If time is money, then people who work more hours should make more money. And yet, there are those who are able to live solely off of passive income, meaning they collect earnings that are not attached to hours worked at all.
Time is only money if that’s how you chose to structure your income, around an hourly rate. The problem with relying on the hourly rate is that eventually, you run out of hours. Each of us gets the same 24 hours, but we aren’t all making the same money. Sure, some of us make higher hourly rates than others, but as long as the payment structure remains attached to time, it is limited.
To escape the time is money paradigm, you have to be willing to be paid based on results rather than hours. After all, it’s not time that produces results, but effective use of time that produces results.
For example, if you are able to focus your time to produce a desired result, like the completion of a project, a sale, or a booking, twice as quickly as someone else, meaning you book twice as many sales and bring in twice as many earnings, don’t you deserve to be paid more? This is a principle freelancers and business owners live by.
However, the opportunity to break free of trading time for money also comes with significant risk. What if you can’t leverage your time effectively to create enough earning opportunity?
The key to avoiding this failure is to identify which actions produce income and spend the majority of work hours doing those tasks. For example, if I run my own consulting business, I will need to network and market myself to create and drive business, however, it is only booking the client that gets me paid. If I spend all my time and energy networking and marketing, I may be using my time productively, but I won’t be creating an income producing result, and my business will inevitably fail.
It’s making that sale or that booking that brings in the income. Unfortunately, that task of closing the sale or asking for the order also makes many of us uncomfortable. It opens us up to the possibility of rejection and failure. So to avoid that, we bury ourselves in the support tasks, feigning progress through time invested rather than results produced.
But when you run your own business, you can’t live off of time invested. You can only live off of results. That’s what gives you the freedom to earn beyond the constraints of an hourly wage. If you don’t use time to effectively produce income, then you won’t benefit, regardless of how much time you invest.
To maximize your earning potential, you must get into the habit of pursuing and producing results. That often means aggressively attacking those uncomfortable tasks- making cold calls, asking for the order, closing sales, etc. Once you develop the discipline to produce results instead of investing hours, you can blow the time is money constraint away.
While the challenge to the time is money paradigm is easily illustrated through entrepreneurs, there are ways for employees to bust the limiting factors of the hourly compensation model too.
Just like any business, companies require a combination of support tasks and money making actions to run successfully and stay in the black. If you can get a job on the earning end rather than support end and specifically illustrate how much you are producing monetarily for the company, you can ask for your compensation to reflect that. Ask to be paid based on your results rather than a standard annual salary that comes with the 9-5. Again, there are risks if you shy away from the “close”, but if you tackle those income producing results head on, you can earn far more than your limiting work hours would otherwise allow.
Do you prefer to be compensated based on time or based on results? How have you seen the “Time is Money” paradigm busted?