When it comes to managing our money among the most important concepts are risk, return and uncertainty. We talk about them in different ways every week on Marketplace Money, from diversification and asset allocation to safe savings and stock portfolios. An idea that is at least as important but underappreciated is time.
Sure, with investing we do talk about time. How long do you plan on holding the investment? One year? 5 years? 10 years? The investment mix can change depending if the goals are short-term or over the long-haul.
But the time that matters is really a lack of time. Time is the scarce commodity in everyday life.
There are only 24 hours in a day and we all need at least some sleep. For example, work absorbs a lot more our time. For instance, families earning the median income now work on average about 3500 hours compared to 2800 in 1975, according to Michael Greenstone and Adam Looney at the Hamilton Project.
That's a 26% increase. One reason it's so hard to save is that working parents often substitute money for time. The classic example is takeout dinner rather than cooking at home.
We also raise families, spend time with friends, volunteer in the community, and surf the 'net. We want to read books, go to movies, take in a play, spend time on Facebook, and so on.
"Our modern economic life depends increasingly on the scarcity of time, the competition for time, the revaluing of time, and the redistribution of time," writes James Gleick in his book Faster: The Acceleration of Just About Everything.
It's why I think time needs to be factored into any personal finance calculation.
Women and those with children in the household are the most likely among working adults to report being strapped for time. Working Americans between the ages of 30 and 49 and those with a college education are also among the most likely to lack the time they need... In other words, the more cash-rich working Americans are, the more time-poor they feel.
On a practical personal finance level, one way to deal with time pressures is to keep money management as simple as possible. Yes, there may be more complicated strategies to accomplish a particular goal with better odds of making money. However, a price paid for complexity is time and if you don't devote attention to the strategy you could lose out on the benefits.
Keep it simple and, well, you'll have more time.