The relationship between time, money, and happiness

The older I get, the more I’m convinced that time is money (and money is time). We’re commonly taught that money is a “store of value”. But what does “store of value” actually mean? It’s a repository of past effort that can be applied to future purchases. Really, money is a store of time. (Well, a store of productive time, anyhow.)

Now, having made this argument, I’ll admit that time and money aren’t exactly the same thing. Money is a store of time, sure, but the two concepts have some differences too.

For instance, time is linear. After one minute or one day has passed, it’s irretrievable. You cannot reclaim it. If you waste an hour, it’s gone forever. If you waste (or lose) a dollar, however, it’s always possible to earn another dollar. Time marches forward but money has no “direction”.

More importantly, time is finite. Money is not. Theoretically, your income and wealth have no upper bound. On the other hand, each of us has about seventy (maybe eighty) years on this earth. If you’re lucky, you’ll live for 1000 months. Only a very few of us will live 5000 weeks. Most of us will live between 25,000 and 30,000 days.

I’ve always loved this representation of a “life in weeks” of a typical American from the blog Wait But Why:

Your Life in Weeks

If you allow yourself to conduct a thought experiment in which time and money are interchangeable, you can reach some startling conclusions.

Wealth and Work

When I began to fully grasp the relationship between money and time, my first big insight was that wealth isn’t necessarily an abundance of money — it’s an abundance of time. Or potential time. When you accumulate a lot of money, you actually accumulate a large store of time to use however you please.

And, in fact, this seems to be one of the primary reasons the Financial Independence movement is gaining popularity. Financial Independence — having saved enough that you’re no longer required to work for money — provides the promise that you can use your time in whichever way you choose. When I attend FI gatherings, I ask folks what motivates them. Almost everyone offers some variation on the theme: “I want to be able to do what I want, when I want.”

To me, one of the huge ironies of modern society is that so many people spend so much time to accumulate so much Stuff — yet never manage to set aside anything for the future. Why is this?

In an article on Wealth and Work, Thomas J. Elpel explores the complicated relationship between our ever-increasing standard of living and the effort required to achieve that level of comfort.

Ultimately you are significantly wealthier than before, but you are also working harder too. Nobody said you had to pay for oil lamps and oil or books and freshly laundered clothes, but you would feel deprived if you didn’t, so you work a little harder to give your family all the good things that life has to offer.

Increasing Wealth & Decreasing Costs

It’s a catch-22. You work more to have more money to buy more Stuff…but because you have so much Stuff, you need more money, which means you have to work more. It’s almost as if the more physical things you possess, the less time you have.

How do you escape this vicious cycle? There are two ways, actually.

Spend Less, Live More

The first (most obvious) way to remove yourself from this hedonic treadmill is to deliberately reduce your spending so that it’s below the level needed to maintain your lifestyle. As I’ve argued before at Get Rich Slowly, frugality buys freedom.

When you reduce your lifestyle, it takes less time to fund it. If you’re earning $50,000 per year take-home and spending all $50,000, you leave no margin for error. If something goes wrong — you lose your job, inflation skyrockets — you’re in a bind. Plus, you don’t give yourself a chance to seize unexpected opportunities!

But if you reduce your spending to $40,000 per year, you give yourself options. You can choose to continue earning $50,000 and bank the difference (building a store of time) or you can choose to work less today (taking the advantage of the time savings immediately).

Spending less also helps fund your future. Learning to live with a “lesser” lifestyle means you don’t need to save as much for retirement. If you spend $50,000 per year, for example, then you need roughly $1.25 million saved before you can retire. But if you decrease spending to $40,000 per year, your target drops to around $1 million.

It takes much less work to fund an ongoing lifestyle of $40,000 per year than it does to maintain a lifestyle that costs $50,000 per year. And if you’re in the fortunate position where you can slash your lifestyle from, say, $120,000 per year to $30,000 per year, you can really reduce the time you spend working.

Buying Time Promotes Happiness

But what if you like your lifestyle and don’t want to cut back? Or what if you’re not able to cut back? There’s still a way to use the relationship between time and money to increase your sense of well-being.

