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Our greatest financial mistake is to waste time

Updated: May 3, 2013 12:14PM

Originally published: January 1, 2004

No resolutions. That was my resolution last year. And it was the one resolution I managed to keep in 2003. I decided not to make any more financial resolutions, because I’ve come to understand that money isn’t the most precious commodity. Time is. After all, time can make you money. But no amount of money can buy you time.

So the real commodity that you want to avoid wasting is time. And it strikes me that all my previous columns about not wasting money by paying interest on credit-card debt, or spending instead of investing for retirement, are really all stories about not wasting time.

It’s difficult to put a dollar value on a minute, or day, or year of your time. You can divide your annual after-tax salary by the number of hours you worked. That will give you the dollar value of one hour of your time. But most of us would say we’re worth far more than that mathematical calculation, because, of course, we’re underpaid!

The impact of time

Another way to value time is to measure the impact it can have, without any extra input from you, into making money grow. For many years I’ve told the story of investing $2,000 a year ($38.46/week) into an IRA, growing in an index mutual fund, at the stock market’s historic average rate of slightly over 10 percent. Starting today, a 20-something could make that annual $2,000 investment for 50 years and have a $3.1 million fund at retirement!

Clearly the power of compound interest -- the impact of time on money -- is a major force of nature. The problem is that twentysomethings have no idea that time is the most valuable commodity, because they have so much of it. For them, money is the scarce resource, so they miss the long-term perspective.

Unfortunately, we learn the value of time only when we recognize it is a finite commodity -- not only finite, but indefinable. No one gives us an advance peek at when it will run out. If we knew for sure, it would be easier to plan. Even so, it’s never too late to vow to make the very best use of the time, of every current moment we have.

The greatest financial mistake we can make is to waste time. So, for the new year, here are some time-wasters to avoid, and the solutions to make sure you don’t waste time.

* Time-wasting worry. There is absolutely no benefit to worrying about money. It doesn’t change anything. It doesn’t create more money. And it just wastes the time you might be using to change your financial situation.

The solution: Start a regular and simple program of automatic investing. Have money taken out of your paycheck or checking account before you see it and spend it. You don’t have to be a genius investor to build a retirement account. And you don’t have to have a lot of money to get started.

The U.S. Global Investors All-American Blue Chip Fund (800-US-FUNDS) will let you open an IRA with as little as $100 if you agree to allow U.S. Global automatically to deduct a minimum of $30 a month (a dollar a day) from your checking account to add to your investment. Once you’ve done something, you can stop worrying about doing nothing!

* Time-wasting drudgery. Many people confuse the drudgery of money management with the idea that they’re actually doing something positive to control their finances. Paying bills is the perfect example. The time you spend writing out checks, then writing the same information in your check register, then finding a stamp and getting to the mailbox, is time that could be far better spent each month just evaluating your retirement plan statement.

The solution: There’s no better time to start paying your bills online, with just a click of your mouse. It’s safe, free or inexpensive, and most important of all: It saves time! Go to your bank’s Web site to get started.

*Time-wasting complaining. Complaining about how under-paid or overworked or underappreciated you are is a horrible waste of that most precious commodity, time.

The solution: Do something different with your time. Start your own small business on the side. Take an evening school course to make yourself more valuable. Invest the time you spend complaining into time you spend building your own future.

As you start the new year, take a moment of your valuable time to recognize how valuable each moment is. Yes, time is money. But even more importantly, time is life. And that’s The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange and McDonald’s Corp.

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