Are You Trading Time For Money?

So what does that mean?

Simply put, most of us have 50 years of productive life- from age 20 to 70.  If you are to work 8 hours/day for all 50 years, you will be working for 146,000 hours in your lifetime. (Note this figure is very conservative!)

If you make $10/hour, you will make $1,460,000.  Wow! You are millionaire.  But only if you save 100% of the money you make. After taxes, the amount most likely will be $1,310,000. It is unlikely that you will save 100%.  At that pay rate, you are likely to be in debt (in the United States!).

Politicians have a brilliant idea- Make minimum wage at least $15/hour.  So at that rate you will make $2,190,000.  After taxes the amount most likely will be $1,971,000. Sounds big but unlikely to get anyone out of debt.

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According to Trade Economics, average hourly wage in the United States was $23.43 in June 2019.  To simplify, let us say that it is $25/hour, you will make $3,650,000.  After taxes, the amount most likely will be $2,920,000.  At 10% savings, at the retirement you are likely to have $50,000! Imagine living on that in post-retirement years.

The point is that whether you are paid $15 or $150 per hour, your income is limited by the number of hours you put in.  In addition, you get paid after all the money, such as taxes, are taken out of your wages first, then you get the balance!

At the same time those who advocate work for yourself, claim that they are not trading time for money, are totally wrong.  Even if you are working for yourself, you are still putting in time to earn.  It is just that you could earn more than you could possible earn at your job! Furthermore, you get your money first and then you pay taxes after deducting expenses.

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As an employee you are engaged in a trade with your employer. There is a mutual understanding that your time is worth a certain amount of money. As a businessman you are trading value for money. The value for the business accumulates over time.

Simply put, everybody trades time for money.  But those who work on own are likely to make more in less time! There is a saying, you are wealthy when you have money; you are rich when you have money to do whatever with your time.