Last year, the Proceedings of the National Academy of Sciences journal published an interesting article that declared buying time promotes happiness. The authors conducted a series of experimental studies to look at the link between time, money, and happiness. Their conclusion?

Around the world, increases in wealth have produced an unintended consequence: a rising sense of time scarcity. We provide evidence that using money to buy time can provide a buffer against this time famine, thereby promoting happiness.

Using large, diverse samples…we show that individuals who spend money on time-saving services report greater life satisfaction. A field experiment provides causal evidence that working adults report greater happiness after spending money on a timesaving purchase than on a material purchase.

Together, these results suggest that using money to buy time can protect people from the detrimental effects of time pressure on life satisfaction.

If you want to improve your quality of life, don’t use your money to buy Stuff, use it to relieve “time pressure”. Instead of buying a fancy car, purchase time-saving devices. Hire a housekeeper or a yard-maintenance company. Maybe consider a meal-delivery service.

Interestingly, the effects of “buying time” have the greatest impact on folks who have less money: “We observed a stronger relationship between buying time and life satisfaction among less-affluent individuals,” the authors write.

Finding Balance

My biggest takeaway from thinking about the relationship between time and money is this: When you spend less, you can work less. In a very real way, frugality buys time. But on a deeper level, frugality buys freedom — financial freedom, freedom from worry, freedom to spend your time however you choose.

When you treat time as money (and money as time), you can better evaluate how to allocate your dollars and your hours. When you know how much your time is worth, you can decide when it makes sense to “outsource” specific jobs.

Ultimately, there’s a balance to be had, and that balance is different for each of us. You have to decide how much time you’re willing to spend on present comfort and how much time you want to bank for the future. I believe there’s no single right answer to this dilemma.

What about you? How do you view the relationship between time, money, and happiness? Do you have some examples from your own life of buying time in order to improve your happiness? What balance have you arrived at — and how did you get there?

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There are 37 comments to "The relationship between time, money, and happiness".

  1. Evan says 15 May 2018 at 10:49

    This is exactly what people miss! It’s not about money necessarily, it’s about time and freedom.

    I was having an interesting conversation last night, semi-related, about how there’s research showing that people perceive time more slowly if they have more variety in their life. If perception is reality, then that means you can, in a way, make your “life” longer by bringing more variety into your day to day activities. This can be pretty hard to do if you are working long hours.

    Therefore, as you say, frugality leads to more time freedom. More time freedom means you can set up your life the way you want. Use this to add variety, and your perception of time slows down as well! That’s a lot more life to live!

  2. late bloomers money says 15 May 2018 at 12:13

    Great stuff JD, I agree, finding the balance is key. Most of us work hard hard now and think that we can sacrifice our time now so we can have better life later on. But I don’t want to look back 20 years later and realize all I’ve done with my time was work!

  3. Jason@WinningPersonalFinance says 15 May 2018 at 13:43

    I don’t know if there is any money challenge that’s more difficult than finding that balance between time, money and stuff.

    We can all go live in the woods and retire today. Most of us would not be happier doing so.

    Hiring a cleaning person would set me back on my path to FIRE. But if I do, my house would be cleaner than ever and I’d have that time back to do what I want today. Maybe it’s worth working for an extra three months to never have to clean again.

    Making the decisions may be hard but they are much easier once you really lay out and understand the costs and benefits of every choice.

  4. JeffreyTurner says 15 May 2018 at 15:10

    I have always regarded money as a claim on labor, which is essentially the same thing, however by framing it as a claim on time perhaps that allows us to refocus on how we use our time, rather than on how we live on passive income.

    My main concern with the Fire community is that it is difficult for people to let go and give accumulating money, in order to enjoy the time we actually have. I fear that saving money could in itself become an addiction that devours our lives. It would be good to see how many people have made that leap, even if it is to work part time. I myself keep wanting to accumulate a little more money even though I know that to spend that money on ‘things’ is probably destroying the world I live in. Simplicity is also time.

