Time Value of Money

I was always in the mentality of save today, for the benefit of tomorrow; foregoing the unnecessaries—it was this or that, not this and that. Life is full of trade‐offs, particularly when it comes to time—and money. There's a concept called the time value of money, which means the value of money today is worth more than that same amount of money tomorrow (aka in the future).² Logically, if you receive $100 today, then you can immediately use or invest it today. Either way, the $100 today has utility. However, if you receive $100 one year from now, the money doesn’t have utility until then (all things being equal). So, everyone wants money and they want it now. This is the financial principle of the time value of money and is also referred to as time‐preference of money. We saw this financial principle in action in Chapter 5, when looking at the power of investing over a 21‐year period. If you invested $100,000 into the public equity market, which returned about 6.9% from 2000 to 2021, then your $100,00 would be $406,005 by 2021. This is the power of time, money invested, and our good friend, compounding.

Monetary Value of Time

While saving and strategizing, leading up to my very own Great Resignation, I began calling into question what many of us often think about: What is my time really worth? This is called the monetary value of time. There are different ways to calculate the value of your time in dollar terms. Here's an example using the most straightforward, approach.³ Let's say you make $100,000 a year as an accountant. Then let's assume your typical work week is Monday through Friday, 9 a.m. to 5 p.m. (40 hours per week × 52 weeks in the year). That places you working 2,080 hours per year. Finally, we take the total money you earn in a year divided by the total time spent earning that money in a year, and voila, your time is worth $48 per hour. This easy calculation adds valuable perspective to how much time and energy we give things in our lives. Stressing over the traffic jam this morning? Not worth your time. And as your earning potential increases, so does the monetary value of your time. Usually, your earning potential increases with time, energy, and increased experience. That said, as the years roll forward, your earning potential increases while your time remaining decreases. This is, fundamentally, the reason why we tend to reprioritize later in life, prioritizing the intangibles of life over the tangibles. But for many this reprioritization is happening now, regardless of age.

“Trade money for time, not time for money. You're going to run out of time first.”

—Naval Ravikant

Knowing the monetary value of your time helps in determining and prioritizing what's most important; it shapes your relationship with time. We begin thinking about investing hours/time, just the same as we think about investing dollars/money.

Taking this one step further, consider the non‐monetary value of your time. By this, I mean consider: Where is your time (and energy) going? What are you supporting each hour of the day? in terms of work or otherwise. Are you spending 40 hours a week on meaningful work, propelling society forward in a positive, consequential way? These intangible considerations are important. Imagine earning a whopping $1 million a year, with each work hour worth $500, but you're making this money by doing things that are a net‐negative for you or society. This dilutes the value of your working hours, even though it's not monetary dilution. Perhaps the stress of your annual $1 million paycheck is wreaking havoc on your mind, body, and spirit, and taking years off your life. Meaningful work that is a net‐positive for you and society increases the value of your hours. Quality use of your time is just as important as the quantity used.

It's worthwhile pulling forward the concept of multiple streams of income and passive income from Chapter 5. First, having multiple streams of income is a smart way to structure your cash flow, so you have multiple incomes coming to you from different sources, at different times. This is particularly important if some streams pay semi‐annually, because of the time value of money principle. For example, let's assume one stream of income pays semi‐annually, meaning you receive $25,000 every January and $25,000 every June. Your January payment has more value to you because you can spend or invest it earlier in the year. Your June payment does not have value to you until half way into the year, when you can spend or invest it at that time. I'm sure if you had your way, receiving $50,000 in January each year would be preferred, because you could spend and/or invest the money sooner rather than later. As we know, the sooner you invest money in the market, the sooner it has the potential to grow.

Second, passive income allows you to generate income with minimal investment of time and energy. By definition, passive income is earned through little participation and involvement. This directly translates into having more time to do other things, besides working for purposes of generating income. Tim Ferriss talks about this in his book The 4‐Hour Work Week.

Technology and Time

With a grand premium placed on time, it's understandable why we want to optimize it. Consequently, technological advancements aim at improving our relationship with time. Over the century, technology has improved access to information, communication, transportation, productivity and efficiency. Here’s a household example: fridges. In 1913, the refrigerator became available for home use.⁴ Fridges extend the shelf‐life of food and it’s nutrients, which are so vital for our well‐being and vitality. Visualize everything in your fridge right now, and consider how refrigeration optimizes time. Perhaps you even order your groceries online with delivery straight to your door. It's astonishing. As time goes on, additional iterations and innovations help us to manage this precious resource. The apps on your phone, most likely, highlight this point. Specifically, Uber spares you from standing on the street corner with your arm in the air, for an unknown length of time. Online banking makes it possible to deposit a check with a few clicks of a button, versus driving a few miles down the road to your local bank. These are time savers. However, it's possible the apps on your phone are stealing your precious time. We're all guilty of overscrolling or checking our phones in anticipation of a ping. The “attention economy” commoditized our time, which is why it's so important to consider where your curiosity goes. As Tony Robbins says, where your energy flows, your attention goes.

