What Should You Choose: Time or Money?
💸 Does more work equal more money? Can you be financially independent while working on your own terms, the hours you’d like to work?
It’s easy to fall into the rat race mentality, and we’re programmed to think that the more we work, the more money we’ll earn. Today, we answer Anna’s question on the relationship between work and financial independence.
Anna’s question: The lying flat movement. During the pandemic, many people quit their jobs and chose to go part-time. People are wanting to work less. They don’t want to be in the rat race mentality. Is that trend directly in opposition to being financially successful and building wealth?
***
You can listen (12 min) and subscribe here:
***
does more work = more money?
“If more work does not equal more money, you might either be in the wrong job or you may need to dial back to invest your time in something that will have a bigger impact on your future wealth:”
When you spend time at work, you exchange it for money that you will use in the future to fulfil basic needs, treat yourself, save for later or buy someone else's time.
With money, you can buy other people’s time, but not more time for yourself. Since time is a scarce resource, an increasing number of people are debating whether it is best spent at work or elsewhere.
Deciding what is more valuable is hugely personal — many things need to be considered: your age, your personal circumstances, your goals in life, your preferences, the impact of such decisions on your future.
It is true that the majority of successful people work a lot. You may find the odd one that got lucky, but this is the exception rather than the rule. In addition, the more capital you accumulate, the easier it will be to face future challenges. Since time is scarce, you have to understand your priorities and challenges.
If you’re finding that more work does not equal more money, you might either be in the wrong job or you may need to dial back to invest your time in something that will have a bigger impact on your future wealth. For me, the answer here is obvious — which is education.
It is also important to understand the temporal value of money. The more you invest today, the more it could be worth in the future.
what do you get out of work?
Anna mentions the “lying flat movement”. The lying flat movement is also called Tang Ping. It is a lifestyle and social protest movement that started in China in April 2021. Employees began to reject societal pressures to overwork, such as in the 996 working hour system where 9-9-6 means working from 9am to 9pm, 6 days a week. This work schedule is very common in China, especially in the tech industry. This is often regarded as a rat race.
These are very long hours and as the country’s growth is levelling off, so it is normal that some people want to dial back. Secondly, the right reason to dial back is not because you want to, but because you can. Thirdly, while it makes the headlines, this movement is far from being the norm — it represents an incredibly small part of Chinese society.
In the Western world, while the employment market continues to recover from the pandemic, more jobs are becoming available. At the same time, people are coming to realise that work isn’t everything.
This has led to the Great Resignation and, more recently, the Quiet Quitting movement. Quiet Quitting basically means doing the bare minimum at your office job. This creates a lose-lose situation. Your employer has underperformers, and you waste your time when it could be spent better somewhere else.
You have to question what you’re doing today and see if you’re satisfied with your life. If you aren’t, you need to make a change, or you will suffer even more in the future.
What if you don't want more money? This is perfectly fine, but the question boils down to how much you’ll need to cover your basic needs. You should also ask yourself how your decision to work less will impact you now and in the future.
You can try to find a balance between money and time. You may even find both: something you enjoy working on, that also pays off.
building financial independence
According to Wikipedia, you’re financially independent when you have “enough money (income / wealth) to pay for your living expenses for the rest of your life without having to be employed or dependent on others”. So how can you achieve this?
Look at where you stand today: reflect on your current lifestyle and be super realistic. Are you at a time where you should work less? As a rule the younger you are, the more prepared you should be to work hard.
What do you need money for? You need a long term plan - how much money will you need? What is the life you want for yourself and your family? Write your goals and your objectives, review them regularly.
Have a conversation with your partner if you have one and think about the future and how it may look like. It may allow one to dial back for a period of time, as he/she relies on the other.
The earlier you do these things and plan for independence, the earlier it will happen. Money invested early will compound more over time.
And this is how investing can help you:
Your income alone doesn’t help you build wealth, unless you save some of it and make these savings grow. This happens via saving with a decent interest rate (which is not available at the moment). You can also invest in things that will grow in value over time and pay you an income (such as dividends or a buy to let property) or that will appreciate and that you will sell at a later stage (stock market investments, buying and selling a property).
What you invest in will depend on your personal interests, risk and the time you have to achieve your goals.
Keep investing regularly to generate more returns.
*** #ad Sponsored by Chase, a digital bank that makes every day rewarding. Get 1% cashback on your everyday debit card spending, 24/7 customer support, and a numberless debit card to help keep your details safe. Download the free Chase app today. 18+, UK residents. Cashback exceptions apply.***