Measuring Wealth: Hours Worked To Maintain Lifestyle

How do you accurately measure wealth? That is a question I’m still trying to answer. But I’m pretty sure it is much more than dollar signs. Measuring wealth is an interesting concept. Some individuals try to measure wealth in relationships. Some countries measure it by the amount of children you are able to have and care for. Another way to measure it may be how well you are able to sleep. Hey, you can even measure it by the amount you have in a 401k. What we all know, however, is that money alone is not a full measure of wealth.

hours workedSo, why is ‘hours worked’ a better measurement than simply the amount of money in the bank? Because it encapsulates more variables. If you make $200 an hour, but you need to work 90+ hours a week to maintain your family’s lifestyle- are you ok? If you make 1m a year but your health is gone, are you really wealthy?

A Better Measurement
So, I purpose a new metric for evaluating wealth. Hours Needed to Work = Maintaining Current Lifestyle. This simple equation makes for an interesting discussion. This works across all income levels and also is useful for measuring personal progress over time. Most of us will make more money five years from now, but will we actually be making progress towards a well designed lifestyle? I think the goal of financial independence or ‘early retirement’ is to move hours worked to 0. That is the goal. Does that mean we will stop doing everything, sit on the beach all day and be lazy? Not necessarily, but it does mean we will have the freedom to do what we want, try new things, help other people, take care of our bodies, and spend time with the people who are important in our lives. I really enjoy helping people. I also enjoy fixing things. I also have a family to care for including my wife and kids. Even though I enjoy my work immensely, I still wish at times I had more flexibility to do other things with my life.

Earlier this year I had the opportunity for employment that would, in essence, take about 2-3 hours worth of work a week to finance our current lifestyle. The combination of a high income opportunity combined with a conservative lifestyle yielded plenty of intellectual conversations with my family and friends. But I didn’t take it. Why? Well, to be honest, I actually really like the place, people, and situation where I am currently employed. I also enjoy taking classes, going to school, and learning in a higher education environment. And the opportunity, or ones quite similar, will be available after I finish up my PhD. The opportunity was pretty neat, but it also brought up plenty of neat ideas. What would you do if you only had to work half as much to maintain your lifestyle? 1/4 as much? What are you putting off because you do not have enough time?

More Money, Less Time
The strange observation that I have made is that often the people who make the most money work the longest. I also know plenty of people who work really hard for very little money, and people who work just a bit and have plenty. But, in large, I tend to take notice of the individuals that seem to work crazy hours, endure insane commutes, and shoulder inordinate amounts of stress and burden despite the fact that their incomes could have produced financial independence long ago. I’m not really sure who decided that working unhealthy (possibly physically, emotionally or relationally) amounts was worth the money, but I’m still not convinced that is the case. People spend too much time pursuing money that will never bring them true wealth. Even when we have enough, we tend to desire more. This in turn, often puts pressure on us to earn more and more income.

Too Much Outflow
One striking consistent feature I notice is that far too many people overwork themselves simply to maintain a lifestyle they have created. The amount of money that makes us happy is much more arbitrary than we wish to admit. The only consistency is that we often feel we would be more comfortable if we just had a little more than we currently do. That holds for someone making 10k, 100k, or 1m. There is always a little more that would make us happy. Too much outflow and the elevated expectations that accompany it, are often the glue that keeps us stuck working when we wish we were free.

Minimizing outflow is a surprisingly powerful tool no matter how much you make. Curbing desires is one of the few ways you can actually develop contentment. Making more money won’t help you get there. Well, making more money without controlling desires, at least, will not help you maximize your free time.
Planning Our Future
When we look at the future we often think about jobs or careers that will make us lots of money. But I think it would be wise to look at a more complete set of measurements to determine wealth and contentment. I believe we need to think just a little more holistically. Five years from now do we want to be in a position to work only a few hours to maintain our lifestyles? Even if we choose to work more, that flexibility is pretty awesome. The choice of when we work is incredibly powerful. Things like stress, free time, flexibility, fulfillment, marriage, and children, all have immeasureable value. Freedom is valuable. It is wealth.

We trade our life for our money. If we are not careful we will set ourselves up for a lifetime of toil due to the lifestyle choices we make. Wealth is much more than dollar signs in our bank account. It is about buying our freedom. It is about the luxury of choice. It is about health, family, relationships, helping others and minimizing bad stress. Take a few minutes to see if you agree. Or disagree. Either way, make sure you are thinking about the way you have designed your current lifestyle and imagine how much better it could be in a few years with some minor tweaks.

 

One thought on “Measuring Wealth: Hours Worked To Maintain Lifestyle

  1. Many thought provoking nuggets in here. I’ve been chatting with my wife about working less and saving less. Once you are debt free and have a decent amount of savings/investments, those investments (over a long period of time) should grow and compound. Once you reach critical mass, can you earn less, save less and essentially buy your time back? One criteria might be when a good chunk of your “spending” is actually “saving”. We spend on retirement (401ks), we spend on college savings, we spend on a trip fund, a car fund, we spend on taxable savings, we spend on Roth IRAs. I think we are a few good years of saving from that critical mass. But working less is a top goal. Being able to be more flexible with those fewer hours worked is also a goal.