Is Time Really Money?

by Kathryn Hauer, CFP®, EA

You’ve heard the old adage “Time is money.” But is it? In so many ways, yes.

Interest, Distributions, and Returns Paid to You

One of the key ways that time means money is the earnings that you hope and plan for your money to yield. Very simply, the longer you contribute, the more you stand to make. Your money works for you when you earn interest on your savings. For example, if you save $50 per month under your mattress, at the end of 10 years you’ll have $6,000 and at the end of 40 years, you’ll have $24,000. If you are able to earn 5% compound interest on that money, you’d have $7,764 at the end of 10 years and $76,301 at the end of 40 years. Even without compounding, time works to increase your money without your lifting a finger.

Interest You Pay

Conversely, time is a killer financially when you are paying the interest rather than earning it. Credit card balances and other high interest debt are the worst culprits because “a credit card balance of $20,000 carried at an interest rate of 20% (compounded monthly) would result in total compound interest of $4,388 over one year or about $365 per month” (Investopedia). I realize that it’s unrealistic to expect a life without debt, but every month you can avoid high interest, non-asset-building debt lets you use time to your advantage in gaining a higher ultimate net worth.

Saving for Retirement

In addition to the money your investments can make for you, the amount you contribute early in your life has the opportunity to work longer for you. In your retirement account, you’re more likely to earn capital gains through your stocks and mutual funds than the compound interest described above, but those returns on investments fare better when you have years in which to earn them. In any given year, the stock market could return a negative amount (in 2008, market loss was about ~ 37%) or a positive amount, but over an extended period, experts agree that the stock market historically returns about 6%. 


Getting a degree or certification takes time, but it pays off well over a much longer period after you graduate. For example, the following degrees are almost certain to increase your salary for many years after you invest the time needed to earn them:

  • CFP certification – 1 year

  • Associates degree – 2 years

  • Law degree – 3 years (plus prior education)

  • Bachelors degree – 4 years

  • PhD – 5 years

  • Night sch