Prologue
I recently read a book called The Richest Man In Babylon. The book is a collection of stories that each have a moral about personal finance. In the book we follow a person who performed a trade (sold time for money) and used that to grow their wealth and became the richest person in Babylon. This shows that finance is not reserved for the elite and that it is highly personal (hence “Personal Finance”). Though the book is set in ancient Babylon and was published almost 100 years ago the lessons it tells are still very much relevant today. I was inspired by the book to tell my own story of how I come to realize that money can not buy time.
The Elusive Xbox
When I was in middle school I asked my Mom if I could have an Xbox. Like many kids I just wanted to play video games after doing homework and it was an easy way to socialize (without actually socializing). My Mom did not approve of video games in general. She believed that nothing productive would come out of it and immediately said “No”. As a kid with no savings, no income, no job, and no marketable talents I had no way of actually coming up with $399 plus tax to afford an Xbox on my own. I asked my Mom what I could do to “earn” one. She wanted me to get into a private high school of her choice. I spent many weekends studying for the entrance exam and I eventually got into all of the ones she asked me to apply for. When I followed up and asked when I would be receiving my Xbox she claimed that my family was spending way too much on tuition (for the school she asked me to get into to). She also claimed that I should not be spending my time playing video games when I should be taking advantage of the educational opportunities provided. She moved the goalpost on me and said that if I got into a good engineering school she would finally buy me that Xbox. I eventually went to a top ten Computer Science program and when I followed up my Mom moved the goalpost on me again. She wanted me to get a decent job and promised that she would then buy me that Xbox. Fast forward a few years and I am now working as a Software Engineer at the company that produces the Xbox. In case it is not obvious my mom still has not gotten me this Xbox.
Follow Up
When I told this story to my coworkers they claimed that my Mom was trying to lead me to a path where I could afford my own Xbox and that I should buy one now that I had income. That all made sense, but I still wanted her to buy me this Xbox (it’s the principal of the matter). I called her recently expecting her to give me some lecture about how this was all in her grand plan to get me on a path where I could afford my own Xbox, but I should have known better. My mother moved the goalpost on me yet another time; If I get married or obtain a PhD she will buy me an Xbox.
Moral of the Story
The moral of the story is that if anyone can get me married or an honorary doctorate there is an Xbox in it for you.
No the moral comes from the analysis for why I have not just bought myself an Xbox. At the time of writing an Xbox One X sells for $499 plus tax. If I follow the 4% Rule I should be able to afford an Xbox every year with an investment portfolio of $13,722.50 (which is less than 1 years of 401k contributions). So why have I not just bought myself an Xbox? I have been wanting one for over a decade and I could afford it without affecting any of my retirement goals. The simple reason is that I just do not have the time to play video games anymore. I want to clarify that this does not have to do with whether or not playing video games is productive. The reason I do not have time is that there are simply better things that I would rather spend my time on. I would rather spend time visiting family and developing the life long relationship I have with them. I would rather spend time socializing with friends and the people that add tremendous value to my life by constantly sharing diverse thoughts and challenging me to grow as a person. I would rather spend time teaching people about the things that I happen to have spent a lot of time learning and am passionate about. It took about 10 years for me learn; money can buy things, like an Xbox, but it can not buy time for you to do the things that truly matter in your life.
Afterwards
One thing that I want to clarify is that money can buy things that save time, but it can never buy you time itself. For example I pay extra on rent for an apartment close to work, which gets me a 5 minute commute. The average person’s commute is 25 minutes long one-way. With a back of the envelope calculation I am saving about 40 minutes everyday. Expand that out to 260 work days a year and a 40 year career I have saved myself about 290 whole days of commuting. Note that I could literally work out the dollar amount I am paying every month to save on commuting time, but that time I saved didn’t actually get me more time. I am merely able to spend the (finite) time I have on things that that actually matter to me. I think the closet that money gets to buying me time itself is the fact that I have good health insurance. Statistically I will probably be covered for a life saving operation in my old age or be able to live a lifestyle that is very stress free. But that doesn’t actually get me immortality. Any easy way to imagine this is by just looking at the list of billionaires. Notice that they all essentially have an unlimited supply of money that they could not reasonably spend in their lifetimes. But what is one thing that all are equally limited in? Time. Every person on that list will eventually die. In fact we should just internalize this one statistic; every minute Warren Buffet makes $6,731 in just dividends. So every minute Warren is literally gaining money, but losing time. It’s a one way conversion that can’t be reversed. The moral here is that we should spend our finite (ever decreasing) amount of time on things that truly matter to us.
Discussion
Contact Me
Email: bschong2@illinois.edu