The goal is to leverage technology, to optimize time and energy.

Energy and Work

Modern civilization is possible because society learned to convert energy from one form into another form.⁷ People use energy to walk, to drive cars, to cook food, to teach students, and to program code—along with many other tasks.⁸ Some of these activities are done in exchange for money, while others are not. You can use your energy to be a cook at a restaurant, to become a teacher at a school, or to program code for a new tech start‐up. From an economics perspective, the more efficient you are with your energy, the more productive your output is over time. Simply put, the more efficient the input, the more productive the output. This is where we start to see the relationship between energy, work, and money coalesce. Let's home in on how we convert our energy at work, thereby making money in exchange for our efforts.

Work is called work because it requires the exertion of energy. The type and amount of energy exerted depends on the nature of your work. If you're a construction worker, you're exerting mostly physical energy. If you're a software engineer, you're exerting mostly mental energy. Either way, the quality of your health impacts the amount of energy you have to expend on work, and therefore impacts how much money you can make. In order to preserve energy for other things besides work (living and playing), it's clever to consider working smarter versus working harder.

Managing Time and Energy

In conversation, we hear the saying, “pay attention.” This expression implies two important characteristics of attention: it is limited and it is valuable (just like time). When we “pay” attention to one thing, we deplete our budget of mental resources, thereby having less attention available to spend elsewhere.”⁹

Managing time and energy is different today, than merely five years ago because of technological advancements and cultural shifts. As a consequence, there are new distractions and new priorities at play. But one thing remains, managing time requires consistent discipline. Let's consider the major pulls on time and energy (attention): technology and stress.

First, it's no surprise that technology saves us lots of time, but it also wastes lots of time, too. In the United States, 46% of Americans believe they spend an average of four to five hours on their phones each day. On the extreme end of the spectrum, 11% claim to spend seven or more hours on their phones each day; that's nearly a day's work. Let's slice the data another way: 67.3% of millennials say they are on their phone more than preferable, of which 30.5% are taking steps to reduce their screen time. Among Gen Z's, 76.3% are on their phones more than preferable, with 41% taking steps to reduce their screen time. According to research, 51.8% of people use social media apps out of boredom. Further, 42.8% of people associate screen time with trouble paying attention.¹⁰ The numbers speak for themselves; technology is a major pull on time and energy (attention).

Second, stress depletes our resources, namely time and energy. As we’ll recall from Chapter 6, stress can come from many sources, and continuously, resulting in chronic stress. This tension negatively effects our body, mind, and soul, which compromises the wellspring of our vitality. When our vitality is compromised, so too is our ability to work. Many even say that money is a form of energy.

Stress definitely pulls on time and energy. Life will always bring some level of stress in our lives, some more so than others. But the reasons for our stressors are changing shape and texture. An obvious example: big life changes caused by the pandemic. Everyone reading this has a story and experienced a stressful challenge as a result of the pandemic. Odds are, you're still managing the forced pressures from this historical time. Many feel like nomads, not in body but in mind. Our minds are moving from one thing to the next, which is exactly why managing our time and energy is so important. Being intentional with decisions and actions helps to prevent and alleviate stress. That said, let's look at how to best manage time, which in turn helps in managing energy and attention other resources.

“The price of anything is the amount of life you exchange for it.”

—Henry David Thoreau

The secret to managing time and energy (attention) is a combination of intentionality and consistent discipline. Here are ways to work smarter, not harder, using your resources in prudent ways.

1. Single‐tasking (versus multi‐tasking)
2. Using phone with intentionality, and as leverage
3. Ritualizing sleep time
4. Saying no to things that are not value‐adds
5. Healthy, nutritious intake (food and media)
6. Minimalizing/simplifying
7. Using calendar time blocks
8. Turning off notifications on your phone

The Pareto Principle

Your time plus your energy, equals your life. Reason, it's absolutely worth thinking about how to align your time with your energy in productive ways. Pareto Principle, otherwise known as the 80/20 rule. This principle states that 80% of consequences come from 20% of causes. Italian economist and sociologist, Vilfredo Pareto, discovered this principle when he observed and researched the distribution of wealth within society. He found that a large portion of wealth was held by a small portion of the population.¹¹ Many have gone on to apply this principle to other areas of economics and business.

