to at least $2,000 per month. By working harder when I’m still single, I will have the opportunity to shift my priorities later on without running into cash flow problems in my household.

Of course having children isn’t for everyone. But it doesn’t hurt to grow an investment portfolio anyway. Even if it’s not used to raise a family or treat a serious medical condition, a large nest egg can still be useful, like allowing us to retire early. Once we retire the goal isn’t to make more money. The goal is to live life on our own terms. 🙂

__________________________________
Random Useless Fact:

Adult polar bears normally weigh between 200 kg to 600 kg. Males are typically twice the size of females.

16-12-polar-bear-yoga-poses

Subscribe
Notify of
guest
1 Comment
Inline Feedbacks
View all comments
trackback

[…] subjects (which is chronically misunderstood or minimized by people who don’t get it), opportunity costs. No, a dollar earned today isn’t worth the same as a dollar earned two decades from now. Not […]