A Look at Time: Part 2

This post is a continuation of “Wasting our Lives Away.”

The Grand Canyon started as a normal looking riverbed; the tallest tree in the Redwoods began as a sapling.  Patience and the passing of time can produce remarkable outcomes.

As long as you are not a theoretical physicist, time is constant in our lives.  The seconds turn to minutes, the minutes to hours, hours to days, and so on.  This consistency allows for small change to beget major results after the passing of millennia.

However, humans do not live millennia; frankly, we are lucky to live for a century.  Yet, with our limited lifespan, we can still see small changes, create “Grand Canyons” in our own lives.

For example, by saving one minute a day, we can save just over six hours per year (365 minutes per year is 6 hours and 5 minutes per year).  Six hours doesn’t seem like a big deal, but before you toss away the six hours, think of the Grand Canyon.  What would six hours per year look like over 5 years? 10 years? 40 years? Over 40 years, you would save over 240 hours, or approximately 10 days.  If one minute per day adds to 10 full days, imagine if you could save 30 minutes per day; that would equate to 400 days of being awake (we are awake for only two-thirds of the hours in a day).  Every 40 years, you would get a bonus, 400 days of life.  400 days with your lover, 400 days with your son or daughter (or grandchildren 40 years from now), 400 days traveling, 400 days reading a book, 400 days changing the world.

The power of time is truly immense, but we, as a society, rarely utilize this time component.  For example, most research studies peg the average social media use in Americans aged 18-65 to be somewhere between 1 hour 30 minutes and 3 hours, per day.  Yes, per day.  Now some people can change the world through social media, but I am willing to bet the typical American is using social media for a different purpose.  Screens in general take up a large chunk of our lives; however, we waste time in other ways.  Check out timing your shower and see how much time you can save.  Personally, I was taking an average of a 10-minute shower and have since cut the shower to about 3 minutes; thus, saving 7 minutes per day (and many gallons of water) or over 70 days compounded across the next 40 years.  There are a million things I want to do with that 70 days than stand in a shower and 3 minutes is definitely adequate for not smelling bad (I hope).

The compounding effects of time make minimal contributions today add up.

Let’s switch gears from saving time to saving money.  In most intro to finance textbooks, the idea of compounding money is covered within the first couple chapters.  The compounding of money is premised on money being deposited in an account and that money generating interest, whereby the interest is kept in the account; therefore, the two cash flows are deposits and interest payments.  Each time more money is deposited and interest is paid, the next month’s interest payment gets larger.  The effect of this compounding factor is monumental.  If a 25-year-old invests $237 a month from today until retirement in a fund that tracks the S&P500 (approximately 9% annual return), by the retirement age of 65, the individual will have $1,000,000 in that account, while only depositing a total of $96,000 over the same amount of time.

Money-wise, Americans are horrible at saving for future use.  A March survey from GoBankingRates found that 33% of Americans have $0 saved for retirement and 56% have less than $10,000. People will find all types of reasons not to put away a few dollars here and there, but the staggering number without any savings is horrific.

Why don’t we think in the long term?  What precludes us from saving marginal amounts of money and time today?  How can you save those minutes?  With these questions in our heads, maybe the next generation will fully realize the power of time; thus, making small contributions today and begetting major results in the future.