Stop Trading Time for Money – Big Secret Here
Do you know what an hour of your time is really worth?
If you are still trading time for money… today’s issue might really help you shift your mindset around wealth building. This concept changed my life.
Let’s dig in
Word of the day: “OPPORTUNITY COST.”
Opportunity cost is the value of what you lose when you make a choice. If you spend money on a new phone, you can’t use that money for a trip or something else. Every decision has a cost because you’re always giving up the opportunity of choosing the other option.
Every decision we make comes with an “opportunity cost,” whether it’s choosing which person to marry or to watch TV or write a chapter of that book you’ve always wanted to publish. It’s not just about spending time—it’s how we invest it that makes the difference between a life of prosperity and one of struggle. As you get older, these decisions become of even MORE importance… because time is less abundant each year we age.
Reflect on this: imagine waking up tomorrow with the same mindset as the world’s wealthiest people. They think very differently than the guy who is going to work to clock in for an 8-hour workday. Very different.
The simple shift in your mindset from trading time for money to trading time for a desired OUTCOME can be a game changer. If you invest a week’s worth of your time, do you want to get paid an hourly wage, or do you want to get paid a residual income every month for the rest of your life?
HOW I INVESTED MY TIME IN 2020.
During the Covid lockdown, I spent three months rehabbing an ugly house in Amarillo, Texas. It was freezing cold, the work was hard, and I had to hire crack addicts and x-cons to finish the job. But, every month since that initial effort, the tenants who live in that house put $1800 in my bank account… each month… like clockwork. I didn’t pay myself one dollar during those few months, but I will get paid monthly as long as I own the house. That is the change in thinking that really set me free.
These days, I wake up each day thinking, “What can I do today that will earn my residual income for years to come?”
Write that magic question down and tape it to your bathroom mirror. This could change your life in months, not years.
In the past year, I have come to actually feel a bit of resentment at the idea of trading time for money. You might not know this, but for the last ten years, when I worked with attorneys, I charged them $650 per hour, and they happily paid it. I find that annoying because I know the key to freedom is trading my time for a specific outcome that earns money residually. Most of our legal cases are now sold on a flat rate outcome basis… but some industries insist on an hourly fee. That bothers me now. It should bother you, too. Whether it is $125 an hour, $650, or $10,000 an hour… trading time for money is not the ideal strategy to get and stay really wealthy.
Obviously, if you get paid $82,000 per hour to play a basketball game in the NBA…that is a great transaction. But those offers are few and far between for anyone under six feet tall and not immensely talented. Take that deal if you got it. Make that three-pointer at the buzzer. For the rest of us mere mortals… here is how you can start changing your thinking.
CALCULATE WHAT YOU BEEN SELLING YOUR TIME FOR LAST YEAR.
Getting clear on what your time is really worth is crucial. It’s a reality check you probably don’t want to see. Bear with me… it will be worth it.
Take a moment to calculate it with this formula: Gross Income divided by 8,760 hours
Divide your gross yearly income by the 8,760 hours in a year.
This simple exercise sheds light on the hidden cost of each activity you engage in, from sleeping to scrolling through social media. For instance, if you aim to earn $100,000 this year, every hour is worth at least $11.40, assuming you never sleep!
So, realistically, you can’t work 24 hours a day, 7 days a week. So, it looks more like this: 2920 hours a year if you can work 8 hours a day productively.
So, how can you start investing your time like a self-made gazillionaire?
Your gross income _________
Divided by / 2920 hours
Your true hourly income ________
THE SOLUTION TO GIVING YOURSELF A RAISE.
Find anything you do that earns you less than that magic dollar per hour … and eliminate or delegate it.
Begin by identifying “time vampires” that sap your productivity—can you get rid of them or hire someone else to do it at a cheaper hourly rate than you are paying yourself?
Examples.
Housekeeping (My housekeeper cost $25 per hour. That is much less than my hourly rate)
Doing your own taxes
Mowing your lawn
Taking your wife to dinner (Just kidding, you can’t delegate that if you know what’s good for you. LOL)
“Lost time is never found again.”
— Benjamin Franklin
BEWARE OF TIME VAMPIRES
Marketing expert Dan Kennedy discusses the idea of “time vampires” in one of his books. After understanding how much my time is worth, or should be worth, I stopped taking phone calls or meetings from time vampires.
Time vampires can include:
- Visits from in-laws
- Unnecessary trips to the grocery store
- People who want you to solve their self-created drama all the time
- Television
- Social media, alerts, distractions, etc.
- Trips to the dry cleaners • Any phone call you don’t initiate (You have caller ID. Use it to screen your calls.)
- Touching any piece of mail more than once
- Sleeping late
- Paying your bills by hand (Nobody writes checks anymore, right? You should get automatic bill pay through your banks and never see a bill again.)
Once you realize that to become a millionaire or multi-millionaire, you must respect your time like a millionaire, taking that phone call from your sister-in-law about her dog’s rash seems unimportant. When I realized this, I just stopped answering my office line for all unknown numbers.
If you call my office, you rarely hear my voice answering our office phone. Even before I could afford to hire an assistant and a sales team, I simply let the calls go to voicemail when I was super productive.
Not answering those calls might have cost me a sale or two – I get that. There is always an opportunity cost when trading short-term gain for long-term gain.
But the number of non-income producing conversations was less valuable than my new hourly rate for time vampires.
And if you think about it, that extra hour of sleep becomes quite costly, doesn’t it?
Can you build someone of great value once and have it pay you monthly for the next 10 years?
For example, if you wrote one terrific non-fiction book about your wisdom and expertise, you could get royalties every month for the next 20 years. That is an excellent investment of time. Despite the fact that I have given away thousands of copies of my best-selling book, The Magic Question, Amazon still sells even more copies per month. It automatically deposits royalty payments from sales from 30 different countries into my bank account. This is 11 years after it reached the best-seller list. These days, using the AI software tools, you can write a pretty good book in a weekend using the Luminary book writing tools and a few early mornings editing and crafting your own words.
WHAT IS YOUR TIME GOING TO BE WORTH THIS YEAR?
Decide how much money you want to gross in the coming twelve months. Then, do the math to figure out your twenty-four-hour per day hourly rate. Then, allow only the people and events worthy of that figure into your daily schedule. This is the only way to know if hiring a housekeeper is a good investment or a bad investment.
Is it worth spending an hour going to the grocery store when you can have them delivered for a $10 fee?
Small decisions like that can buy back hours per day so you can work on projects that really matter.
Here’s a step-by-step guide to take charge:
1. Calculate: Determine the current value of your time using the formula above.
2. Prioritize & Delegate: Identify non-negotiable activities that align with your goals. Filter out time-wasting habits that don’t match your hourly rate of value.
3. Say No More Often: Like a successful millionaire, start saying “no” to low-value activities and focus on maximizing the worth of your time through leveraged investments of time. For every hour of saying “no” to watching a meaningless TV show… you could be working on something that pays for your years.
Remember, taking back control of your time is about making room for what truly matters—be it art, family, or personal growth. By consciously choosing how you spend your time, you inch closer to that dream of financial freedom and living life on your terms.
Until next time, dream big and take action! Shoot me an email if you have any comments or questions. I read every response.
Warmly,
Bart Baggett
Author of Happy Wealthy Mind, The Magic Question, Success Secrets of the Rich & Happy and Founder of the Life Design Academy