    • Mary Jones says 20 May 2018 at 15:06

      RE: “…difficult for people to let go and give accumulating money, in order to enjoy the time we actually have. I fear that saving money could in itself become an addiction…”

      Indeed! My parents lived like paupers until the day they died (both >90 years old). Drove us crazy. They talked about going to Alaska, or having a new house built. But they never did. They had so many assets (more than $1M), they had to spend it away on assisted living an skilled nursing care. Left us 5 kids about 90K to divvy up. I wish they had spent it on the adventures they dreamed of. But they always thought they needed a little more. I blame it on the trauma of the great depression and WWII rationing.

      • James Donnel says 21 May 2018 at 10:09

        Dear Mary… Did you spend a moment thinking past your statement?

        They saved $1M and had that to spend for their assisted living and care. What if they had spent that $1M on homes and cars and travel? Then YOU would be paying for their assisted living. You were left with $90K originally, but in this case you would have the debt of their estate “given” to you (health care debt is now part of their estate). You could have had them live with you at the end of their lives and relieved them of the burden of the cost of their last days. You can’t have it both ways….

        • Joseph Christman says 21 May 2018 at 15:06

          James, you speak from my soul. I feel as though Mary Jones is the type of person we despise because they allowed their parents, whom spent an entire lifetime saving, to slowly die in a nursing home so that she could not be inconvenienced by her parents. I believe that we should take care of those whom cared for us…and that is not something the rich can be inconvenienced with.

  5. anon +40 says 15 May 2018 at 15:51

    I buy time frequently, & it’s one of the main reasons I could never do that FIRE stuff. For example, I pay for food delivery after work bec. I hate to cook & don’t want to spend time doing that when I could be writing (my passion) or spending time w/family (my loves). I don’t buy a lot of things, I don’t have any debt, but I’m desperately short on time bec. my job, my family, & my hobbies make demands of me, so I’ll gladly use money to buy me more time NOW when I need it, not some mythical future that I can’t appreciate.

  6. FullTimeFinance says 15 May 2018 at 16:45

    In my opinion money is a tool. Time and enjoying it is a goal. Money is just a tool to facilitate that goal, and not even always correlated with it.

  7. Freddy Ky says 16 May 2018 at 06:11

    Money is a renewable resource. Time is not!

    • TNflash says 20 May 2018 at 15:50

      Time can be extended by living a healthy life style and enjoying happiness.

  8. S.G. says 16 May 2018 at 06:15

    I think the money problem is partially cultural. We have a culture that doesn’t pass on virtues like prudence, and we see that in how people interact with money. In many ways wealth is like being thin or well educated: it takes a sacrifice today to invest in your future and in each immediate present that can be a difficult decision to make, even if you have a solid philosiphical structure. If you don’t have that structure you have even more difficult.

  9. Joe says 16 May 2018 at 07:12

    I’m in the spend less camp. Now I have more control of my time.
    Buying time seems very inefficient to me. Labor is too expensive here in the US.

    Buying time in cheaper countries is much more affordable. I’d like to try that someday.

  10. Wealthy Content says 17 May 2018 at 04:10

    Love it, great post! It sounds so basic but you have to catch yourself as your brain seems to be wired differently based on the inputs received over its lifetime.

  11. Dan @ Stocktrades says 18 May 2018 at 19:59

    Awesome post JD. I’m currently working towards selling my second home, taking the profits made and moving back into my original home, which I have been renting out for the better part of 5 years.

    This will drastically reduce my living expenses(I will literaly only have my mortgage and basic necessities like food utilities and insurance) to the point where I can actually quit my job and work full time on my website.

    The satisfaction and hapiness that this brings me is far more than anything I have felt from getting paid 6 figures at the job I have now.

    I am literally quitting a job most would kill to have so I can spend more time growing my website, providing excellent advice to those who need it, and living life on my own schedule.


    • Jon says 29 August 2020 at 10:36

      “living life on my own schedule” well ok you’re no longer 9am to 5pm but you still have to spend time with people that pay you, be it at 7am or at 9pm, which timing might most likely depend on those customers so it might be just a matter of semantics “live life on my own schedule”…. when you still serve whatever customers for whatever reasons you are NOT (yet?) on your own schedule!

  12. Noonan says 19 May 2018 at 12:24

    Great post about a very important topic JD!