That said, let's apply this principle to time and energy management, highlighting the potential for increasing productivity in work (money) goals. The Pareto Principle supposes that 80% of your results will come from 20% of your efforts. With this in mind, evaluate your tasks, and prioritize the 20% that will provide 80% of what you value. This principle helps in prioritizing and focusing on the activities that have the biggest potential impact on your goals. Further, it's best to use your peak time and energy for the most impactful tasks, those that are often harder than the less impactful tasks, yet stand to yield the highest reward. Deep work often translates into deep and meaningful results, in shorter amounts of time.¹²

“Distraction is dilution.”

—Unknown

The Attention Economy

Attention is a scarce, intangible asset and one of the most valuable resources in the digital age. Your attention is valuable to you, and it's also valuable to businesses. Businesses are well aware of the potential to convert attention into dollars, which is why so many companies are competing for your time and energy. Companies distribute targeted marketing ads based on the data they constantly mine from your activity online. More attention means more sales, so there's a clear incentive to draw people in and maintain their gaze for as long as possible. American psychologist and economist, Herbert Simon, coined the term “attention economy,” and made the clever observation that in an information‐rich world, a wealth of information results in the poverty of attention.¹³

Advertising plays a huge role in the attention economy. The way ads are distributed and presented is changing rapidly as the battle for attention gets uber competitive. Facebook and Instagram are testing augmented‐reality advertisements.¹⁴ Others are making user interface adjustments, making it harder to avert and divert your eyes elsewhere. It's all really bonkers. The attention economy is valued at billions of dollars.¹⁵

While an intentional social media diet may provide reprieve from the draws on your attention, Web3 might provide a more meaningful counterbalance in the future. Remember how I mentioned that companies are able to do targeted marketing based on all the data constantly being mined from your activity online? Well, Web3 would stave off this data mining by enabling users to own their own data. This means you would control who sees your data and what is done with it.¹⁶ Basically, your gold mine of data would be placed into your hands, rather than into the hands of businesses and advertisers. This is another example of individual empowerment, a theme woven throughout each of the Principles of Invisible Wealth thus far.

While this may be a bit down the road, it's notable and promising to see people placing their attention on redefining the power dynamics in the attention economy.

Extraordinary Experiences

Extraordinary experiences add a rich dimension to life, the value of which is reflected in society and in the economy. We're witnessing the shift from spending on tangibles, i.e., goods, to spending on intangibles, i.e., experiences. In the United States, the top 1% have spent less on material goods since 2017 (and are now spending more on education and healthy lifestyles).¹⁸ We saw this through the lens of status symbols in Chapter 7, when discussing how people are forgoing luxury goods for luxury lifestyles, i.e., memberships and experiences. The 1% aside, millennials are leading the way for prioritizing and purchasing experiences.¹⁹ Among millennials, 78% are spending their time, energy, and money on experiences over materials.²⁰ This generation isn't valuing the traditional markers of success, like buying a car, but, rather, on experiences instead. A McKinsey report blends these points together, and also folds in the role social media is playing in the prolific demand for experiences:

“The fact that millennials are now the largest spending cohort, and that the cohort of higher‐income consumers is growing as well, creates greater confidence in the sustainability of the trend. To understand the underlying drivers of this shift in consumer spending behavior, we see three key factors, which are particularly applicable to millennials but hold true among older consumer cohorts too: a more holistic perspective on what leads to happiness, the growing importance of social media, and an increasing fear of missing out. They are unlikely to dissipate, which suggests that this shift in spending behavior will stick.”²¹

Agreeing with the three key factors this McKinsey report lays out, let's explore each, starting with the quest for happiness. Happiness can be found through experiences for a few reasons. First, we often share experiences with other people. Sharing experiences with others is a way to form strong social bonds, which we all crave. Humans are social, by nature; we are literally hardwired to connect. It's a necessity, and this necessity became glaringly obvious when we were all quarantining in seclusion for months on end. Human connection through shared experiences makes us happy.

Second, experiences typically provide a great(er) return on investment. The joy we get from purchasing a new object usually declines with time. Joy typically declines anywhere from six to eight weeks and up to three months, after purchase.²² The happiness of seeing the new shiny object on our table, in our closet, or in our garage—fades with time. Plus, objects require maintenance. And when you have lots of objects, this translates into lots of upkeep and maintenance (aka time and energy). Not only that, but the value of the object may actually fade too—aka depreciate in value (e.g., cars). Experiences and memories stay with us for a lifetime, whereas objects don't.

Third, extraordinary experiences make us feel alive, they stretch us. They allow us to explore the continuum of being. And sharing this aliveness, this stretching into realms unknown, with others— is priceless. After all, the reason for intentionally managing our time, energy, and money is to fully experience life, to feel, to max out our aliveness and our sense of vitality.

We share these experiences with others in the moment, and we can also share the story of the experience with others, thereafter. Take for example, attending a dinner party or a work gathering; what do most people talk about, besides the weather—their experiences. Therefore, there's this sort of compounding effect from the extraordinary experience that lives on beyond its initial occurrence.

