Tax time is a special time of year in that it forces us (at least those of us who do our own tax returns!) to take a look at our finances. We submitted our own returns last month, and have just received the refunds. But no matter the outcome – tax refund or tax bill – tax time can be full of pressure – and communication problems.
If you’re in your 20s or 30s, chances are, you have thought of starting your own business. Almost 70% of Taiwanese employees between 21 and 40 want to set up their own businesses, and a University of Phoenix survey showed 63% of those in their 20s are either already or wanting to become business owners. Maybe digital nomads.
The lure of entrepreneurship appears correlated with age, possibly because those in their 20s have fewer responsibilities in the way of children or mortgages, they may have parents that are willing to financially support them, and they may deal better with the grueling hours required. I suggest, with the benefit of a couple of years’ experience, people in their 20s may also simply be less burned out by work. But Minda Zetin at Inc suggests that witnessing startup culture may be another important reason.
The relationship between time and money is complex. We talk about ‘saving’ and ‘spending’ both money and time. It’s very tempting to say to ourselves that we could get everything we needed to done if only we had a great expanse of uninterrupted time.
‘I could organise my finances if only I could have one afternoon a week spare, or a whole day to set aside to do my taxes!’
‘I could write that novel if I were rich enough to be holed up in an hotel for a year!’
‘I could learn French if I could live in France for six months!’
What is much harder to see is the amount of time we could be spending, each and every day, on these bigger goals we’d like to achieve.
We arrived in Milan, Italy yesterday, hungry. All throughout the flight, visions of plates overflowing with pasta danced in my head.
Upon landing at the airport, we took a bus straight for the city. On the way, we fervently started looking up Italian restaurants – and, no surprise, there were over 6,000.
But all of them were closed.
‘Time is money’ wrote Benjamin Franklin in 1748, in Advice to a Young Tradesman, Written by an Old One:
Remember that TIME is Money. He that can earn Ten Shillings a Day by his Labour, and goes abroad, or sits idle one half of that Day, tho’ he spends but Sixpence during his Diversion or Idleness, ought not to reckon That the only Expence; he has really spent or thrown away Five Shillings besides.
To update this slightly, Franklin is saying that there is an opportunity cost involved in deciding not to work: if you take a week’s unpaid holiday, you need to consider not only the costs of the holiday, but how much money you could have earned during that time.
Over time, the idiom has come to be associated perhaps more commonly with other people wasting your time rather than you not making the most of it: ‘I can’t afford to spend a lot of time standing here talking. Time is money, you know!‘
But what is the relationship between time and money?
I have always found it strange that the gold watch (or clock) has long been considered a traditional retirement gift.
Surely once you are retired, you will have more time to enjoy, and less cause to watch the minutes tick by to home time, less need to set an alarm to wake you up?
It is estimated that volunteers contribute about $400 billion (USD) worth of services worldwide each year (calculate your contribution according to an average rate). Chief economist of the Bank of England, Andy Haldane, is quoted in The Economist as saying that in Britain, formal volunteers each year do the work of 1.25 million ‘proper’ employees, and nearly a billion people are engaged in volunteering worldwide. Interestingly, Turkmenistan and Sri Lanka lead the charts, thanks to national days of ‘compulsory volunteering’ in Turkmenistan. Yet the economic impact of volunteering is not captured by GDP statistics as no monetary transaction takes place.
Andy Haldane talks about three types of value that volunteering creates: economic, private and social. Just as we need to consider various types of capital to evaluate our own wealth, it’s important that we consider the types of value we might contribute through volunteering – at home or abroad.
One of the joys of no longer having to work is being able to determine what you will do, and for how much. We’ve spent part of our time in Fiji volunteering through IVI. Had we not already resigned, it would be impossible for us to take time off in the middle of the year like this.
Earlier this year, we were in Fiji when Cyclone Winston struck. We were out in the Yasawa islands when the resort manager handed us two weather reports – one out of the country’s capital, Suva, and one out of the nearest city, Nadi.
Each predicted a different path for the cyclone – one heading to Nadi, one heading to the Yasawas.
Perhaps you’ve heard the idiom ‘don’t put all your eggs in one basket‘?
This phrase pretty much sums up the concept of ‘diversification’.
‘Diversification‘ is a risk management strategy, usually applied to investment portfolios. Investing all of your money in Coca-Cola shares would be an example of poor diversification, while having a portfolio that consists of some investment property, 15-20 different companies’ shares across a variety of different sectors, a bit in cash, and some bonds and international stocks would be considered much more diversified.
But have you though about the concept of ‘diversification’ in relation to your income?
Recently, I filled in the shortest form that I ever saw over the course of my career. A single page. And yet it was more difficult to complete than any of the 30+ page forms I’ve filled out before. It was a resignation form. Quitting doesn’t come to many of us easily. No one wants to be a ‘quitter’. But does having quit something necessarily make you a quitter?
The final chapter of Steven Levitt and Stephen Dubner’s excellent book Think Like A Freak, following on from their (Super)Freakanomics fame, is aptly titled ‘The upside of quitting’. They identify three important forces that bias us against quitting: