The Most Important Thing Money Can Buy

money growing

Kinda like this... Flickr photo by Images_of_Money

There are 24 hours in day and 7 days in a week. Most of us spend 8+ of those hours 5+ of those days engaged in an activity that we simply don’t enjoy.  Yep, I’m talking about work.

Oh sure, some people love their job! I love.. err.. like my job most of the time. But the true test of whether you really love your job is this: would you do it for free? I’ve got a shiny silver dollar that says you probably wouldn’t. So why do we do it? Why do we sell so much of our precious time?

Because we have to, right? We’ve all got bills to pay and stuff that we saw on TV that we have to buy. But I’d like to propose an alternate solution: instead of buying a bigger house or a new car, why not buy something far, far more important?

Why not buy the most important thing money can buy: your freedom.

My fellow blogger, jlcollins said it best: “Freedom is the single most valuable thing that money can buy” and I agree 100%. Imagine what you could do with your life if you bought back those hours, the best hours of the day? Could you work on improving your health? Could you pick up that hobby you’ve always wanted to try? Could you start your own business or volunteer more?

There’s a lot you could do with that time, if you could only buy it back. Thankfully, you can! And while it’s not hard, it’s also not easy. It takes time and no one is going to do it for you. You have to take charge and do it yourself.

Getting Started

Like all change, it starts in your mind. You have to view your time as a commodity and see that it has a price. You’re selling it to your employer right now and the compensation you receive is your paycheck.

Let’s say that you make $20/hr. This works out to $40,000/year if you work 8 hours a day for 52 weeks a year. This is actually less than the national median income in the US according to Wikipedia. Plus it’s a nice round number :). We’re going to ignore taxes and inflation to keep this example simple.

If you make $20/hour, and you had $20 set aside in your savings account for a rainy day, you could just move that $20 into your checking account, use it to pay your bills, and take an hour off. If you had $4,000 then you could take a month of unpaid leave. Of course, once you do that, the money is gone and you have to continue working.

What if you have an income stream, like a savings account or investment, that paid you $20/month? With that $20 coming in, with little or no effort on your part, you could take an hour off every month! You’ve effectively bought back an hour of your time, one hour per month, for the rest of your life (assuming that income stream doesn’t dry up). This is exactly what my family is doing with our real estate business.

Developing Income Streams

To create an income stream, we require another definition: Capital

Capital: Cash or goods used to generate income


When you set aside dollars to create an income stream, it becomes capital. And you should never touch it. Not ever! Your goal should be to live off the income stream itself, not the dollars which created the income stream. It goes back to the story of the goose that laid the golden egg: the goose is your capital and the eggs are your income. Properly invested, your capital will continue to generate income for your entire life. But if you spend your capital – if you kill your goose, your income stream will dry up and there won’t be any more golden eggs.

Going back to our example: how much capital does it take to create an income stream of $20/mo? That works out to $240 a year. The amount of capital depends entirely upon what rate of return you can achieve:

Rate Capital Required
1% $24,000
2% $12,000
3% $8,000
5% $4,800
8% $3,000
10% $2,400

You can see that even a 1% difference has a huge impact on the amount of money you will need. But in the beginning, if you’ve never invested before, don’t even worry about it! Just start building up capital. There will be plenty of time to figure out what to do with it.

The Trick!

golden egg

Don't kill the goose if you want more of these. Flickr photo by Mykl Roventine

The trick is that there is no trick (which was a trick in itself :)). If your $20/month income stream buys back 1 hour per month, then multiply that by 40 and we see that an $800/month income stream can replace a whole week of work. And a $4000/month income stream would replace the need to work entirely!

Ok, maybe there is a trick: if you don’t need your whole salary to get by, then you don’t have to replace your whole salary. You just have to pay all your bills – and then some. How much beyond your expenses is up to you, but if you live a frugal life like Jacob from or Mr. Money Mustache then you can be free a lot sooner than if you set out to replace your whole salary.

When you are first starting out, you can take the income from your income stream and reinvest it, thereby converting it into more capital. Capital creating income which becomes more capital is called compounding and Albert Einstein said it was the greatest invention in human history. No kidding!

The Journey Begins with You

The Chinese philosopher Lao-tzu said that the journey of 1000 miles begins with a single step. I’m here to tell you that the journey to buy back your life begins with a single dollar. I don’t care who you are: everyone can squeeze a dollar out of their budget. Your freedom is the most important thing you could possibly buy, and the journey can start right now if you’re willing to make it happen.

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  1. Posted February 3, 2012 at 1:37 am | Permalink

    Thanks DD….

    …I appreciate the tip ‘o the hat! Excellent post.

    For the most part I’ve enjoyed my work over the years but I’ve always said it was my second choice. I turned to it only because my 1st, being born idle rich, didn’t pan out.

    Most people see saving and investing as deprivation. To me it’s always been a matter of what do you want to buy? Fancy house? Fancy Car? Fancy wardrobe? Freedom from your shackles?

    In “The Richest Man in Babylon” the author discribes saving as capital and those dollars become your slaves working tirelessly to earn you more.
    jlcollinsnh recently posted..Muk Finds Success in TahitiMy Profile

    • Dollar D
      Posted February 3, 2012 at 9:31 am | Permalink

      You’re welcome, jc! Thanks for stopping by.

      There are time when I can “lose myself” in my work, when I look up from the keyboard and find that I’ve spent the whole afternoon happily coding and that it’s time to go home. But those days come fewer and fewer the longer I work. Being born rich would have been my first choice too but I doubt I would understand the value of money so I’d have to be really rich or I’d die broke.

      Frugality definitely has that connotation of deprivation. People think you aren’t really living if you save most of your money instead of spending it. If you only feel fulfilled when you’re spending money, then you better get ready for a lot of disappointment.

      I think “The Richest Man in Babylon” was probably the first personal finance book I read and it’s one of my favorites!

      • Posted February 5, 2012 at 5:41 pm | Permalink

        “The Richest Man in Babylon” wasn’t my 1st, but it remains my favorite.

        my only concern, and this is not the fault of the book, is that people seem to need things to be complicated to see the value.

        Babylon is such a simple little book, it’s easy to let the message slip thru your fingers. It is a book to read, and reread, slowly; contemplating what is being said.
        jlcollinsnh recently posted..Go ahead, make my dayMy Profile

        • Dollar D
          Posted February 6, 2012 at 9:33 am | Permalink

          I think the format definitely does make people take it less seriously. The story and the message are so simple that it would be easy to dismiss it as not applicable. But the opposite is true: the principles espoused in the book are timeless and therefore universally applicable!

          I’ll have to add that book back to my reading stack. It’s been a few years since I’ve read it.

  2. Posted February 4, 2012 at 9:18 am | Permalink

    I really like this post, and the quote about freedom :)

    I need to poke around your site more, but it sounds like you’ve read Your Money or Your Life — is that true?
    Jackie recently posted..Look at the Overall PictureMy Profile

    • Dollar D
      Posted February 4, 2012 at 10:01 am | Permalink

      Thanks, Jackie. I read it recently, actually. I knew it was one of those foundational books about financial independence so I thought it was silly that I hadn’t read it yet :)

  3. Posted February 4, 2012 at 6:13 pm | Permalink

    Freedom… reminds me of of Brave Heart when Mel Gibson screamed this word in his final moments.
    Freedom is one of the main reasons I want to get out of debt. I want to make my choices myself. Right now those choices are made for me.
    Aloysa @ My Broken C recently posted..Spending That I Can AffordMy Profile

    • Dollar D
      Posted February 5, 2012 at 7:20 pm | Permalink

      Freedom from debt is a noble pursuit to be sure! And the starting step on the path to healthy finances.

  4. Posted February 5, 2012 at 7:38 pm | Permalink

    Great article DD! I value my freedom much more than any new handbag or luxury car. I think it’s a waste of time and energy to try to keep up with the Joneses. Having this mentality helps me keep things simple :) and live within my means.
    World of Finance recently posted..Finding a Bank that Fits Your NeedsMy Profile

    • Dollar D
      Posted February 6, 2012 at 9:30 am | Permalink

      People think that a simple life can’t be fulfilling but I think the opposite is a true: a life spent chasing more and bigger stuff is a life of constant disappointment.

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