Financial Freedom

How Successful People Use Their Spare Time

  • How do you make use of the spare moments in your day? Do you prefer to work ahead or use that time for a break?
  • Today, Mark Ford explains how those spare moments can have a major impact on your goal of achieving a rich life.

Jack and Jill live in the same apartment building and work in the same office. They both wake up at 7 a.m., shower, have breakfast and get to work by 8 a.m. It is at this point that their habits diverge.

From 8 a.m. until 9 a.m. (when the rest of the workers come into the office), Jill plans her day and begins work at a job that she has identified as important in terms of furthering her career.

Jack likes to get into work an hour earlier, too, but uses this hour for a different purpose. He uses that quiet time to put his feet up on his desk, sip coffee and read the morning paper.

Every so often, he glances at Jill and shakes his head. As he sees it, he and Jill are equal in terms of earning office brownie points, but Jill is the loser because she’s spending the hour miserably while he’s enjoying himself.

He sees her work as a sort of compulsive selfishness. “She’s so self-centered,” he thinks.

David Niven, a college professor and author of the book 100 Simple Secrets of Successful People: What Scientists Have Learned and How You Can Use It, would half agree.

“Yes, Jill is acting out of self-interest,” he’d say, “but so is Jack.”

Both of them choose what they do with their spare time because they believe they benefit from it. Jack doesn’t like work. Thus, he doesn’t want to work more than he has to.

But since he has to work from 9 a.m. to 5 p.m., he figures he might as well do a good job during that time. And he does.

Jill does like to work. And although she doesn’t enjoy every single aspect of it, she especially enjoys the hour between 8 a.m. and 9 a.m. That’s when she plans her day, figures out what she can accomplish and gets some work done on a project that she knows will change her life for the better.

By 9, Jack’s earlier feeling of relaxation has been replaced by a mild anxiety. In a few minutes, the office will be teeming with activity, the phone will be ringing and his inbox will be overflowing – all with the work he must do but doesn’t like.

At that same moment, Jill is feeling fine. She actually feels better than she did at 8. She’s organized, ready for the day ahead and happy to know that she has already accomplished something important.

If we were to look at this scenario in financial terms, we might say that in their use of spare time, Jill is an investor, while Jack is a spender.

As an investor, Jill works from 8 a.m. to 9 a.m. because it gives her dividends. On a short-term basis, she is rewarded by knowing that her day is set, her inbox is organized and she has already done something she cares about.

On a medium-term basis, she benefits by enjoying a more orderly day. And on a long-term basis, the work she puts in will provide her with all sorts of rewards in the future – higher pay, better work, more responsibility, etc.

As a spender, Jack is not willing to work that extra hour every morning. He would rather use it to “buy” some time that will give him instant gratification.

Jill is building value. Jack is spending it.

We know that in the financial world, value compounds over time. This is equally true of how we spend our time.

Invest $1,000 in the stock market today and you can be pretty sure it will be worth about $2,000 in eight to 10 years (assuming the stock market grows at its historical 9% rate). The same principle holds true with work.

Every hour that you put in today will be worth many times that amount later on. The rewards can be extraordinary if you think of them in terms of money.

Let’s say Jack and Jill are both earning $20,000 per year right now. By putting in an extra hour per day for a full year, Jill can expect to get salary increases that are, perhaps, 20% higher than Jack’s. If that’s the case, when he gets a $1,000 raise, hers will be $1,200.

That may not seem like much during the first year, but by the third year, Jill will have jumped up to a new level – a management position with a salary of $65,000.

If she continues to put in that extra hour per day, she will eventually be running the business, pulling down $175,000 per year. Meanwhile, though Jack has been enjoying his early morning hours, he will have had a very slow career arc. With any luck, he’ll be earning about $55,000 per year as a junior manager.

During the 20 years of their respective careers, Jill will have earned a lot more money and lived much better in terms of material goods. But Jack does not regret his choice.

After all, he figures that he has enjoyed an hour per day of pleasure – five hours per week, 260 hours per year, for 20 years – that Jill gave up. That’s 5,200 hours of “fun” that Jill didn’t have.

But now Jack and Jill are 48, and Jill doesn’t have to work anymore. She was able to retire with $4 million in the bank. But Jack is forced to continue working.

With two kids in college and a mortgage, he couldn’t retire even if he wanted to. Every 40-hour week that Jack now works is 40 hours that Jill can spend enjoying herself.

It will take Jill just 130 weeks, less than 2 1/2 years, to catch up with Jack in terms of the amount of time he spent on personal pleasure all those years between the hours of 8 and 9 in the morning.

And Jill will be not only much richer and freer than Jack but also able to continue enjoying herself… an extra 2,000 hours per year. That is how successful people use their spare time.

Good investing,

Mark


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