Understanding the Power Of Time

Time is undoubtedly the scarcest resource on earth. Unlike wealth which has no limit to how much of it we can amass, time is a limited commodity and really cannot be cheated

Time is undoubtedly the scarcest resource on earth. Unlike wealth which has no limit to how much of it we can amass, time is a limited commodity and really cannot be cheated.

It is for this reason that individuals who learn how to control and effectively utilize this limited resource are the ones that become successful at many of their endeavours.

On your journey to financial independence, there are various ways in which time plays a role but below are two core ways in which time makes a difference.

To Be Financially Free, You Must Buy Time And Not Sell It

Much has been said about whether or not people should strive towards owning their businesses as opposed to working full time jobs. While there are indeed reasons for and against whatever option you choose, the concept of time has a simple answer.

Think of how much you earn as a staff of your organization. How much do you earn per hour for the work you do? How much is your time worth? More often than not, you would realize that not only are you underpaid for the work you do, you might be spending so much time without any other direct impact.

This is what selling your time is about. Employees sell their time and employers buy time. Selling time means reducing how much of it you have for yourself while buying time means trading an unlimited resource (money) for a limited one (time).

In simple terms, you are making your money work for you. Interestingly, you don’t have to start a business to buy time. By investing your funds especially in the stock market, you use your money to work for you by buying time from the organization that would be painstakingly working to ensure you make great returns from your investment.

Compounding Makes Time An Indispensable Asset

Another way time plays out in terms of propelling you towards financial freedom or limiting you, is how much of it you give in the incubation period. The compounding effect means that you receive higher than proportionate returns on your investment when you give it enough time to grow.

The idea is that if you can have small and steadily consistent investments over a long period of time, you are better off than when you have large investments over short periods of time. Long term investments will lead to better returns because of the multiplicative effect of compounding.

Not only will you have profits but they would grow in multiples. What this means is that you are better off when you invest small amounts today and grow them into the future than when you wait until you are much older and invest larger amounts for short periods.

It is not uncommon to hear stories about people who invested very little amounts of money decades ago and have changed their lives by so doing.

If all the little funds you spend unnecessarily today without much concern are set aside and invested for tomorrow, you can rest assured that time would work its magic and you would be better off in the near future.

Written by Lawretta Egba