In money-value-of-time terms this could cost you $1638.40The average disposable income in Australia after tax is $43,100 a year for a single person. On 250 working days a year and eight hours a day, that’s an earning rate of post-tax money of $21.55 an hour or 36¢ a minute. The average disposable income of an Australian earning $100,000 a year is $73,476 or $36.74 an hour, or 61¢ a minute.
In finance, we are constantly talking about the time value of money. But in life we now have the basis for calculating the money value of time. A minute for someone earning $100,000 a year is worth 61¢ in cash. Waste a minute and you waste 61¢.
On that basis, brushing your teeth costs you $1.22, boiling an egg costs you $2.13, travelling to work (40 minutes) costs you $24.40 on top of your fare. More seriously, a VB stubby appears to cost $1.66 but under the money-value-of-time formula, a VB actually costs you 2.72 minutes of your life. A carton costs you one hour and five minutes and if you take more than 2.72 minutes to drink each bottle instead of earning money, it gets even more expensive. On top of that, if you drink the whole carton and spend 24 hours with a hangover, it actually costs you $517.20 of lost earning capacity on top of the cost of the case. That’s $23.21 a bottle. Expensive stuff.
And the more you earn the more expensive everything becomes. On $150,000 after tax, it’s 87¢ a minute, and for someone earning $200,000, a minute of life is worth $1.11. Of course, earning $200,000 is great, but it does mean you only have 1.5 minutes to drink a VB before it is more expensive to drink it than it is to earn it, and if you drink a boxful and lose 24 hours of earning capacity, it costs you $1638.40.
Let’s look at something else. On the average wage: Every $10,000 you spend on a car will cost you 58 working days or 1.9 months. If you have a mortgage paying 7 per cent, every $10,000 repaid over 20 years will cost you 224 days work or 10.8 months to repay. A $100,000 mortgage costs you 8.98 years of your life to repay. The average mortgage of about $367,000 will, if paid back over 20 years on the average wage, cost you 32.9 years of your working life. Even on $200,000 a year the average mortgage is still going to cost you 10.7 working years.
And all this is, rather amazingly, before you actually eat. For brokers it looks like this: if you want to earn $100,000 a year and you do an $80 minimum-commission trade, of which you get say 45 per cent of the commission, after paying tax you have to do 11.1 trades a day, in which case you have 43 minutes to talk, execute, report, follow up, do the admin, monitor the trade, talk about it, take the blame and revel in the glory before the trade becomes a loss in money value of time terms. And that’s before netting off your other costs, such as trading errors and settlement issues.
Money is time and this is just the hard numbers calculation. For some people, time is more valuable depending on what you do with it. A minute schmoozing your spouse, for instance, is more valuable than a minute being grumpy about the fact that the Dow Jones just fell 353 points. On this basis, debt can be a lot more expensive than you think. Under the money-value-of-time formula you cannot quote the hard cost of debt without taking into account the ”soft” cost of debt, which is the devaluation of time lost worrying about the debt that could have been better spent schmoozing.
Worrying about debt makes it doubly as expensive because of the cost of the lost opportunity to spend the time doing something worthwhile, like being happy. We all spend so much time worrying about making money, but you can do just as well by enhancing the value of your time spent not earning it. It may lose you $36.74 an hour but drinking VB and schmoozing your spouse, if it’s time well spent, can work out to be very cheap.
Marcus Padley is a stockbroker and the author of the daily stockmarket newsletter Marcus Today. Click here for a free trial.
The original release of this article first appeared on the website of Hangzhou Night Net.Categories : 杭州龙凤