-advertisement -

Money in your pocket, time on your hands

"People realize they're earning much less than they thought," says Carolyn Hilles, who gives money management workshops based on this concept. "When people realize they're really working for $14 per hour, that $14 bottle of wine looks a lot different. They say, 'I worked one hour just to pay for this, and I don't even remember drinking it.'

"I've seen it blow people's minds open. They didn't understand what they were hiring themselves out for and what they were spending it on. They have one life on this earth, and they're blowing it on stuff that doesn't meet their values."

If you run your own business, another way to think of money is the amount of product or services you'll need to sell to earn whatever you buy.

- advertisement -

"Because I'm a writer, I tend to think of the spend part of the equation a little differently," says Jennifer Lawler, author of Dojo Wisdom: 100 Simple Ways to Become a Stronger, Calmer, More Courageous Person.

"For example, I know how hard it is to sell one copy of my book to one customer. I make about $1 in royalties from that sale. So every time I go to spend money, I think of how many books I have to sell to pay for the expense. This really puts the reins on things."

Spending wisely
For simplicity's sake, let's say that your actual earnings are $10 per hour. That means if you buy a $200 golf club, you're using 20 hours of your life to pay for it. Does this mean that you have to give up golf, or new shoes, or trips to Cancun? And how do you figure out which purchases are worth the life energy spent and which are just a waste of time?

When contemplating a purchase, you should consider three things, says Wild: personal cost, utility value and social impact.

"Personal cost is the amount of your personal life energy that went or that will go toward paying for the purchase," he explains. "Utility value is the life energy saved or gained by making the purchase. Social impact is the effect that your purchase will have on the world and all of its inhabitants."

Only you can decide whether the personal cost, utility value and social impact of a product or service are in alignment with your own values. For example, that new rider mower may cost a bundle, but it's worth it to you because you'll save time over the old push mower. Or perhaps it's not worth it to you because the mower negatively impacts the environment.

Still can't decide whether to drop the bucks on the latest electronic doodad or those sparkly earrings?

"A quick-and-dirty exercise is to ask yourself what the world would be like if everyone -- including over a billion Chinese -- followed your actions," says Wild. "Is that a world you'd want to leave to your children?

"Another exercise is to find someone you really admire and respect. It doesn't have to be anyone you know personally. It might be, for example, George Washington or Mother Teresa, or even a fictional character such as James Kirk or Wonder Woman. Ask yourself, 'Would he or she make this purchase?'"

If you start living by this concept, you're sure to start spending less. The result? More money in your pocket, and more time on your hands.

-- Posted: June 11, 2004


Looking for more stories like this? We'll send them directly to you!
Bankrate.com's corrections policy

30 yr fixed mtg 3.56%
48 month new car loan 3.16%
1 yr CD 0.55%

Mortgage calculator
See your FICO Score Range -- Free
How much money can you save in your 401(k) plan?
Which is better -- a rebate or special dealer financing?

Begin with personal finance fundamentals:
Auto Loans
Credit Cards
Debt Consolidation
Home Equity
Student Loans

Ask the experts  
Frugal $ense contest  
Form Letters

- advertisement -
- advertisement -