Today I visited The Death Clock – a website that estimates how much life we have left. After giving it my gender, age, height, weight, and smoking status, it informed me that I have about 1.5 billion seconds left. Try it; it is rather sobering, even if it lacks precision.
What does this have to do with personal finance? Well… very much because it helps reveal how I think of money.
Money is rather dryly defined as, “a medium of exchange for the payment of debts.” To some, money is power. To others it is a comfort or a source of security. It has taken the form of precious metals, paper, and digital numbers in electronic accounts. However, the best definition of money I have ever heard, and the reason for including a link to death clock is this:
“Money is something for which you trade your life energy.”
Think about it. The majority of us get money by giving up part of our lives. You get up early, you spend time away from your family, you earn by the sweat of your brow, and the whole time your death clock is ticking down. When you are young, and have energy to spare, it is wise to convert some of this excess into money, for as you age you have less energy to spare. The unfortunate part is that it is a conversion, not a storehouse. Life, once traded for money, cannot be changed back if you discover you have more than you need. Our goal then should be to strike a balance: to convert sufficient life energy into the money needed for an enjoyable life, but as much as is possible, to spend our lives actually living.
Counting the Cost
In order to apply this principle, you first calculate your real hourly wage. You will then see exactly how much your life energy is worth, and you will be able to measure the cost of money spent in terms of valuable life energy lost, instead of just dollars. I find this is helpful when trying to learn to live more frugally.
Back in my article on using time well I blocked out how I spend my time. I spend so many hours at work each week, but also spend a lot of time preparing for work and commuting… for which I am not paid. Since my life energy is draining away during this time, it only makes sense to include that time in my workday. A little division, and I have my real hourly wage. Use this handy calculator to discover yours (it includes other variables that can be factored in.)
Once you have finished, you can do some eye-opening conversions. For example:
How much life energy do you spend at convenience stores/restaurants daily? Could you spend less and still be happy if you made your coffee and lunches at home?
How much life energy will it cost if you buy that new toy you are thinking about getting? Is it something you know you will use, or are you simply shopping for the thrill of something new?
Matt has written several times about how much debt costs that also illustrate my point beautifully. With your real hourly wage, you can now see how fast your debt is literally draining you of your life energy. That knowledge should provide you with the strength to run from debt with gazelle intensity.
This is not to say that you should never spend money, but rather to find the point at which spending more brings no additional joy, then learn to say… “I have enough.” It is impossible to truly enjoy financial success if you believe you still need, “just a bit more.” This idea of a finish line will help protect us from spending so much of our lives accumulating things… things that we may not have enough life left to enjoy!
Try it yourself
First, go try out the DeathClock Calculator. Then check out the real wage calculator to get your own numbers. Then, next time you spend money ask yourself how many hours this purchase is costing you, and most importantly, if it is really worth it. Then come back here and tell us about it.
Oh crap! I’m going to die around September of 2055! Wait, why are you slated to die before me? Have you started smoking? Great article by the way, as always.
I was filling out the real wage calculator and thinking….some of these items are pretty disingenuous. Particularly commuting time and dining out expenses. I bike to work, so I enjoy my commute. And if I didn’t have to work, I’d really just end up spending more time biking anyway. (Admittedly that would be biking in exotic locales, but it comes to the same thing) Knocking out my commute time significantly increases my hourly wage, pretty much to my actual wage after taxes. As for dining out expenses…dining out is a choice you’ve made that it’s a valid way to spend money. It’s not part of the cost of earning money, since you could have brought a lunch, and you do have to eat.
Also missing was a vacation time factor, sine that’s time I’m earning money, but not working.
As with all things, it’s all in how you look at your life. If you see work and everything surrounding it as something that you do just so that you can have some money, you’re probably going to be excessively negative view of the time spent working and any related activities. If you enjoy working, then it’s not so bad.
