Time and Money

Time and Money

When growing up on the farm, it was not always easy to understand how our family made money.  What I knew, when I was young, was that we had some land and that we milked between 30 and 40 cows depending on the time of year.  Some of the land was pasture for our stock to graze on, some of the land was for hay and the remainder was for our feed crops of barley and oats.  We did plant some wheat which we did sell at the local Pool elevator after harvest.  The dairy cows were a constant in that we had to milk them twice a day.  The milk that we got from them was put into a large bulk tank and then every 3rd day, a large milk tanker truck came to our yard, pumped out our bulk tank and drove away.  A few days later when we went to the post office, there was a cheque in the mail that made mom and dad happy when they deposited it at the local credit union.

In my teen years, my parents started to invest in newer and better machinery and procedures that reduced the cost of production.  These changes were made because family labor was becoming scarce and therefore more expensive.  As each of my older siblings graduated from high school and university and got other jobs, those of us that were left behind had to pick up what the older ones were leaving behind.  When their unfinished work was coupled with our own chores, something had to give.   It was eye opening lesson to realize that “time” is a resource that needs to be considered both in daily business and in investments. 

To see how time and money interact, consider the Rule of 72.  The Rule of 72 helps to estimate how long it will take to double an investment at a given interest rate. For example, if you have money invested at 1% at your bank or credit union, divide 72 by that interest rate you are getting.  The answer will tell you the number of years your savings will double (72/1 = 72 years).  Alternatively, if you are getting 4%, it will take you 18 years (72/4=18).

The great Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”  It is for this reason people search for solid returns for their work and for their money.  Farmers want good yields because the fruit of their work is always translated into money.  Retirees want good returns on their money otherwise the capital will be used up sooner than later.  So, whether you are getting interest or are getting a dividend, your ability to calculate both return and time together will help you determine the best deal.

Al’s nuggets:

  1.  Money is the great equalizer among people because it is the common language that all people speak.
  2. Time and Money are two commodities that should be spent wisely.
  3. Time is precious because you can never get a wasted moment back.