    A severe job-induced “time famine” motivated me to FIRE in 2008 at age 48. Since then, I’ve been much happier. I attribute this to the fact that i’ve gained almost total control over my schedule. No bosses are telling me what to do or when to do it—except for the boss i happen to live with. 🙂

    At its essence, a decision to FIRE reflects a personal choice that additional time is a lot more important than additional money. A growing body of behavioral science suggests that consistently choosing time over money actually increases happiness:

    “Life frequently presents time versus money trade-offs. [Our research] showed that the way people answer this [hours versus dollars] question predicts their happiness. Although time and money are both valuable resources that give hope for greater happiness, choosing time over money promises a happier life.”

    Hershfield, Mogilner & Barnea, People Who Choose Time Over Money Are Happier, (first published 5/25/2016).

  13. Andy says 20 May 2018 at 15:06

    Couldn’t agree more. It is unfortunate how many people work themselves to extremes for an endless cycle of worry and more stuff. The only way to really get out of it is to find a point of contentment, knowing that more is not always better.

    • Jon says 29 August 2020 at 10:40

      you can’t really get out of it while watching continuous bombardment of advertisements that tell you that you need this and that and the other to be happy… people in sales and in marketing should take a break, stop creating fancy false images of happiness and stop selling s*** that no one needs!

  14. Dick Peters says 20 May 2018 at 15:38

    Some interesting posts. I am living proof of what you say. Am 88, retired at 59 to better care for my wife (now married 67 yrs.) and family. Walked away from a lot of money by retiring early but have had a very meaningful life. Took much lower pension and stock options by retiring early but have gotten along just fine, with even second home until recently. Have had a rewarding retirement with growing family, serving church and non-profits. Happiness is much more important than even time. It is great to have both time and money now, which we won’t have when the Lord calls us Home.

    • Jon says 29 August 2020 at 10:41

      you’re one of the few that could do that. unfortunately. for many reasons, one of the few.

  15. TNflash says 20 May 2018 at 16:05

    Good article JD. It’s very pertinent for our time and I am in full agreement with you. I spent my whole life living below my means so I could afford to “buy back my time”. I passed up buying the latest trendy stuff and always tried to buy quality made things that I needed and things that would appreciate instead of depreciating in value. I accomplished my goal at 55 and retired early. It is a wonderful feeling. Anyone that wants to experience a high degree of personal freedom and happiness should try it.

  16. jmabta says 20 May 2018 at 16:10

    I found it interesting and passed it along to my kids but I thing it misses the value of work. Although we all work for money. Our work is invaluable to society. We help others if we are doing heart transplants or selling used cars. Jobs and work have intrinsic value and our goal should not be to just stop working

    • Jon says 29 August 2020 at 10:43

      yes please, I really agree with the fact that work/activity is needed by normal persons, can’t just sit on the couch watching tv all day… but can they sell used cars ethically, without trying to rip off the other people?

      • Sarah Madany says 11 January 2022 at 01:13

        Agreed! Time plays a significant role in human life. If you understand the value of time better, you can gain experience and develop skills over time.

  17. Ed Herdman says 20 May 2018 at 16:34

    I’ve just moved, and looking through those piles of Stuff I see a lot of reminders of the path history took to get here.

    In the 20th century (especially in the postwar period, up to roughly the 1970s according to some) technology and low wage inequality were improving peoples’ lives rapidly. Stuff made of steel and driven by oil or electricity were hugely freeing, and so was plastic too (and it’s still true). The eventual adoption of Pullman’s train couplings meant that fewer people were getting cut in half working on the rails. During the Depression, many executives rallied a portion of their wealth and holdings to supplement their workers’ real incomes, such as by offering better pay, or even garden plots (in the case of W.E. Upjohn the pharmaceutical king). Bird’s Eye delivered fresh frozen veggies to the customer with labor and quality savings all around. In the 1960s “Happy-go-spending world” you could buy a car cheaply, buy a nice little house in the ‘burbs for your atomic family, and the boss didn’t make much more than 100 or 1000 times more than the lowest-paid worker. Maybe not as carefree as the show Route 66 portrayed, but it was easy to pick up stakes and follow the work, too, in contrast to today’s increasingly sedentary population. When you went someplace new, you could just swipe your credit in, too. A certain Pill gave half the population months and years of extra freedom from unplanned labor. The civil rights movement seemed poised to improve the lives of marginalized people. Even fiction could give people mental fortitude against for a future where you could be cryogenically frozen to wait for miracle cures. Even mirages gave people a bit more bounce to their step, whereas now a lot of the discussion seems limited to “how bad is it really?”