“The very purpose of life is to experience life in its fullest depth and dimension.”

—Sadhguru

Extraordinary experiences make us feel alive because they deviate from the norm, from the mundanity of the day‐to‐day. Some of us search for “peak experiences,” those described by psychologist Abraham Maslow, as profound and meaningful events.²³ These awe‐inspiring moments are saturated in feelings of pleasure and bliss. Whether extraordinary or awe‐inspiring, the experiences are etched into the essence of our being, and are anything but mundane. However, the mundane, the day‐to‐day moments provide just as much opportunity to shape our lives as the peak moments do. Let's draw a parallel between peak experiences and peaks in the stock market.

There’s a parallel between investing money (energy) into the stock market cycle and investing time and energy throughout life. Often, both as an investor and as an individual, we seek the peaks. In other words, we seek the market highs and peak experiences, yet the market lows and mundane moments deserve equal emphasis. A savvy investor knows how to optimize market dips, just the same as a savvy individual knows how to optimize mundane moments. As an investor looking for investment opportunities, you can view a bad market as a great time to invest. As an individual looking for valuable experiences, you can view the mundane moments as a great time to rest, reflect, and recharge—which are necessary for truly enjoying (peak) experiences with self and others. Additionally, moments of solitude provide the space for self‐inquiry, which is incredibly valuable (for reasons we'll explore in the next chapter). Finding opportunity in both the ups and downs allows you to fully appreciate the market cycles and the cycles of life—the totality of being.

“Content with an ordinary life, you can show all people the way back to their own true nature.”

—Lao Tzu

Ordinary Experiences

The mundane moments, the trite to‐dos, are valuable. Why? Because the extraordinary experiences are measures against the ordinary; the ordinary acts as the benchmark. Beyond this, time, as we know, is precious and finite, and ordinary experiences make up most of our time. If time is precious, then it follows that so too are our daily, ordinary experiences.

“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”

—Marcel Proust

Now let's address the elephant in the room: What about bad experiences? Wisdom suggests those are precious, too. As we all know, life is full of twists and turns, which sometimes lead to dark places. This is life, they say. But what “they” also say is that wisdom is found in these dark places. These experiences also stretch us, across the continuum of being. And bad experiences can be channeled into valuable lessons. There are times when we color with yellow, with green, with pink pencils, and there are times we color with black, with brown, with gray. All are necessary contributors to a beautifully drawn and colored life.

Challenging experiences invite us to view life in different ways or through different lenses. Pencils are sharpened during these times, under pressure. The precision with which you're left, helps in dealing with the next (bad) experience, with well‐informed accuracy. As Will Rogers said, “Good judgment comes from experience, and a lot of that comes from bad judgment.” Better yet, some people say that learning from other people's experiences is the best teacher, by hearing or reading about their lives, and lessons—sparing you the scraped knee or broken heart.

Experience Economy

Something of value? There's an economy for that, and the (extraordinary) experience economy is no different. It's projected that the experience economy will reach $12 trillion by 2023.²⁴ This projection is supported by the fact that we've already seen a massive shift in spending four times more on experiences, versus buying physical goods.²⁵ This massive shift is in alignment with the other trends we're seeing, namely, the shift away from buying things. Many are less inclined to own cars (as previously mentioned), given the rise of the sharing economy. Many are more inclined to share experiences with others in person, counterbalancing the hours spent online. Essentially, there are a myriad of factors influencing the rise of the experience economy. What's more, technological innovation promises to enhance our experiences; entering from left stage, in comes, the metaverse.

“The metaverse is the next level of the ‘try before you buy’ concept, and it offers new vectors for advertisers and marketers alike, and they should not be underestimated, no matter how we feel about a virtual universe.”

—Simone Puorto

The metaverse offers experiences beyond our physical world, hence its name. Meta comes from a Greek word meaning “after” or “beyond,” and is often used as a prefix meaning “more comprehensive” or “transcending.”²⁶ And that's exactly the intention of the metaverse right now, to go beyond our current universe by offering experiences that immerse and transcend the norm. The metaverse is an umbrella concept that covers terms such as augmented reality, virtual reality, mixed reality, virtual economies, headsets, and digital glasses. It relates to a continuum of immersive experiences, which are value‐adds for learning, working, or playing.²⁷ The metaverse has the potential to extend our experiences; it's a feature, added to certain experiences. As Albert Einstein said, “Life is just like a game …,” and the metaverse is here to prove it.

There's clearly a fundamental shift in our concept of value within society and therefore, within the economy. We walked through the various economies pegged to the 5 Principles of Invisible Wealth: the creator economy, the knowledge economy, the influencer economy, the attention economy, and the experience economy, to name a handful. The through line: each of these economies are valuing intangible assets; an abundance of which results in Invisible Wealth.