Lifestyle Investing: How to Compound Time
May 7th 2008 08:44 pm
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The most powerful force in the universe is compound interest
Albert Einstein
We all know about the power of compound interest (at least we should). Basically you take a few dollars and put it away for a few years and the interest you earn earns interest. Before you know it you have much more than you started with. Can you apply the same concept to time? That’s the question asked to Tim Ferriss of The Four Hour Workweek. Unfortunately he doesn’t provide an answer. But we all know the answer is obviously yes- investing is one of the principles of success. Here’s six ways to compound time:
Outsource
You don’t have to do everything yourself. Get rid of the easy tasks so someone else does it for you. Need someone to do payroll try a company like ADP then all you need to do is spend a couple of minutes sending them your data and they take care of the rest.
Delegate
Some tasks are too complex or personalized to outsource- instead you can insource it (delegate). Train someone to do your job inside your organization or family- a few minutes of training or direction can give you huge dividends in the long term. Sometimes just asking is all you need to do.
Automation
Invest a small amount of time to get a machine/computer to do your job for you. This is why I love computers. They have the potential to do exactly what you need you just have to tell it the right way. It may require a special program, a special setup or even some programming but if you find the right command your computer will do your work for you and will never complain.
Learning
Investing in learning time is crucial. Sometimes learning simple techniques can end up saving you much time in the long run. Learn how to type faster. Learn advanced features of your word processor. Just Learn.
Teaching
If you’re the guru in your house or your office, you’ll often get all kinds of requests- each of which takes you away from what you need to accomplish. The solution is to invest time to teach the person how to do it themselves. So go ahead: Teach your kids to pick their own close. Teach your coworker to run a report you created. As the saying goes “Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime.”
Systemize
When there is a system to your actions it makes it much easier to succeed. Think about a recipe- it tells you exactly what you need to do. For projects that you create look into making it systematic. It takes away complexity and limits the risk of problems.
With the Success Blueprint you’ll always know what you’re supposed to be doing and what needs to be done next. It’s a formula that helps you succeed. Your machine works for you invisibly even if you aren’t actively working on it.
This just shows the value of time don’t waste it. Do you have any techniques to compound time? Let me know below.
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Invest Tool responded on 08 May 2008 at 12:14 am #
I agree that in investing we need third party help.
Heshy responded on 08 May 2008 at 3:48 pm #
I think lifestyle investing doesn’t need third party help (at least initially). You just need to look at your time use and figure out how
Once you solve the easy issues you can then go to teachers, for example, to get you to the next level.
Matthew Cornell responded on 30 May 2008 at 7:55 am #
Great post.
> Here’s six ways to compound time: Outsource Delegate Automation Learning Teaching Systemize
“Compound” is the wrong word, though. From WP: “Compound interest is the concept of adding accumulated interest back to the principal…” Again, you can’t actually create more time, in the literal sense of 24 hours. What you’re getting at is maximizing the *use* of our time, which is really what it comes down to, at least from that perspective. (That’s why “Time Management” is a good term. I’m staying away from it, though, for various marketing reasons.)
Thanks for making me think!
Heshy responded on 30 May 2008 at 9:12 am #
Time management will just tell you to do your payroll as efficiently as possible. GTD will even help you to do it in the right context but that is still short term thinking. Investing and compounding will help take it to the next level.
Compounding “The process of applying investment growth not only to the original investment, but also to income and gains reinvested in prior periods.”
I understand your hesitation to use the word compound. You only see these steps as long term investments (growth to the original investment). What is being suggested here is that a “small” investment of time can gain you more time now and in the future. And can self-perpetuate. You gain time “income” on your investment because as the process changes you wont have to worry about it because someone else is taking care of it.
Let’s take outsourcing to ADP as an example. Let’s say it takes you only two hours to do payroll a week for your 15 employees (this isn’t exact just for illustration) because you’re using time management principles. That’s 100 hours a year. Now you invest 5 hours to get ADP up and running and it only takes you 15 minutes a week (17.5 hours a year) so your investment saves you 82.5 hours every year. Even if you factor in the ADP costs and some occassional ADP maintenance time and you figure out that you’ve still made a very solid time investment. Now watch the compounding: what happens when the government changes a rule or when you have a new employee scenario (e.g. unemployment). ADP has taken care of it for you at no charge or a minimal charge for much less than you would need to learn it. But there’s more. What happens when you properly invest this 82.5 hours and your other time saved to grow your business to 150 people? Instead of hiring a full time payroll person or two you just spend a few more minutes giving ADP a larger file and you give them a few more dollars and you dont have to worry about it.
As a bonus not having to focus on payroll gives you more time to focus on what’s important to your business.
(Note: i don’t have any financial stake in ADP. This story is overly simplified for illustrative purposes.)
Do you like the term compounding better yet?