    Over time a lot of these silver linings have tarnished in their clouds, other good ideas were given up on for entirely small-minded reasons – and some Stuff just turned out to hold false promises of saving you time, like a dedicated video tape rewinder. Today if an executive tried to help out their employees or refuse a bonus, it’d be against the company line, people would argue the benefits went to illegal labor, and shareholders would force the Board to remove the free thinker. A lot of articles on time and life management focus on the “micro” you can do with what you’ve been given – which is great. But I think it’s worth some of our precious time to engage politically to try and find ways to turn the apple cart around, too. I feel that (and there’s mountains of evidence) much of the problem goes through the entire system. Wealth inequality, short-sighted deals by local and state governments to please influential economic players, and mountains of advertising to overcome our indifference with what’s old – just to name a few likely culprits in the theme of bad macro planning and time management.

    • Joseph Christman says 20 May 2018 at 23:47

      Everyone needs to seriously consider reading the responses to articles like this, and ask themselves “Am I someone who has benefited from inequality?” Ed seems to know a lot more about “society” as a whole and how wealth shapes EVERY aspect of life, that which includes the happiness of others. The real issue we are faced with is how long will it take for the middle class to deplete what they see as their “earned lifestyle.” Anyone here who suggests something as silly as a “meal delivery” service as a way to allow them more time to write is exactly the kind of “entitlement” that goes along with over indulging yourself. The belief that you “choose” to spend money on meal delivery over learning to cook is literally like saying, “a lion could choose to hunt for food, to eat, in order to survive for another few weeks” or “that lion could pay another pack of lions to hunt for it, so that they can pursue their passion of laying in the shade all day doing nothing to benefit the pack.” The flaw here comes in the belief that you DESERVE to live a life under the tree, in the shade, doing NOTHING to benefit society as a whole. Meanwhile those people hunting and providing the food are somehow considered a servant, in the form of their wage, whom should desire only to cater to your every want in life *NOT need*

      • Jon says 29 August 2020 at 10:58

        Meanwhile people serving the system on top of which there is a Bezos or Zuckeberg or others like them hoarding all the billions and billions of dollars and resources for themselves and NOT for the benefit of other members of society might choose to no longer do that. If the company I work for would choose to invest its profit in ME and my co-workers and my community (at least local community) instead of a faceless mass of shareholders (ok, choose a nice face: Bezos) I would go there and work there and do my best there day in day out all my life and maybe never think of retiring. But when my work gets Bezos and the likes rich and then he asks for the world to donate for him to pay some miserable sick leave for his workers?…. how FUCKED UP is that? how can you say that those people are not entitled to live and DO NOTHING instead of working all day long to make these billionaires even richer???? I understand having and active and meaningful life, work is embedded in the human being, but why work to get Bezos and Zuckeberg and the likes insanely rich???? What is the good THEY provide to the society?

  18. Claire says 20 May 2018 at 18:47

    Such truth in this post, and I know it to be true. We had to sell our large paid-off house after my husband’s industry shifted to China and his business failed, because we no longer had enough income to pay our ever-increasing property taxes. We moved to a more affordable town, bought a much smaller house and downsized our lives.

    That was over ten years ago. The amount of free time we have now is worth so much to us! We only work part-time and our modest bills are covered. We didn’t want to wait until we were old to enjoy having enough time to do what we want. Kudos to you for emphasizing the joy of freedom.

