It’s (not) All About the Benjamins

What would you do for $100?

Close your eyes for a moment and think about what $100 (or $1,000) means to you.  In other words, what does it take for you to trade time for money?  At what point do you decide to get out of bed (or off the couch) and trade your brains and/or brawn for something of value?

If you saw a $100 bill on the sidewalk, would you pick it up?  Of course you would!  What if you noticed that same bill stuck in a tree, but just a little out of reach?  This would require you to put forth some additional effort (you might have to get a broomstick out of the garage), but you’re probably going to place that $100 in your pocket, as well.  But what if the bill was on top of your roof?  I’m sure there are still plenty of people who would climb a roof to get $100, but at this point, I’m starting to think about the trade-offs (especially if I’m accident-prone or don’t own a ladder).

I recently had an experience illustrating the way that different people think about what’s valuable to them.  Last month, I applied for a credit card offering 100,000 reward points which I could then exchange for a $1,200 Amazon gift card.  I consider Amazon gift cards to be (nearly) the equivalent of cash so I felt like I had “found” $1,200.  It wasn’t exactly lying on the sidewalk, but the effort to claim my prize was certainly worth it to me.  I was pretty pleased to have made this discovery so I told my mother-in-law.  Interestingly, she didn’t share in my enthusiasm and politely told me that she was not interested.  I was surprised by her response, but it made me realize that we all have our own “get off the couch” number even if we don’t specifically think about it in those terms.

Successful people tend to do a very good job of focusing time and effort on those things that offer them a high expected return (or value).  For example, it would be foolish for a wealth manager to suggest to Bill Gates or Warren Buffett that they should take the time to fill out a credit card application in order to receive a $1,200 gift card.  Their time is not worth it.  On the other hand, there are those who will drive ten minutes or more to save $0.10 on a gallon of gas.  Regardless of one’s earning capacity, this is not a wise management decision.  These are extreme examples, but you get the point–most of us can do a better job of becoming more efficient allocators of our time and resources.  Determining the best use of your time and then having the discipline to consistently focus on those areas is a matter of intellectual and financial maturity.  Being able to elevate yourself from simply meeting basic daily obligations to spending significant time on those things that you are most passionate about is a good definition of success.

No matter how far you would go for a “Benjamin”, we all have our limit.  Ask yourself these questions:  How closely do I pay attention to my time/value trade-off on a day-to-day basis?  Am I spending the majority of my time on activities that bring me the most value?  Am I being consistent in maximizing value in my life?  Remember, value is what is most important to you.  We all need money to live, but it is only one of the many things that may be valuable to us.  Prioritization is the key.  If you are spending too much time on your financial affairs, or wondering if your investments could be managed more effectively, we should talk.  Don’t spend your time on things that you are not passionate about.  You will never be as good at those tasks as the person who is deeply passionate about it.