The Time Value of Money: What is an Inch of Time Worth To You?

"An inch of time is an inch of gold but you can't buy that inch of time with an inch of gold."
                                           --Ancient Chinese Proverb

My sister sent me this quote a few weeks ago and it really got me to thinking about the time value of money. As someone who spent my entire career steeped in the world of Wall Street, I always understood this phrase to refer to the notion that a dollar received today is worth more than a dollar received tomorrow, because if someone gives you a dollar today, and you are able to receive interest on that money, it will be worth more than a dollar tomorrow. But this notion of the "time value of money" places a lot of emphasis on the value of money, but very little emphasis on the value of time.

I am fortunate that for the better part of the last year and a half, I have been traveling around the world and have the chance to learn a lot about the true value of time – time for space, time for myself, time for what really matters to me. Immersing yourself in other cultures can have that effect!  Here’s one of my favorite stories from the road that has stayed with me and continues to remind me not to get too caught up in the rat race. Have a read through it and see what you think.  Does it change your mind about how you spend your time?

TO FISH OR NOT TO FISH

An American consultant was at a pier in a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied "Only a little while."

The consultant then asked why didn't he stay out longer and catch more fish? The fisherman said he had enough to support his family's immediate needs. Then the American asked how he spent the rest of his time.

The Mexican fisherman said, "I sleep late, fish a little, play with my children, take a siesta with my wife, Maria, and then stroll into the village each evening where I sip wine and play guitar with my amigos. I have a full and busy life, senor."

The American consultant scoffed, "I am a very successful business consultant and could help you. You should spend more time fishing and, with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, and eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then Los Angeles and eventually New York City where you will run your expanding enterprise."

The Mexican fisherman asked, "But senor, how long will this all take?"

The consultant replied, "Probably 15 to 20 years."

"But what then, senor?" asked the fisherman.

The consultant laughed, and said, "That's the best part! When the time is right, you would announce an IPO and sell your company stock to the public. You'll become very rich, you would make millions!"

"Millions, senor?" replied the Mexican. "Then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

We hope you enjoyed this post! Please share your comments and let us know if there are any other topics you'd like to hear about!