  19. Mike says 20 May 2018 at 20:30

    Before I retired a couple of years ago I attended a series of classes on retirement. It was useful but only to the point of confirming my plans and knowledge on several subjects. One exercise was a survey that included a question about why you want to retire? Of course the #1 answer was “so I have time to do what I want”. And the answers to “what do you want to do” consisted of the typical standards: more time with grand kids, volunteering, reading, fishing, golf, etc. First year I tried most things that I had interest in but nothing connected. Then most of the second year I spent a lot of time discovering my soul and who I really was and who I had become. Never had much time to think about these things before. It has been a very time consuming process for me but extremely rewarding with a very positive outcome!
    I share this because more “time” may not in itself be a wonderful experience. You may think you know how to spend more time but it may not work out. The time/money issue can only solved based on how well you know you-and for me that took a lot of time that was priceless!

  20. K says 20 May 2018 at 21:03

    I was well on my way to a very early retirement until I got married and had a kid. Now I have to scrimp and budget whether I want to or not.

  21. Brain says 20 May 2018 at 21:53

    Because time is linear & finite, time is more valuable than money. It’s hard to see that as a healthy young person, but the older you get, the more clearly I see it.

    I’m very aware of trying to not waste time because of my mother who has Alzheimer’s. She no longer knows who I am. She can’t remember who I am. I think of all those hours she frittered away, playing solitaire, or some other “time killer” activity and my heart breaks. Those were opportunities to do a thousand things other than just throw time into the trash-heap of personal history. In my head it almost doesn’t matter what she could of done, just SOMETHING.

    But the time is money paradigm can also get out of hand. When I worked as a self-employed consultant, paid an hourly amount as a hired-gun, I started to view everything I did as costing me money. If I waited in line at a restaurant, those minutes were minutes I wasn’t working, and thus the restaurant was costing me money to eat there, & not just for the food. I started to eliminate everything that took time. Vacations? Leisure time? Leisure cost me. Every minute I wasn’t working was costing me.

    A recent brush with death has also made me appreciate time more starkly. Not the stress-inducing must-be-working-or-I’m-losing-money appreciation of time, but the realization that there is no tomorrow. Literally. For me there wasn’t. I’ve always done things, many things, because I can. I still do, but they’re much more poignant now. Tear-making, sentimental poignant. I never thought I’d be able to walk again, let alone push a lawn mower, & now mowing the lawn is a joy. Stuff that others barely notice, like their kids participation in a sports activity, or a get-together with friends or family, for me is the rarest, most precious moment ever.

  22. EB.Sawaneh says 21 May 2018 at 12:52

    I always believe that money is a tool for us to use in achieving our goals. Having time to enjoy life is one of those goals. When we are making money, we need balance with time for ourselves . Although, with enough money, we can buy some time but money cannot buy all forms of time with maximum benefits.

  23. The Poor Swiss says 22 May 2018 at 23:25

    Finding a balance between time/money/happiness is very important. As you said, time is finite while money is not. We should enjoy life more than money. Money for me is just a a tool to help us live the life we want.

  24. Xrayvsn says 02 June 2018 at 08:49

    This is exactly the reason I started on the path to financial independence and early retirement.

    They have a lottery for money, but they don’t have one for time. Therefore time is far, far more valuable and once it’s gone it really is game over.

    The best way to enjoy your finite time on earth is to be doing things that bring you happiness. Most people are slaves to the 9-5 job because the W2 wages are what allows them to live. How many people would quit their job if money was no longer an issue? I would say it would be a large percentage (and kudos for the ones that wouldn’t). This means they are doing something with their time that they rather not.

    Becoming financially independent breaks the ties to W2 wages and you are free to explore anything you want. That is the key to happiness.

  25. Adam @ Minafi says 04 June 2018 at 07:09

    The research on time scarcity is interesting! With income increasing in some countries, he number of people spending money to save time will only increase which will then increase the income of people providing those services.

    I have definitely felt some of the best money I’ve ever spent was paying to reduce my time doing something. Not all labor either – using a travel agent to schedule a trip recently was an amazing experience too!

  26. Susan @ FI Ideas says 04 June 2018 at 08:57

    Buying time appears at first glance as the opposite of frugal. For those of us that have achieved FI, it makes sense to consider spending on housekeeping or a gardener. But it is so hard to change the patterns of frugality that got us to this point financially. And as we age, we start thinking of going full time in an RV to simplify even more and reduce those types of tasks, while maximizing experiences.

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