People often think in terms of their hourly earnings. While standing at a clothing rack in a store in a shopping mall, they see something they like, and although they hadn’t come to buy anything, this particular sweater is just too cute to pass up. The fall fashion line has just come out and it’s time to think about the cooler weather anyhow. Besides, it’s only $60 so that’s like…less than four hours work. There lies a big misconception about our earnings.
First of all, we need to stop thinking in terms of gross income (our hourly wage) and instead realize our net income, or what we actually take home. In Canada, someone earning $15 an hour, like my friend Carl only takes home $12.50 after taxes and other deductions have been taken. So, in a month Carl actually sees $2,125 come into his bank account.
Secondly, if we identify Carl's actual needs, those expenses that are absolutely necessary to live a safe and healthy life, we will have a better understanding of his actual earnings. For example, he could live with room mates in a cheap neighborhood and probably only spend $400 a month on rent, including utilities. If he eats at home, he can easily live on $10 a day for food, or $300 a month. And of course he has asthma and some skin condition so lets tack on another $100 for medication and ointments. That's $800 total. His 'profit' could be $1,325. But of course he is commited to more than just that because he has a cell phone contract ($75/month) and he lives alone on a year-long lease ($750). His needs (in the short term at least, as long as he's legally bound to the contract and lease) is $1225. This means that Carl's spending money is just $900 a month. Or, in more relative terms, $5.29 an hour. That sweater he's looking at isn't just four hours work, it's closer to twelve hours work!
We need to realize that every unecessary purchase we make (and we make a lot of them!) costs us much more time than we realize.
Monday, November 9, 2009
Sunday, November 8, 2009
First thoughts, the basics
Life is so busy, and sometimes we forget to stop and ask ourselves the big questions. Where am I? Who am I? How did I get here? Where am I going? What is this all for? Am I really happy?
Right now, I am sitting in the warm cabin of a sailboat in a harbour in Annapolis, Maryland. My name is Michael Hofmaier, I call myself Mike, but people who know me best call me Hof or Hoffy. But the question - who am I? Maybe I'll save that for a future time. I took a chance to get here, a leap of faith. I've joined two strangers on a sailboat bound for the Caribbean, and hopefully leaving in a few days. Why am I doing it, what is it all for. Well, I suppose its something I want to do. To challenge myself and learn new things and experience something different. Besides, right now I have enough time and enough money. I am happy right now.
Time and money. It seems to me that the vast majority of people have accepted a certain norm, a certain balance between time and money. Looking at a scatter-graph of that balance, I would imagine there's a big milky way of people who have some time and some money. Of course there are also the outliers, suckers without time or money, and those that we envy with all the time and money in the world.
Looking more closely at the milky way of society, we see that at one end of the spectrum we have people with a lot of time but no money - homeless people. They have chosen a life rich in time. At the other end are work-a-holics who work 100+ hour weeks and enjoy big paychecks. But for the rest of us, we've decided to find a balance depending on our priorities and given our situations.
Let's consider how time and money are mutually exclusive for most of us. First of all, many people earn an hourly wage. And those who earn a salary or commission could average it out to an hourly wage easily enough. Essentially we are placing a monetary value on our time each time we go to work. Of course there are other considerations in the value of work beyond money, such as personal satisfaction or gratification. But on the flip side, work taxes us in ways beyond time, for example through stress. For this reason, lets assume the "soft" pros and cons of one's work cancel each other out so that tomorrow, we can focus on just time and money.
Miss Self Important, of the Cheapness Studies Blogspot makes an interesting discussion on the 'opportunity cost of time'. In other words, what is the value of my time? Check it out below.
http://cheapness-studies.blogspot.com/2009/06/time-is-money-but-how-much.html
Right now, I am sitting in the warm cabin of a sailboat in a harbour in Annapolis, Maryland. My name is Michael Hofmaier, I call myself Mike, but people who know me best call me Hof or Hoffy. But the question - who am I? Maybe I'll save that for a future time. I took a chance to get here, a leap of faith. I've joined two strangers on a sailboat bound for the Caribbean, and hopefully leaving in a few days. Why am I doing it, what is it all for. Well, I suppose its something I want to do. To challenge myself and learn new things and experience something different. Besides, right now I have enough time and enough money. I am happy right now.
Time and money. It seems to me that the vast majority of people have accepted a certain norm, a certain balance between time and money. Looking at a scatter-graph of that balance, I would imagine there's a big milky way of people who have some time and some money. Of course there are also the outliers, suckers without time or money, and those that we envy with all the time and money in the world.
Looking more closely at the milky way of society, we see that at one end of the spectrum we have people with a lot of time but no money - homeless people. They have chosen a life rich in time. At the other end are work-a-holics who work 100+ hour weeks and enjoy big paychecks. But for the rest of us, we've decided to find a balance depending on our priorities and given our situations.
Let's consider how time and money are mutually exclusive for most of us. First of all, many people earn an hourly wage. And those who earn a salary or commission could average it out to an hourly wage easily enough. Essentially we are placing a monetary value on our time each time we go to work. Of course there are other considerations in the value of work beyond money, such as personal satisfaction or gratification. But on the flip side, work taxes us in ways beyond time, for example through stress. For this reason, lets assume the "soft" pros and cons of one's work cancel each other out so that tomorrow, we can focus on just time and money.
Miss Self Important, of the Cheapness Studies Blogspot makes an interesting discussion on the 'opportunity cost of time'. In other words, what is the value of my time? Check it out below.
http://cheapness-studies.blogspot.com/2009/06/time-is-money-but-how-much.html
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