Here’s the 411.
What if the only acceptable currency that we could use was time. For example, the next time that you pull up to the Starbucks drive through, instead of paying with cash, you were required to pay with your time.
What if we broke this down even further. Say for this example, we look at the typical college graduate starting their first job, and lets say that this person receives a starting salary of $45,000. What is that person’s time worth? I guess it depends on how you look at it. At that level of salary, if they worked a 40 hour week, they would be making about $21.63/hour. Not a bad starting salary. But what about when you take away taxes, social security, and Medicare? With today’s current tax rates, that would reduce their gross income by about 20%, leaving them with a healthy $36,000 left to live on. So now the net hourly rate of pay goes down to $17.31. Still not terrible, but what about the other 16 hours in a day that may not be earning anything? What if we got real with each other and started looking at hourly wages based on a 24 hour day, not just on the 8 hours where we trade our time? At $36,000 divided by 365 days in a year, dividing that by 24 hours in a day, the above person is left with a mere $4.11 hourly wage.
Now lets go back to getting that latte. Imagine it cost $4.11 for that tall drink to kick your day off. Are you willing to trade 1 hour of your life for that coffee? How do you plan on making that hour back, is it even possible?
This is why developing wealth is more than just about working hard or putting in the hours at work. Wealth is a thought process. Anyone working on a dollar per hour basis has what is called a “linear income,” self-limited to the amount of money they earn, trapped by the amount of hours they can trade. Wealth mentality doesn’t focus time on achieving an immediate result, instead it focuses on duplicating efforts, compounding time, and achieving maximum output for minimum input.
Recommended resource on this topic:
- “Think and Grow Rich” – by Napoleon Hill