Time is the Primary Currency

Many people make decisions optimizing for money. This is a common socially-accepted default, and it makes sense because money is a general proxy for value. Optimizing for money can be seen as a way of keeping your options open. If you work long hours and save a lot of money now, you’ll have the option to redeem your dollars for whatever valuable goods or services you want in the future. And, most likely, you’ll have a better idea of what you want later on, so it’s best to save your money for spending then.

When you optimize for money when making decisions, you’re making money the primary currency in your life. Time is the primary currency of life because life is constituted of time, and spending time on something is the same as spending your life on something. Money is secondary to time because a) money can be recovered, but time cannot, and b) it is easier to buy time with money than it is to buy money with time.

The trap people fall into is exactly what I described above — optimizing for money above else, and spending time chasing money-making opportunities instead of doing things they want to spend their life on. People fall into this trap because they don’t want to be broke, and the easiest way to not be broke is to spend all your time making money. In the process of this lopsided optimization, they quickly lose all the time they had and neglect to develop activities and skills that give their life meaning. Fast forward twenty years and they find themselves with an appreciable bank balance but nothing to spend their time on, so they go back to work because they have nothing better to do.

There are many reasons why people end making decisions that implicitly optimize for money over time. Most of the time people don’t consciously understand what they’re optimizing for. If you’re in business school, the most compelling reasons to take that job in IB or Consulting are that everyone else is doing it and you can subtly flex your job every time somebody asks what you do. That’s pretty much what it boils down to in most cases — everyone else is doing it, and the job has clout.

Most people already understand the money-first paradigm, which pretty much boils down to “spend your time trying to make as much money as possible”. I’d like to introduce the time-first paradigm through the idea of Time Accounting.

Time Accounting

The core tenets of Time Accounting are simple.

1. Life is made of Time. The terms Life and Time mean the same thing, and are interchangeable.
2. Each person gets 24 hours to spend each day.
3. Once you spend time, you cannot recover it.
4. There is a biological upper limit on the amount of time anyone can spend.

If you spend 10% of your time allowance every day on something, then you can equivalently say that you’ve spend 10% of your life on that thing. You might object and say that you can’t reduce someone’s life to numbers like that, but in Time Accounting, you can. The linearity here is so simple that it seems wrong. It is wrong, but remember: all models are wrong, but some are more useful than others.

It follows from Time Accounting’s core tenets that the more time you spend on something, the more important it becomes to you. Usually people see it in the opposite way — the more important something is to you, the more time you spend on it. Both are true, but the first fact means that you can adjust how important certain things in your life are by simply spending more time on them.

Let’s contrast the core tenets of Time Accounting with the properties of money:

1. Money can only be obtained via a transfer from others. The transfer could an exchange for goods or services, a grant, a gift, theft, etc.
2. Money is only valuable if others are willing to accept it in exchange for goods and services. The wider the acceptance, the more valuable the currency is.
3. The value of money is dependent on the total amount of money in active circulation and the total value of goods and services being provided.

Here we see that money is an inherently more flexible currency than time. For starters, there is a much, much higher upper limit on how much money you can make, but there is a very restrictive biological upper limit on how much time you can spend. Money that is spent or lost can be recovered through a variety of means (job, gig, theft, gift, welfare, inheritance, etc) while time can never be recovered. (When you run out of money, you’re broke and can always build your way back; when you run out of time, it’s game over.) Lastly, money’s value is dependent on factors outside a person’s control (monetary policy, inflation, etc), while the value of time is dictated mainly by the person themselves.

Financial Accounting is widely known and accepted. There are many courses out there on accounting and personal finance, but there are very few on Time Accounting. This may be one reason people prioritize money over time, simply because they’ve had more exposure to financial accounting than Time Accounting.

The first step in the Time Accounting process is identifying what you need to spend time on, and what you’d like to spend time on. Let’s say you just started your first full-time job as a salesperson. The needs breakdown might look like this:

1. Sleep (8h/day, 56h/week, 33%)
2. Job (40h/week, 24%)
3. Commute (10h/week, 6%)
4. Exercise (5h/week, 3%)
5. Cooking, Cleaning, Household chores (12h/week, 7%)
6. Eating (10h/week, 6%)

Total: 133 hours

There are 168 hours in a week, so after necessities, we are left with 35 hours. We can budget this time for wants and leisure:

1. Learn Spanish (10h/week, 6%)
2. Hang out with friends (10h/week, 6%)
3. Study for certification (7h/week, 4%)

Total: 27 hours, 8 hours leftover

This is very basic Time Accounting and something that most people already probably do. The real power of Time Accounting shows when you start budgeting your time on longer time horizons. For example, if you want to write a book and you estimate it’ll take roughly 500 hours it’ll take roughly 3 years to finish if you work 30m a day. This means, then, that you’ll need to reserve thirty minutes every day for the next three years if you want to publish this book. If we add probabilities to the mix, you might predict that there’s a 50% chance of finishing the book within 2 years and an 80% of finishing within 3 years, or something like that. (The probabilistic approach is similar to the stuff they teach in Operations Management classes.)

You can approach goals from the opposite direction. If you want to publish the book within 2 years, how long do you need to work on the book every week in order to have it out by the deadline? It’s simple math, but very, very useful.

Once you’re comfortable with basic time budgeting, you can start betting your time. If you find that you have two hours to spare everyday and you’re betting over a one year time horizon, you have 730 hours to bet. Nothing’s guaranteed in life, but professional poker players consistently make money in the long run, so the same applies here. The better the bets you make with your time, the more you will benefit in the long run. The payoff doesn’t have to be money — remember, money is secondary to time — and most of the time it’s something else. If you bet your 730 hours on a relationship, the payoff might be a lifelong partner. It also might be a breakup. Consciously betting your time, instead of aimlessly letting it trickle off on YouTube or Reddit, is the first step in realizing life payoffs that compound over time. Framing decisions as time bets also helps you evaluate your options in a way that explicitly takes into account the time costs.

You can only budget and bet your time if you are confident that you’ll be able to consistently spend time doing the activities in question. Consistently hitting 2h/day or 14h/week on a task takes discipline that most people don’t have. You can only bet time that you know can allocate, so the betting process is a combination of identifying what you want to spend your time on and understanding how much time you will realistically be able to spend on said activity. Developing this understanding itself takes time, and involves budgeting your time and tracking how long you actually spend on the different activities every week.

Related: 9–5 and a TV and you’re done for it