This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
I recently sold my practice and have started collecting an hourly wage instead of the net profit from my practice. The income is roughly the same, but I’m now reminded of the fundamental exchange of time for money. In the past, if I came in late or if I missed a day of work, the profits would be unaffected (assuming all the work got done). But now, if I arrive half an hour late, I’m expected to update my time sheet and I receive less money in exchange for contributing less of my time. On the other hand, if there’s more work and I stay an hour late, I’m paid more for putting in extra time.
Time and money are both scarce resources. Although no one knows how much time they have left, none of us will live forever. And, despite the fact that money creation is theoretically unlimited, in practice each person can only accumulate a certain amount of money. When we work, we exchange time (and effort and creativity) for money at the defined rate of our salary or wage. Everyone’s rate is different, but each of us goes to work to earn money. Money, of course, is a means and not an end in itself. It can be used to provide the necessities of life or luxuries or experiences. But money itself serves no other purpose.
When we retire, we reverse the equation and exchange money for time. I spoke with a couple yesterday who prepared very well for their retirement. When we meet with them, we ask them if the income they’re receiving is adequate and if we should be sending them more. They always decline, saying that they’re doing all the things they want to right now and more income wouldn’t make a difference. They enjoy traveling and have toured Egypt and Europe and even took a cruise to Antarctica. The money allows them to spend their time doing things that they enjoy. In this way, time, like money, is a means and not an end in itself. It can be used for work or play or to build relationships, but has no inherent meaning otherwise.
People with the goal of retiring early seem to value time more than money. We will use money to pay for a vacation or a sabbatical (mini-retirement) or to exit the “rat race” early. Exchanging money for time allows us to do the things that make our lives meaningful. Whereas the people who find fulfillment in their job, like my father, seem to have little desire to take time off and are in no rush to retire. Whether we value time or money depends in part on what we do with them.
What will you do with your time, once you can retire and can use it in whatever way you choose?