What Will Your Financial Dreams Cost You?

27 September 2020

We probably have all heard the saying, time is money, which is a quote attributed to Benjamin Franklin. Therefore, if two persons earn different salaries, the cost of their time is also different. To illustrate this, let us calculate how much “time” or days of your labour an item priced at J$28,000 will cost you and other persons whose salaries may be dissimilar to yours. Follow the example in the table so that you can determine how much is your time worth as well.

	Phillip	Peter	You
Gross monthly salary	J$400,000	J$120,000
Average # of days worked each month	24 days	20 days
Daily gross salary	$400,000 = $16,666 24 days	$200,000 = $6,000 20 days
How many days labour is spent on an item that costs $28,000 per month?	$28,000 = 1.7 days labour $16,666	$28,000 = 4.7 days labour $6,000

OPPORTUNITY COST
Phillip shared that he had wanted to purchase a property but was struggling to save the J$1 million down payment. Confessing, “Mich, my problem is not earning money, my problem is saving that money because of my online Amazon purchases.”

So I took the time to show Phillip that if he calculated his spend on Amazon purchases over the last 3 years, he would have been able to achieve his goal. Here is the breakdown, J$28,000 in Amazon purchases monthly x 36 months = J$1,008,000. Let us take this a step further, to see how many days of work this was costing Phillip. Here is the calculation, J$1,008,000 divided by hourly rate of J$16,666 equals 60.5 days. When I walked Phillip through these calculations slowly the reality sank in, his Amazon purchases had cost him the down payment on a house. At the end of the conversation, Phillip had a clearer perspective noting, “The fact that it is hard for me to reach to J$1 million shows that I’ve spent a significant portion of my life’s labour on other expenses, while my financial goals are largely unmet, I need to change that and work deliberately towards my goals.”

FOOD FOR THOUGHT
1. What does your labour represent for you? Does it mean sleepless nights working on projects, the stress of deadlines, etc.

2. Could you have achieved more of your financial goals, if less of your money was spent on other expenses?

3. Like Phillip, what is your specific expenses, if not reduced, costing you, is it that house?

4. What will you commit to doing differently, as of today?

Remember, what you earn per day represents the number of hours you sacrificed in exchange for your salary. If this portion of your time is being spent on things, other than your financial goals, it can cost you your financial goal/dreams. Do you want to contribute more of your time working towards your own dreams? Please call us at (876) 998-5662, to let us help you take a closer look at making your time really count towards you achieving your goals/dreams, after all, time is money, so spend it wisely.

Written by Michelle Sinclair-Doyley

Manager, Group Financial Partnership Support & Financial Education, JMMB Group