Time Is Not On Your Side

Time Is Not On Your Side

Why employees always see scarcity and the rich see abundance

One of the fundamental differences between an employee and an entrepreneur is that the employee sells time while the entrepreneur sells value. Because of this, the employee always lives in a world of scarcity. The entrepreneur, on the other hand, lives in a world of abundance.

As humans, we only have so much time and energy. Because an employee sells time, that is they get a paycheck for the hours they put into a job, they can only work as much as there is time in a day and energy to work. Eventually, they have to eat and sleep. If they’re a balanced person, they have to spend time with family and friends, and maybe pursue a hobby or two. Yet, even if they did nothing but work, they could still only produce 24-hour’s worth of value in each day.

Entrepreneurs sells value. So, they can transcend time and energy. Rather than sell their time, they invest it into building systems that run and create value with little to no effort on the part of the entrepreneur.

So, for instance, an employee can make a great burger but an entrepreneur makes a system that makes millions of great burgers. That is the fundamental business model of McDonald’s. Or as another example, a web developer creates code, but the entrepreneur creates the business that sells products through that website 24/7. The web developer channels all his or her energy into an 8 or 10-hour day. The business owner channels the energy of thousands of consumers into his or her site at all times. That is much more powerful, and it is how true wealth is built.

This points out a fundamental truth: employees and entrepreneurs have different mindsets that shape the way they see the world. And these mindsets color everything when it comes to interacting with the world, from how they interact with their kids to how they make purchasing decisions.

How employees view buying things

Bringing this into true clarity is a new feature of Amazon’s Alexa. In partnership with Ally Bank, Alexa will now tell you how many hours you have to work to purchase something.

As “Business Insider” reports, a typical exchange might go like this:

User: “Alexa, open Ally and tell me how much a $1,000 bike will cost in CurrenSee?”

Alexa: “Okay. How much do you make in a year?”

User: “$75,000.”

Alexa: “Thanks. How many hours do you work in a week?”

User: “40 hours.”

Alexa: “Okay a $1,000 bike will cost you 27.73 hours of work.”

The feature is praised as a way to help people be more financially disciplined and decide if something they really want is worth the time cost. This makes sense because, as I’ve pointed out, the only thing employees have to sell is time—and it’s a very scarce resource.

I find this to be a very depressing way to view life. As Einstein pointed out, time is relative. Confining your ability to pursue your dreams by the constraints of time is a reductionist way of viewing life. It is a limiting mindset that serves to tamp down possibility rather than opening it up. Yet, sadly, many people live this way, and features like this will only serve to reinforce the employee mindset.

How the rich view buying things

The rich do not view the world in terms of time value. Rather, they view the world in terms of cash flow. A rich person would never ask Alexa how many hours they’d need to work in order to afford something—and not just because they already have the money.

For instance, many years ago I wanted a new Bentley. I had the cash on hand to easily pay for the car, but I didn’t want to do that for a fun toy. Kim and I discussed it, and we decided to use it as a motivation to increase our investments by finding a cash-flowing asset that would pay for the car with passive income. It took six months to find the right asset, but in the end, I got both my car and an asset that put money in my pocket each month well beyond when the car was paid off.

This is an example of a worldview of abundance. Rather than compare my limited resources to my purchasing ability, I created more resources and increased my purchasing ability.

The difference between the purchasing mindset of an employee and an entrepreneur is summed up neatly by the different words my poor dad and my rich dad used.

My poor dad always said, “I can’t afford that.”

My rich dad always said, “How can I afford that?”

Live below your means?

Ultimately, what I’m talking about here is the scam advice so many so-called financial advisors give: Live below your means.

It’s not surprising to me that a bank, which profits off of people with low financial education saving money, would create an app that helps them reinforce the live below your means mindset. After all, they’d much rather have you keep your money in the bank so that they can lend it out at a 10 to 1 rate while paying you next to nothing in interest. Having employees live below their means is always in the bank’s interest.

Rather than live below your means, I encourage you to determine how you can increase your means. Don’t be constrained by time. Rather, find out how you can move beyond time to create near-infinite returns through business and investing.

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