A Yachtie's Guide to Personal Finance

Time is money, bitches.

My mission with themoneydock is to persuade ya’ll to think differently about money & personal finance.  To achieve this, I find myself repeatedly wondering how I can make my content, which is typically boring for most, relatable and different.  

One of my biggest hangups is understanding why money is spent so freely and in a seemingly unconsidered manner. 

I commonly hear the phrase “well I have the money” or “its fine we are yachties” used to justify certain purchases.  Now, I’m not suggesting you shouldn’t ‘shout’ the bill every now and again or pay it forward in some way, no, my point is not to spend for the sake of it or to avoid an awkward interaction (think end of dinner when the bill comes).

I think the best way to expose how senseless spending is effecting your future financial security is by changing your spending perspective. Right now you probably think of spending in terms of Dollars/Pounds/Euros/Yen/Dirhams/Rand or whatever currency you spend in.  

Thats cool, it’s expected and totally normal but what I want to introduce is the concept of thinking about money in terms of time. 

Money is like the tide, it comes and goes, however, time, does not.  We begin to die the day we are born, is a phrase I’m sure you’re familiar with but how is this relevant to personal finance, you ask? Well, as suggested by the phrase, time is not infinite, time is limited.  

You can make endless amounts of money but you cannot make endless amounts of time. For this reason, it is important to find a balance between your time and your money. 

If time is money, then I’m broke

Say, you earn $48,000 a year which is $4000 a month, $1000 a week, $200 a day or $20 per hour.  This article assumes a 50 hour work week which I know is very unlikely for yachties! This is just a nice round number example. 

By the way, working your own number out might cause sadness or anger for those who work many hours but keep reading through the tears. 

Since we have calculated our hourly rate, we can more easily relate our dollars to our time, in that, one hour of work is equal to $20.  So, when you next buy a $450 dollar DJ set you can understand the expense through your time.  $450 = 22.5 hours of work (remember, $20 is equal to one hour of work).  

Hopefully this technique inspires you to think again when window shopping, or more like breaking through the window and insisting the cashier take your money. 

At the risk of overusing an already overused example, the same can be applied for purchasing a coffee, or, (insert ridiculously named Starbucks drink here). 

A coffee sets you back $4 which is just under 15 minutes of your time.  But, buying a coffee everyday sets you back $28 a week equalling $112 a month which equals 5.6 hours of your working life.  Is a coffee everyday really worth 5.6 hours (half a day) of work if a cheaper alternative is available? 

Sacrifice your Starbucks

Lets look at some other examples;

  • New Iphone = $1300 = 65 hours or over 1 week one day of work
  • Barely used nice car you keep back home = $8000 = 400 hours or 8 weeks of work
  • Luxury hotel weekend away = $600 = 30 hours or 3 days work 
  • Newest GoPro/Drone etc. = anywhere from $600 – $1500 = 30 hours or 75 hours of work
  • Eating/drinking out 3 times a week = $40 per time = $120 a week = 6 hours of work

You get the point. Before your next purchase convert the money amount into hours of your life.  

Personally, my technique is to make the conversion and then ask myself if I’d be willing to work that again for whatever it is I am about to purchase. 

Normally the answer is no! 

This isn’t due to my cheapness but due to the purchase being something I desire right this moment and will soon be forgotten.  I am delaying my gratification, I would prefer to have that money available for investing/future use rather than buying something I’ll forget about the next day.

 Of course, this is small scale stuff but I encourage you to calculate your own little expenses and see how much they add up to!

Before you pass this off as a ‘this freakin’ guy is saying I should never buy anything’ article, wait a second. You should buy things! I’m suggesting you buy things that bring value to you and don’t take away from your future wealth.  

Don’t waste money, don’t buy shit you don’t need, don’t throw money down the drain, don’t buy things you don’t want to impress people you don’t like (is that how the saying goes?), save your money etc etc.  You’ve heard them all, when you strip these sayings down the message is simple. 

Be a conscious spender, sure, buy things you really love & value but save and scale down on the things that you don’t. 

“Beware of little expenses, a small leak can sink a big ship” A famous person once said, probably. 

So, the next time you’re about to make a purchase, ponder how many hours of your life that costs you and ask yourself, would I work that again for this? 

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