By Ramit Sethis, CNBC
Self-made millionaire: This is the greatest paradox of wealth—and most people fail to recognize it.
Change is a constant and continuous process in life. As we grow older, we change how we dress, what we eat, where we live and who we become friends with.
Yet when it comes to how we use our time and money ― especially for high earners and wealthy individuals ― we tend to be more resistant to change.
So imagine my surprise when I visited him one day and pointed to the bags sitting on his kitchen counter.
“Oh, I just got back from the grocery store,” he said.
After a quick pause, I asked, “Have you ever considered having someone else do your grocery shopping?”
He looked at me like I was crazy. Pay to have someone do his grocery shopping? What kind of elitist would do that?
Here was an adult earning $750,000 a year, but behaving as if he still earns $50,000.
The Hidden Paradox of Money vs. Time
The concept of buying back your time is one of the most powerful productivity concepts I’ve learned as a business owner.
Buying back your time is all about convenience: By spending on things like Lyft rides, pre-cooked meals or a housekeeper, you’re actually saving money because you get back the hours that you’d normally spend doing things that don’t make you happy.
Most high earners fail to recognize the effectiveness of buying back time. Maybe it’s because growing up, their parents didn’t have more money than time, which changes the calculus of how they make decisions. As a result, those high earners never end up changing their approach to work and their personal lives.
This is a huge paradox of earning more money: Many people claim they value time over money, but if you look at their calendars, you’ll find that the opposite is true.
Buying Back Your Time Isn’t an Act of Arrogance
I used to scoff at people who flew first-class and think, Why would anyone spend an insane amount of money something so pointless? We’re all getting to the same destination.
But more often than not, those people were not stupid. They were high earners who understood value in a different way than I used to.
If you earn $40,000 a year, for example, spending $5,000 on a first-class flight is crazy. But if you’re a CEO who earns $450,000 a year, it makes perfect sense.
In business, misaligned beliefs on time and money can cost you dearly ― while getting aligned can become a force multiplier.
Sometimes, people who buy back their time are seen as showing off. But guess what? Many of us already do it:
- Eating at a restaurant instead of cooking at home
- Getting the car oil changed instead of doing it yourself
- Taking an Uber instead of walking or taking public transportation
- Paying retail price instead of looking for a good deal
I’d bet that some of you do these things every week and don’t consider it as “buying back your time.” But you actually are because you’re spending on convenience so you can focus on getting results and move on to more important things.
I’m really into fitness, for example, and Theoretically, I could read a ton of material on bodybuilding, structure my diet and fitness routine ― and stick to it.
But I know I’ll never be as efficient as my trainer, who lives and breathes fitness. By paying him, I can trade money for time and get the best results. (Again, I could be doing it all on my own, but I don’t have to; I’d rather spend that time on my business and with my family.)
Give It a Shot―It Might Change Your Life
I still find it difficult to know when it’s “right” to spend money or time on something ― and I’m not alone.
Think about all the wealthy and successful people, like my friend who earns $750,000 per year, who are uncomfortable with the idea of delegating tasks to others. But if you’re working hard, you should be able to buy back your time.
The key is to ask yourself: What do I get out of it?
What do you get if you got three hours of your time back every week? Do you get to fly your parents out and put them up in an amazing suite? (If you’re Indian like me, the answer is no: They’ll be staying with you.) Do you get to do things you really enjoy, like cooking your own meal or composing music?
If you’re making more money than ever, aim to save at least one hour per week. Think about all the responsibilities that you hate (e.g., doing the laundry, grocery shopping, managing your finances) where there are great solutions available to outsource or systematize the work.
Then, as you get more advanced, you can tackle trickier topics like scheduling, email management and entire project management.
1Original CNBC article by Ramit Sethi: "Self-made millionaire: This is the greatest paradox of wealth - and most people fail to recognize it"