Robert Espe says
I’m impressed that you ride your bike to work, way to go green, and you are right, you’ve found a way to redeem your commute time as physical acticity/recreation time. So I guess that one doesn’t apply to you, but I’m sure you know many people with long commutes.
I partially agree with you about dining, but people usually eat out more when they work because they don’t have time to fix lunch. Home prepped meals require either a dedicated homemaker, potential recreation time spent preparing tomorrow’s lunch, or more expensive pre-packaged food. If you really eat the same thing, then leave that line blank, but it makes sense to me to include any difference in the cost between your regular lunches and whatever you eat at work.
Good point about vacation, but that makes the math hard, and I don’t think it takes away from what I was getting at. I also agree that it is important to enjoy your vocation, and I REALLY love my job. But I still wouldn’t do it if I didn’t need to,
With the commute, I still think it’s somewhat disingenuous. Many people have long commutes, but not because they have to, but because they’ve chosen to live far, far away. In essence, rather than being a cost of earning money, a significant portion of their commute time and expense is actually a part of their cost of renting or owning their home. (A sensible way to look at it, since many people live so far away in order to pay lower rents/buy cheaper land)
I know what you’re getting at…everything you buy has a tradeoff in the amount of time you’ve spent obtaining it. And that’s fine. But in addition to discussing the tradeoff of time for money, you’ve asked people to use a discounting calculator, which I think spits out an unreasonably low number.
As for home prep of food…making dinner with enough servings to provide a lunch takes much less leisure time than making lunch. Someone who’s working 80 hour weeks and can’t make either meal might justifiably include the cost of eating out, but if you’re cooking dinner, there’s a nearly-free lunch available.
Vacation, paid sick leave, and general holidays really does substantially reduce the number of hours worked for the same amount of money. I realize it introduces a lot of additional variables, but that’s kind of my point…the discounting calculator introduces a lot of variables to dubiously reduce your hourly earnings, while ignoring any variables that might increase it.
He he, not been to the death clock yet!! I don’t know if I can face the truth right now 😉
I have been thinking of purchases as hours for quite a while now. I have just recently decided that any big purchases require at least double their value in the savings account. Hopefully I will up this to 3/4/5 times the value eventually..
Len Penzo says
I just entered my info into the death clock and it said I’m going to die tomorrow. Dang cigarettes.
Any suggestions, Neil? And, please… make it quick. 😉
All the best,
Len Penzo dot Com
Matt Jabs says
Len, spend some time reading WhyQuit.com —> several people at work have successfully quit after spending time there.
I believe the two calculators used in this article are not so much about exact figures as about making people think twice about how they choose to spend their precious time. The really pertinent question here is whether or not we have made choices that reward us with a sense of purpose, a sense of having made a difference in the world, of time well spent. A job is not just about making money, although that medium of exchange has become necessary to support human existence in the world. Some folks have made a judicious choice in their employment and feel as if the time spent at work is well spent. Some people may have traded the opportunity to have a fulfilling job in order to make more money. That says a lot about where their priorities lie. I believe the choice to earn more money at the expense of ones fulfillment will eventually work against one in many ways. Our society has evolved into a system where many of us have become reliant upon an employer and we no longer have control over our time, because our employer is paying us for our time, thereby giving him the right to dictate when and where we spend our time. We may also have to sacrifice our personal standard of behavior in order to comply with the terms of employment. Organizing ones life around one’s employment is also important in the choice department. Choosing to live closer to ones employment to reduce commute time may force one into living in a less desirable area, but there will always be pros and cons. Choosing to spend time preparing food that is healthy is a worthy endeavor. The payoff comes on many levels, including being able to perform better at your job and live a healthier, more productive life in general. It may even help to prove the death clock inaccurate! It is all about choice; all about what one values.
Matt Jabs says
Beautifully put mom! Ultimately, my goals for debt repayment are centered around the reality of being charge of my own time!
