Tuesday, August 25, 2009

Time is Money, Budget your Time

Remember, back in school, when the teacher would say, What is the Time Value of Money? Or what is a dollar today, worth tomorrow?

What did they really mean? If you invest one dollar today in the bank, and it's earning annual interest rate of 3%, it will take approximately 24 years before that dollar is actually worth 2 dollars. Seems complicated, huh?

Investment Secret You can Use, Rule of 72:

The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. For example, the rule of 72 states that $1 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2. In reality, a 10% investment will take 7.3 years to double ((1.10^7.3 = 2).When dealing with low rates of return, the Rule of 72 is fairly accurate. This chart compares the numbers given by the rule of 72 and the actual number of years it takes an investment to double.

Well if we confused you enough, please read on and let's explain. We have to understand that time is money, and how we budget our time will many times determine how much money we will make. If we look around we have so many things in our way to distract us from actually spending our "Time" or "Money" wisely, from emails, chat, tweeting, to even doing things that you shouldn't be doing (we'll let you decipher what that may mean). The point is, there is only so much time in the day to really take full advantage of the many opportunities life presents us with. The question is do you Budget your Time, we talk so much about having a Budget, is your TIME also put in that budget. Have you ever took the time to calculate how much you make an hour, when you are actually working? Have you ever taken the time to calculate how many hours you spend not working? Try doing the math, and you will have many answers to your life's decisions and where you are, where you want to be, and where you are going at the pace your at.

Start to place a Value on your Time, how much it's worth, attorneys, accountants, advisors, doctors, charge hourly fees. What is your Hour Worth? When you have your answer, this will begin helping you build a more efficient practice, and allow you to start budgeting your time during the day towards the things that make you the most profitable.

Remember, that a Dollar Today won't be worth a Dollar Tomorrow, and What you do Today will determine What your Worth is Tomorrow.

You missed this week's Money & Music Show? We got you, check it "HERE"

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