Articles

Is Time Really Money?

I recently stepped out of Zurich Airport on a warm summer day, a stark contrast to my last winter visit. Banks and watches come to mind when many think of Switzerland, followed by chocolate. Let’s indulge in a bite of chocolate and converse about time and money. Zurich Airport is one of the few places filled with ads referencing both money and time. One ad even proclaimed that money is time. We are more accustomed to hearing “time is money.” Which is it, then? Both make money and time seem equal and exchangeable to a certain extent. But that’s not entirely accurate. Let’s delve into this.

In my podcast, Talking Billions, I’ve talked with fifty authors, experts, and investors about wealth, money, investing, and better living. In our discussions, we often start with money and end up talking about time. Many guests have reminded me how time is our most precious asset. Others pointed out that you can borrow and save money, but you can’t do the same with time. That’s just the first difference.

Very often, we utilize the same vocabulary to describe money and time: save, invest, spend, waste, lose, gain. This language use creates an illusion that they are exchangeable or even identical.

So, what is time, and what is money? Money is a medium of exchange, a measure of value that allows us to trade goods, services, and assets amongst each other. Time, however, is more nuanced. It permits us to perceive our reality in a linear fashion; it measures the order and duration of events; it’s the fourth dimension. If humans invented money, wasn’t time already there, even if not observed and measured?

The phrase “Time is money” is most commonly attributed to Benjamin Franklin. He employed it in his essay, “Advice to a Young Tradesman,” published in 1748, where he penned, “Remember that time is money.” Yet, the idea predates him.

We grow accustomed to trading time for money. There is even a concept of an hourly wage for work, from a barista at your local coffee shop to a high-powered corporate lawyer racking up billable hours.

Your time can be traded for money, and your money can be traded for other people’s time. We understand that much. Interestingly, if you want to borrow money for a period of time, you’ll need to pay interest. This concept is as old as money itself.

So how old is money? And what about time?

The first known form of currency dates back to ancient Mesopotamia (modern-day Iraq) around 3000 BCE. They used clay tablets as a medium of exchange. These tablets represented a certain amount of goods, like grain, and were employed in trade.

The first known devices for measuring time were sundials, which date back to ancient Egypt around 1500 BCE. Water clocks, or clepsydras, were also utilized by various ancient civilizations, including the Egyptians, Greeks, and Chinese, as early as the 16th century BCE.

It seems we quantified money before we started tracking time. Of course, time didn’t start the moment we decided to measure it. It doesn’t stop when we neglect to measure it, either.

In essence, money is a promise of repayment at a later date. If there’s no tomorrow, money ceases to exist. Before we had refrigeration, drying, smoking, and pickling food, we’d only pick and harvest what we could consume today. In some cultures, people live for today. They earn what they need to pay today’s bills, including meals. Even in these societies, there is some form of credit, which relies on the promise of repayment later.

The only reason to accept any money in any form is that there’s an opportunity to spend it at a later time.

Now, if all the money were lost with one wrong click at some mega-bank, time would be just fine, ticking along. New money would reemerge to settle debts among us.

There are people who are time-rich and cash-poor. A high earner working 100 hours a week with a long commute on top of that might be making millions, but he or she doesn’t “have” time to “spend.” A young graduate backpacking through Asia on a shoestring budget has all the time in the world but little money. They are stretching the proverbial dollar. Try to stretch an hour sometime.

Some choose to work, save, and retire early. They have a clear goal of saving decades’ worth of annual expenses and possibly never work again as they enjoy their financial independence. They trade some years for future years of financial freedom.

Another interesting phenomenon differentiates money and time further: lost money can be earned back; lost time cannot.

You’d think that we’d immediately know that time is more precious to us than money. Yet, we sometimes value money over time. We’ll walk for 45 minutes instead of taking a 5-minute taxi ride, for instance.

Throughout most of our human history, we didn’t know what time it was. We had a vague idea. Watches are only five centuries old, and in the US, still only one out of three people wear a wristwatch daily (I know, smartphones tell time now, too).

Also, money can outlive us, but our time cannot. We manage multi-generational fortunes and witness another interesting phenomenon. The initial fortune created a century or two ago is still around, and growing, reinvested in new businesses serving another generation. This gives money a certain level of immortality with an infinite time horizon.

If you buried a gold bar in the sand in ancient Mesopotamia and dug it out today, it would probably still buy you something, including someone’s time. Perhaps it was purchased with someone’s time as well? This makes money seem a lot like time captured in a time capsule.

Speaking of unearthing treasures, let’s introduce another dimension to our discussion and consider fossil fuels for a moment: oil, gas, and coal. They are essentially a form of stored solar energy. Hundreds of millions of years ago, plants used photosynthesis to convert solar energy into chemical energy. That energy is converted into money today while it powers our lives and economies. It’s easier to think of millions of dollars than millions of years. What’s the true value of anything that took that long to produce?

Time and money seem to be engaged in a perpetual dance. Time never stops, and money tries to keep up with it, relating to it in various ways.

We might have started with sundials and clay tablets, but today, sophisticated financial instruments like options have a pricing component called “time value,” second only to its intrinsic value. The closer we get to expiration, the more the time value decays.

It was the ancient Sumerians, around 2000 BCE, who are credited with dividing the day into 24 hours, each hour into 60 minutes, and each minute into 60 seconds. This sexagesimal system was based on their counting system, which used a base of 60.

4,000 years later, with two smartwatches on our wrists and digital money in our virtual pockets—we all still have only 24 hours in a day, and 60 minutes in each hour, no matter how large our bank account may be.

At the end of the day, it’s all about the perception of value. We all fall somewhere between those that have all the time and no money and all the money and no time. At different points in life, we might feel we have more or less of either of the two. There is no one right answer, but it’s good to remind ourselves that money can be borrowed and saved. It’s fungible in many ways, while time is not.

Money has yet one more interesting quality – it seems to have the ability to buy us the freedom to spend our time as we like. Let’s spend our time wisely, or at least, let’s think for a minute about how we spend it. I plan to!

Happy Investing!

Bogumil Baranowski

Published: 7/19/2023

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