‘Time is money’ is an old adage that underscores the truth that we have only one life and how we choose to spend it costs us dearly. For the purposes of this article, we want to consider how you can make the most money with your time. We’ll show you that the best way to do that is to disconnect your time from the making of money.

In the traditional work model, people either work for an hourly wage or a salary. While they both have benefits at first glance, each is still inextricably tied to a transfer of your personal time for an employer’s money.

In the case of an hourly employee, there is a direct exchange between the number of hours they work and the amount they are paid. This seems like a reasonable trade. After all, the employer has a job that needs to be completed and is willing to pay someone to work until the job is completed.

Imagine you are building a house. You need to hire several tradesmen to do different jobs within the house, the wiring, the plumbing, putting up drywall. You will pay workers an hourly wage only for the time required to complete their part of the house. However, if you are the electrician on this job, once you’ve finished the wiring, you can’t make more money by doing the drywall work, you have to go on to another job requiring your skills. So as an hourly employee, if you want to make more money, you have to work more hours somewhere. There is no other means of compensation available within this model.

The salaried employee is thought to have a better deal. S/he is paid an annual salary for a job, regardless of how many hours are required to complete the job. In an ideal model, the employee should be able to set their own hours as long as they complete their assigned task. For instance, if you are an accountant and are able to come in at 7a.m. and finish all of your accounting work by noon, shouldn’t you be able to leave for the day? Yet imagine the reaction of your co-workers or your boss, if you actually did just that. Chances are that within a very short time you would find yourself without a job, even though you were completing your work. In this model you are effectively punished for being efficient. And other workers, doing the same job, but staying from 7a.m. to 7p.m., are rewarded for their ‘hard work’ even though they may actually be less efficient than you are.

How can you leave the rat race behind?

The key to breaking the trade-off between money and time is to create a product or investment that creates a flow of money after an initial investment of your time. What would this look like? Here are some examples to get you started:

If you are a writer, you can create a website or blog that has sponsored advertising that rewards you for the number of people who visit your site. Better yet, if you have a related product and offer it for sale on your site, while you have made an initial investment for the product and its distribution, you can continue to be paid as long as it sells. This is the traditional model for authors who write a book, publish it, and then receive royalties for each book sold. Even long after they’ve finished the work and are sitting on the beach, payment for their work continues to flow in.

The same model applies to owners of investment properties. Imagine you are able to buy a small shopping center with five stores. While you have made the initial investment in the purchase price, and will have to maintain the property, the money from the five shopkeepers who rent store-space from you will pay your mortgage and eventually pay you for simply owning the shopping center. Ten years later if you decide to sell the property you will, hopefully, be able to realize a capital gain on your original investment, in addition to all the monies you’ve collected over the past ten years.

Here’s how you can get started today:

• Create a product or service that cash flows without your constant input
• Become a business owner or investor
• Learn how to leverage your time and skills

Once you decide to create alternate forms of income to the traditional time/money trade-off, you will find yourself feeling empowered by your choices rather than a victim of the workplace. Think of how you can use your skills to form your own business, especially where you can offer a product or service that others can buy even when you are not present. Talk to others who are already doing what you want to do and ask them how they got started. Small business ventures can grow into larger ones, and eventually become your only necessary  means of income. Then you are truly making the most of your time.

Tags: rat race, Wealth, work

This entry was posted on Wednesday, April 14th, 2010 at 11:47 am and is filed under Freedom. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.