My family was never wealthy, frankly speaking, there were times when we had trouble to get through a month and as far as I remember, we mostly lived paycheck to paycheck. This resulted in a very low pocket money which our parents would hand out to me and my brother. It didn’t bother us when we were very young, but things became unacceptable when we turned teenagers.
Hanging out with friends, buying new sneakers or going for a party costs money, as do computers (I still remember that first C64) or books and magazines. I wanted to have all those things, and there was only one way to get them. I had no choice: I had to work.
The Time & Money Relation
The legal age to start working in Berlin in 1994 was 14 years (don’t nail me on the details, I might be 1 year off) and I quickly found part-time jobs which I could do after school. It was a great experience for me: Working just 1,5 hours in a shop cleaning or filling up empty drawers would provide me with the income that before I had to wait for an entire week. We are talking about roughly 10 DM – today the equivalent of approx. 5 €.
I realized how much time I had wasted in the past: 1 week vs. 1,5 hours for the same reward. Just that the latter one would require my active participation.
The lesson learned was that I could get much more money by spending more time working. Having realized this, I didn’t want to spend time at home anymore. I wanted to go out and work.
However, since that very first time, while I basically kept on working until today (I am 38 now), this feeling that I had when making my first salaries didn’t come up too often with later jobs. I was always tight with money and therefore I learned very quickly that if I wanted to get anywhere with my wishes for what I want and what I need, I had to prioritize – and sacrifice.
It was a tough lesson and I hated the very idea that most things were still out of reach for me. Because you see, we get used to our salaries very quickly and by some miracle, the more money we get, the more things we start to see that we want to have which are out of our reach.
So, when I started to work the initial happiness didn’t last that long. I got unsatisfied with the situation, as I needed to make constant choices and set priorities. To help myself manage my expectations in a better way, I developed very quickly this 1 way of measuring expenses, which helped me to actually really understand what I truly wanted every time when I reached for the wallet.
I was counting hours.
I was counting how many hours I needed to work, to either get the money back that I was about to spend, or, how many hours I would need to work in order to be able to afford something I wanted. With this idea in my head, the evaluation of “wants” and “needs” took a truly different perspective.
Time is limited. There are only so many hours in a day and with my limited knowledge, school and friends to take care of and family, there was simply a limit of how much I was realistically able to earn. Measuring working hours against the price of a product would clearly show me if it’s something worth working for.
At that time I also learned that in the future I would have to learn to control these 2 factors: My hourly income and the amount of available time to take advantage of it.
This habit stayed with me until today and in a sense, investing in stocks became the ultimate solution, because this is what stocks, especially dividend-paying stocks, do.
They take time almost out of the equation because analyzing and purchasing a stock is a one-time effort. But it can reward you for decades. The only difference is, that instead of time to exchange for money, you need to put money as a downpayment first, and receive both, time and money slowly back, stretched over a long period of time until it starts to out-weight your initial investment.
The more you invest, the more time you free up and at the same time your hourly income increases. Patience and diligence is the key here.
Just chasing higher salaries will seldom give you time back. And working less will seldom give you opportunities for higher salaries.
You see, this is what investing is all about, and this is why it’s, in my opinion, the best way to escape the rat race.