I have been travelling a lot lately. One observation I find, particularly true for long-haul and international flights, is that the elder travels a lot. In fact, on most long-haul flights, you’ll often find elder (50 years old and beyond) travelling than youngsters.

One explanation for this, I thought, comes from the trade-off of owning time and money. Pre-working age, such as when one pursues education, he is in total control of how to spend his time. However, he wouldn’t be financially capable to afford many amenities of life. In another world, he doesn’t have money. The reverse is true once he starts working: he is now financially capable to afford his wants, yet loses the freedom/control of his time to the institution he belongs. One may view that we have both the control of time and money during the retirement period. Since you have guaranteed income and the freedom to control your own time, retirees would spend more time on enjoying life, such as going travelling.

The questions that immediately pop in my mind: Can we reverse this time and money trade-off? Why do I have to wait until retirement to live like that? How can we enjoy life like a retiree right now?

Who wouldn’t want this? We, as human, always want more. By owning your own time whilst having the financial capability, you can be the engineer, the painter of your own life and happiness. Sound ideal, isn’t it? I don’t promise to give you an answer to the above questions on a silver plate. If I have a straightforward equation to reverse this nature, I would be a millionaire by now by making profits from the answer that everyone wants. However, I may bring you one step closer by suggesting a few thoughts below:

1. Realise time is limited and wealth is limitless

In this article, I refer to “money” frequently. Let’s me fixate the meaning of “money” in this article: I meant wealth, not cash. It’s easier for readers if I write “money” instead of “wealth”, which is why I wrote it that way. However, there is a clear distinction I must make between the two.

Many people grow up with a limiting belief that there’s a fixed amount of wealth in the world. Someone is richer means someone else is poorer. Like a pie that can only be cut to so many pieces, these people with limiting belief fights for their own share thinking when others have more they have less. The domination of “the 1%” is what the politicians want these people to believe as an excuse to why they are less well off.

These people just don’t understand the distinction between wealth and money. This limiting belief will preclude them from getting rich. The first mindset to embrace to become rich is being generous with others and creating as much for others as possible.

Let me explain why wealth is limitless. I understand the reasons for the limiting belief of these people. The amount of money, or cash, is indeed limited in the short run. Typically, you get a fixed amount of income stream every calendar period. You can borrow to a certain limit from credit cards and personal loans. Hence, there are indeed financial constraints faced by most in the short term. How well you manage your resources against the constraint represent your liquidity efficiency.

Liquidity efficiency does increase your financial capability. In some sense, you can live comfortably on an average income stream if you can manage your money well. However, liquidity efficiency doesn’t increase your financial capacity i.e. it may make you richer in satisfaction terms (how much satisfaction you get from a fixed amount of income) but doesn’t make you richer in monetary terms (it doesn’t increase your overall income).
Who believes in “the pie” theory is probably confused between money and wealth. Money is limited, yet wealth is limitless. What is wealth and why is it different from money?

Wealth is what people want.

Let use an example of barter trade to make it clearer. There are a hairdresser and a winemaker. All of them have some wealth as they have something others want e.g. hairdressers’ wealth is the haircuts he can operate. Money is just a medium of exchange, for them to trade their wants with each other. If the wine is more wanted than the haircut, then the winemaker is wealthier than the hairdresser by the unit. The hairdresser can always create more of what others want i.e. haircuts, to becoming wealthier without decreasing the wealth of others. If the overall amount of wealth i.e. the products/services demanded in this economy increase, more money can be created (such as in form of IOU or loan notes) to facilitate the increasing wealth.
Wealth can always be created, and it’s unlimited as human’s wants are unlimited. There’s no such thing as the fixed pie as some imagine, as everyone is better off when their desires are satisfied and more wealth are created.

The moral of the story is: there’s no limit to being rich. As long as you continuously and sustainably have something people wants, how wealthy you can be can be close to limitless.
However, back to the original thesis, your time is limited. Or at least we haven’t figured out how to live forever yet. You must realise your time is incredibly limited compared to how much wealth you can/will make, in order to tackle the time/money tradeoff. Which brings me to my second point.

2. Don’t convert your own time into money. Or don’t use your time as the sole source of income.

If you use your own time as the main way to obtain our own wealth, a very straightforward derivation would be: with this method, since your time is limited, your wealth is also limited. To make it clearer, let’s talk of the hairdresser earlier. Assuming he doesn’t eat and sleep, purely giving haircuts all day to a maximum of 50 haircuts a day, his daily wealth is limited at 50 xPrice of his haircut.

Most people convert their time into money, hence they face the money/time trade-off. When they don’t use their time to make money (such as spending time on leisure), they don’t obtain any income.

The key for your is to figure out, how can extra wealth be created for you without you spending more of your time on it. That’s when you can truly defy this trade-off.

One way could be through asset appreciation. For example, the wine maker’s wealth can increase just by leaving the wine to age over time. He doesn’t need to spend more of his time to create this extra wealth.
Another way could be through the seamless accessibility, replicability and distribution of your products. For example, famous artists make thousands of dollars overnight when they are sleeping, as people around the world buy their songs.

Fundamentally, the key is not to use your own time to create your wealth. As alternatives, for example, you could use other people’s time (e.g. hire them) or use other things (e.g. your name/ reputation, or appreciating assets) to increase your wealth. There are many other ways that you may think of for yourself to suit your own circumstances.

3. Don’t belong to an institution

We were told, growing up, to follow rules. One of the rules that society set is for us to join an institution. As young as toddlers, we join kindergarten, then going to schools. Finishing schools, the expectation is that you start with a job, again by joining another institution.

The difference between retirees and youngsters is that retirees don’t belong to an institution. An institution rules over how their members spend their time (think of a university, any governmental organisation or any well-established company). This control over how your time is spent will be directly correlated to how and how much of your wealth will be made. This could be beneficial to you; such as in a university, when the wealth you are creating is your knowledge. The rules set by the educational institution is to ensure you acquire this wealth in the most disciplined manner. However, this could also be the constraint to you creating your wealth, such as in government administration jobs where you work from 9am-5pm with no rewards for further working hours.

I’m not suggesting you quitting your job or liberating yourself from the institution you belong right now. However, I hope you are now aware of this limitation, especially when the payoff of giving someone else the control of your time is not as much as how much you could make by liberating yourself from it.

Remarkable people break rules and question the status quo.

I have some additional thoughts on this matter, yet this article has reached quite a length. If you are interested in more, as an additional source to figure out how you defy the time-money trade-off, I recommend reading “The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich” by Timothy Ferriss. This best seller book offers a different-from-the-above, yet insightful perspective on this matter.

I have collected over 200 of myself and my friends’ cover letters and published it at Cover Letter Library to help you. This member-only library includes successful cover letters from people who secured jobs at all major investment banks, big 4 firms and other. Check it out 🙂 

 

Illustration by my friend Karl. 

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