How Should You Divide Your Money and What’s Worth Your Time?

I’ve recently been intrigued with different methods of earning money, managing that cash, and being successful in doing so. Due to that, I have invested time in studying the methods to put money in the right places as well as figuring out what is and isn’t worth my time. Here I will discuss whether your paycheck alone is enough and how to divide your money while answering the question what’s more important: time or money?

Can you earn your way to wealth?

Most people tend to follow the saying “hard work pays off” and attribute it to a 9-5 and expect that paycheck alone to catapult them to wealth. While depending on the job you land, you may be able to live under no financial stress solely from that paycheck, but the majority of Americans can’t say the same. Contrary to popular opinion, you (most likely) won’t earn your way to wealth looking at your paycheck alone. Here, I’m defining wealth as living either at or around what your financial dreams are. So, if you want to become wealthy, you have to look at other options in terms of earning that added income. Now this may include starting a blog, running a business, or creating a YouTube channel. The possibilities are virtually endless but all things aside, one question must always be the focus: how can I do more for others than anyone else? Finding an answer to this question is where you can break that barrier and find yourself living out your dreams.

How should you divide your money?

I’ve learned recently that it’s never too early to invest. I’ve also learned of plans and percentages to divide your money in order to be ready in case of any emergencies. We all know that we should have a bank account as this is where paychecks are deposited and debit cards are connected to. Yet there’s more to it than just that. In your account, you should keep an emergency fund. This is a certain amount of money, usually enough to survive off of for a few months, that you don’t touch unless needed. Having an emergency fund protects you from stressing about anything unexpected that may arise. In cases where you can afford to put aside extra money in your account, something along the lines of a “freedom fund” can be made where a portion of your money goes towards vacations or extra expenses for the future.

Invest a percentage of your money

I can’t stress this idea enough and that’s starting early in the investing game. The key here is to take advantage of this compound interest which grows exponentially as you see drastically better results the more years this portion of money sits. What’s important is finding a percentage that works for you. What I suggest is finding an amount of each paycheck that you put towards investing. Having this recurring deposit ensures you are consistently adding little by little into these accounts but it’s very important to stick to it. Also, if possible, see if you can have this percentage of money taken directly out of your paycheck before going into your account. This way, you don’t even see the money you’ve put aside. All in all, figure out what percentage of your money to invest and stick to that plan. Something I’ve learned to remember is: earn more, spend less, and automate it.

Trading time for money is a bad trade-off

Time or money? Do you have an abundance of one over the other? While some may say money, there’s more to it than a simple answer. Working countless hours may allow you to bring in some extra cash, but the time you have to yourself outside of work is then quickly diminishing. This also brings me back to the earlier point of living paycheck to paycheck. Something I’ve noticed is that nothing is more important than your time, but you just have to find ways to make money more efficiently. That’s easier said than done of course, but one way of doing so is through passive income. This is a chunk of money coming from various online methods where you “make money while you sleep” and you enjoy time to yourself. Finding the best ways to bring in that passive income is where you can maximize your amount of time while making money efficiently. A quote I’ve really tried to dissect says “I can’t afford to waste my time making money.” This ties back to my point about efficiency and the best ways you can make money.

Finding the best bargains at unconventional times

We all remember when the stock market crashed back in 2008. People lost all the money they worked for and many lost the majority of their retirement savings. What if I said that you could have benefited off others in the midst of this economic recession? You find the best bargains at times of maximum pessimism. Here, people were worried of this collapse and sold their investment funds (stocks, bonds, etc) often times too late at a price much lower than the amount they originally paid. Taking 2008 for example, at a time where stocks were rock bottom, some of the smartest investors didn’t miss the opportunity and made absurd returns. How did they do it? By buying into these stocks at their lowest point. Knowing the market always rebounds and breaks even, they knew these larger companies would soon see positive growth again and emptied their pockets into them. In a few short years they saw these companies get back afloat and it paid dividends. Going against the trend, taking advantage of the worried majority, you can find the best bargains and see the greatest results.