Make Room for Your Dreams

Sunrise.JPGOur most precious resource is our time.  We don’t know how many healthy, active years we have been given so every hour, every minute and every second is precious.

When we work, we trade our most precious resource, time, for money.

If your work provides other benefits to you like personal growth, fellowship and satisfaction, that enhances the trade.

If your work comes with negatives like long commutes, crappy people, lack of balance with personal needs, and excess stress, that weakens the trade.

Many of us trade our time for money and keep none of that money for ourselves.  So we’ve traded our most precious resource for . . . nothing.

When all of our time goes to supporting our lifestyle, none of our time goes towards supporting our dreams.

We all have dreams right?  As children, we had a vision of the future us.  Have you compared your vision and dreams to your reality lately?  Did you dream you would slog to work day after day for . . . nothing?   Boy, I hope not.  If you did, spend an hour updating your dream by crafting your personal mission statement.

What if you started to look at your financial choices in terms of how much time you would have to trade to pay for it?

The average American with a Bachelor’s Degree earns about $5,340 and works about 150 hours per month.  But it costs money to make money right?  If you’re average, you lose $159 and 8 hours per month to commuting, $325 and 5 hours per month for childcare, and $462 and 3 hours per month for clothing, dry cleaning, lunches out and additional conveniences.  Taxes take 23% or $1,239.  So at the end of the month, that average American has traded 166 hours for earnings of $3,155.  Our average American ends up making $19 per hour:

costofwork1

You want that cable plan that costs $40 extra per month?  You’ll need to work just over two hours per month for it.  Is it worth it?  Maybe.

You want to go out for a fancy $200 dinner?  You’ll need to work about 10 1/2 hours for it.  Is it worth it?  Maybe.

Want a new car with a payment of $400 per month?  You’ll need to work 21 hours per month for it.  Add in the additional taxes and insurance and you’ll lose another couple of hours.  Is it worth it?  Maybe, maybe not.

We are all different.  I might think something is worth it and you might think I’m crazy.  That’s ok, I’m pretty sure I’ll think you’re crazy sometimes too.

How much are your dreams worth?  Many would say your dreams are priceless.  I thought my dreams were worth saving almost half of my income over my career.  Your dreams are worth something too–you get to decide how much.

Pay yourself first.  Decide how much your dreams are worth and take it off the top.

Calculate your true hourly rate using your own costs (click here for the detailed calculation).  Spend intentionally: divide a cost you are considering by your hourly rate and then decide whether it is worth it.

Want to turbo boost your intentionality?  Take the monthly cost for whatever you’re considering signing up for, annualize it (multiply by 12), and then multiply it by 25.  This is approximately how much you will need to save in order to support that cost during your retirement.  A $100 cost per month is $1,200 per year, multiply by 25 and you find you’ll need to save $30,000 in order to support that cost in retirement.  Is it still worth it?

Look at everything you spend money on–debt payments, cable, cell phone, subscriptions (books, music, magazine etc.), memberships and so on.  Run the numbers, make sure each one is worth it to you.  If it isn’t, start looking into alternatives.  Make room in your budget for your dreams.

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Author: Ms. Liz

A CPA, I retired at 51 and I am helping people create their fantastic futures!

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