Your TSP or Your Life? You Decide.

Looking at the amount of our time invested to earn or spend our money can help put large purchases into better perspective.

How Much is Your Life Worth?

Imagine you are walking down the street and someone pulls a gun on you. 

They demand your wallet or they will shoot. 

Most of us would hand over our wallets without a second thought. 

But what if they demanded you hand over your TSP or your house?  

Trading Your Life For Money

When faced with death, even this decision becomes easy. We want to live even at the expense of our money. 

But what if we flipped the situation around. Instead of the man asking for money in exchange for your life. What if he wanted a piece of your life in exchange for money? 

Would you make that trade?

Well, it turns out you already are. 

As a federal employee, you promise a piece of your life in exchange for a paycheck and a pension one day.  

Now, I am not saying that we should never trade our time for money. We all need money. 

But it is essential to understand exactly what you are giving up in exchange for your money.

How Much You Actually Get Paid

Most of us can rattle off what our annual salary is, but do you know what your hourly rate is? 

Now, I am not talking about your hourly rate that shows up on your pay stub. I am talking about your actual hourly rate.  

For example, if you work 8 hours a day, you may actually spend 10 hours a day on work related items such as getting ready, commuting, etc. 

And what about the extra expenses that come up because of your job. Think gas money, work clothes, etc. 

So if someone makes $50/hour on paper, they may actually only make $35/hour after they factor in all the extra time and money it takes to do their job. 

Note: Your actual hourly rate will go down even further when we also factor in things like Social Security tax, Medicare tax, income tax, etc. But to keep this article simple, I am not going to go there. 

Do the math for your job and you may be surprised. 

This Boat Actually Costs How Much?!?

So by this point in the article, you now know that you are trading your time/life for money and you should have a better idea of your actual hourly rate. 

With that knowledge, you are prepared to take things to the next level. 

You now may be realizing that your money is much more than just money. It represents the time and energy you spent to earn it. 

So when you choose to spend your money on something, you are exchanging a piece of your life for that item. 

For example, if you buy that $100,000 wake boarding boat and your actual hourly rate is $35/hour, you are exchanging 2,857 (100,000/35) hours of your life.

So again, think about the guy with a gun. But this time he is trading you a boat in exchange for 2,857 hours of your life. Would you do it?  

But remember, I am not saying that this is a bad trade. For someone that absolutely loves boating, this may be an incredible trade. 

The most important thing is to truly understand what you are trading when you spend your hard earned money. 

After all, we only get one life and when it’s done, it’s done.

My dream is that we can all look back on our lives and say that our money and life were well spent. 

This article was inspired by the book “Your Money or Your Life” by Vicki Robin

About the Author

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.