Budgeting Time

Jonathan Clements

FIVE YEARS AGO, I realized I’d spent my adult life doing something that was totally unnecessary—drying my hair with a hair dryer. I’m not sure why I got into the habit, but one day I realized it made zero difference to my appearance. I’m not saying using a hair dryer is a bad use of time for others. But for me, it was a minute or so each day that was completely wasted.

And it isn’t just the hair dryer that I’ve ditched. I’ve become ever more parsimonious about time. I spend as little of it as possible on shopping. I don’t currently own a car, and I couldn’t be happier. That’s one less thing to deal with. I put off chores—doing laundry, upgrading my cellphone, tidying the garden—until they’re absolutely necessary. Instead, I want to devote as much of each day as possible to the things I care about most: time with loved ones, time outdoors, and writing and editing.

We all know time is the ultimate limited resource, but we sure don’t act that way. Many folks closely track how their dollars are spent and invested. But how about our use of time? It strikes me that time allocation is far more important than asset allocation, and yet most of us aren’t nearly as rigorous about it. That got me to thinking about six ways we can conceptualize our use of time:

1. Fixed vs. discretionary. We often divvy up our spending between fixed monthly costs and those expenses that are at our discretion. But the notion applies equally well to time.

There are things we have to do and things we want to do. If we love the things we have to do, that’s great. What if we don’t? That’s when they become a chore, and we’ll likely improve our happiness if we pay others to do them for us. That way, we can devote more hours to discretionary activities—the stuff we really enjoy doing.

For those in the workforce, their job will be their biggest fixed time commitment. That’s why it’s so important to like your work. What if you don’t? There’s this thing called financial freedom, where your time becomes largely your own, and the way you get there is by saving diligently and investing prudently.

2. With others vs. alone. One isn’t superior to the other. Rather, unhappiness will likely result if we spend all our time with others or all our time alone. As someone who sits hunched over a laptop most of the day, I treasure the time I have with others and would happily spend more time doing so. But I can also imagine that others feel just the opposite, hungry for time alone to read and think, after too many hours each day with family or colleagues.

3. Indoors vs. outdoors. Being in nature is associated with a slew of mental health benefits. Ditto for exposure to sunlight, which can also help our physical health. I try to get outside every morning for a bicycle ride and I try to take a walk every afternoon. All this grows less inviting as winter approaches, and the days grow shorter and colder. But I still make it a point to get outside—because I know I feel better when I do.

4. Active vs. passive. Americans spend fewer hours working and have more free time than they did in the 1960s. Problem is, we’re spending much of this free time passively sitting in front of the television, which doesn’t rate well in terms of happiness. Instead, we should strive for active engagement—things like seeing friends, playing sports, volunteering and pursuing hobbies, all of which have the potential to boost happiness. We’ve all heard it before, but it’s still a shocking statistic: Americans spend an average three hours a day parked in front of their TVs.

5. Investing vs. personal finance. Many folks check the stock market’s performance every few hours and their financial accounts every day. They spend countless hours fretting over whether they own the right investments. Yet ample research has shown that once we do the investment basics—settle on a sensible asset allocation, decide how to diversify and pick some low-cost funds—further effort is typically a waste of time.

Meanwhile, we tend to spend too few hours on broader personal finance issues: managing taxes, developing an estate plan, getting the right insurance, holding down borrowing costs, reviewing spending, deciding when to claim Social Security, developing and revising our financial plan, and so on. That’s a shame. Unlike investing, these are all areas where a little effort can yield big benefits.

6. Hedonic vs. eudaimonic happiness. I discussed this distinction last month. Going out to dinner with friends can deliver hedonic happiness—a pleasurable interlude that delivers a brief boost to our spirits. By contrast, planting bulbs that’ll flower next spring can deliver eudaimonic happiness. Getting on our knees and digging in the dirt is taxing, but there’s also satisfaction involved, as we imagine how great the garden will look six months later.

As I argued in my earlier article, we should pursue both types of happiness. Want to get more from each day? Ponder how you’re divvying up your time between hedonic and eudaimonic happiness—and make sure there’s a good balance between the two.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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