Thanks Matt! I must also point out that the paradigm that we now live with is something relatively new in modern history. There was a time in this country when a man could live independently on his own land, grow his own crops and raise his food animals. Time was centered more around survival back then. In our modern times, with all of the time/labor saving appliances and devices, if we can find a way to be in charge of our time, and not beholden to an employer, we have the real possibility of choosing to spend our time as we would like.
Matt Jabs says
And that is precisely where I intend to get! 🙂
Financial Samurai says
Hi Robert – Thanks for your article. Mine said 87 years old…… hmmm… not that long either. Does your 74 year old figure make you want to work out more and eat better? It’s gotta right?
If we know the end, we can better shape the now.
Welcome aboard the Yakezie Oda Matt. Look forward to seeing you help out the community (there is a badge too btw that many of us have put up).
Matt Jabs says
Thanks Sam. I have to draw the line somewhere on badges (I have so many that people want put up) so I draw the line at none. I know you understand. 🙂
Financial Samurai says
No badges, no blog roll, no recap. No problem. 🙂 The Yakezie Group is hitting a limit of 50 due to a Google Docs spread sheet limitation, so we’re creating separate groups and perhaps a waitlist. If you don’t want to be in the challenge it’s not a problem, because there is a lot of demand. Just let us know.
Matt Jabs says
I surf each Yakezie site every day, and RT them often – if that isn’t enough then do whatever you gotta do Sam.
Financial Samurai says
Gotcha. It’s really out of my hands, and it’s up to you. The challenge has created a life of it’s own. It’s great you want to participate and RT others. I always appreciate your help.
I understand the importance of the business aspect of blogging for you regarding SEO and stuff. The challenge isn’t there yet, and hence money really isn’t on our minds. It may come in the 2nd challenge, but not now.
Steven and Debra says
Interesting article and it parallels somewhat some of the principles we make in our four-part series on hoarding. We would, however, take exception to the following:
“When you are young, and have energy to spare, it is wise to convert some of this excess into money, for as you age you have less energy to spare. The unfortunate part is that it is a conversion, not a storehouse. Life, once traded for money, cannot be changed back if you discover you have more than you need.”
Although our lives have a finite end, we can take our surplus energy, stored in the form of money, to buy time back on the backend of our life spectrum. Certainly, we can’t buy back the exact time we may have missed with our families, while out earning a living, but if we do find we have a surplus of money, toward the end of our lives, we can buy time on the backend of life. How? By using our surplus money to buy the time of others who are raising their own young families and need work. The gutters may need cleaning, the yard mowed, the barn mucked out, the cow milked, the oil changed on the truck, the flat fixed on the tractor, or our taxes prepared. In our twilight years we can pay others to do these tasks for us so we can have more time to spend with our children and the grandkids. Our children may have vacation time they would rather spend in their own manner, but if they can get time off without pay, we have a storehouse of money to compensate them for those lost wages. In doing so, we are buying precious time for them and us to spend together.
When we are young we generally have more time than money, but when we are old we generally have more money than time. This is how it probably should be. A storehouse of money DOES represent a storehouse of time in that we can use money to buy the time of others who have a surplus of time and a deficit of money. It’s a neat trade-off. It creates jobs for those who need them and allows us to make-up for the time lost in our earlier, more productive and energetic years. The time gained back is not an exact reproduction of the time lost, but it is no less valuable. Actually, time seems like it becomes even more valuable as we age.
Robert Espe says
Thank you for sharing this unique and interesting perspective. I trust you understand that I meant that most of the time (although certainly not always) by the time one realizes they have this extra money, they have already retired, and so THEIR time cannot be bought back. But your idea of using such a loss to save others from the same thing is a great one, if all the parties involved understand the loss.
Steven and Debra says
We probably could have made our point more clearly. We will attempt to clarify.
If we buy the time of others, by hiring them to do things for us that we would have had to do ourselves, have we not bought back, with our monetary surplus, a portion of time for ourselves to spend in some other manner?
We hope this clarifies.