I’m sure you’ve heard of the expression “time equals money,” or some derivative of it, but have you actually thought about how true that statement really is? I think after you read this you’ll have a better appreciation for both how you earn your money and what you ultimately spend that money on.

Think about it; for us working stiffs that have to go out each and every day and earn our money, we are essentially trading our time (the eight or however many hours you work in a given day) for a day’s pay. So, when you spend that money, you’re trading your time (bits and pieces of your life) for whatever it is that you’re buying.

To put things in perspective, let’s take a hypothetical person – Ralph, who makes roughly $25 per hour – and see how much of his time he’s giving up to make some run of the mill purchases.

After all taxes, health insurance, etc., are taken out of his paycheck, Ralph’s take home pay is $16 per hour. All things considered, this isn’t too bad and is probably representative of many of you who are reading this article.

Let’s look at some typical purchases Ralph makes relatively frequently and without much thought:

Large Starbucks coffee – $4

Lunch at Subway – $8

New DVD – $20

Tank of gas – $30

Happy hour with coworkers – $40

Now, let’s look at these rather mundane purchases in terms of how much time Ralph had to give up in order to get the money necessary to make these purchases:

Large Starbucks coffee – 15 minutes

Lunch at Subway – 30 minutes

New DVD – 1 hour and 15 minutes

Tank of gas – 1 hour and 37 minutes

Happy hour with coworkers – 2 hours and 30 minutes

When you break down these mundane purchases by how much of your life you’re giving up in order to have necessary money, it puts things in an entirely different perspective. When Ralph buys that Starbucks coffee, he’s given up 15 minutes of his life to be able to make that purchase. While 15 minutes may not seem like much, it does add up over the years.

Now, let’s look at what some big purchases will cost Ralph in terms of money and time:

New video game system – $400, which equals 25 hours or roughly 1 day

Plasma TV – $2,000, which equals 125 hours or roughly 5 days

New mid-level car – $18,000, which equals 1,125 hours or roughly 47 days

In looking at spending money this way, it certainly does seem like Ralph is giving up a lot of his time in order to be able make these purchases. If you told me I had to give up 5 days of my life in order to buy a new plasma TV, I think I would definitely think twice about it.

But because we don’t directly have to do this, nobody thinks about purchases in these terms. People say, “Oh, it’s just money,” so it’s really not that big of deal. However, if they thought about what they were giving up – their time – in order to get that money, maybe they’d treat money differently.

Don’t get me wrong, I’m not telling you that you shouldn’t spend your money or occasionally splurge on yourself. After all, what’s the point of having the money if you’re never going to do anything with it? That being said, I do think that if you realize what you’re giving up in order to make these purchases you’ll be a little more careful with your money.

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