Return of investment (ROI) is a term that you often hear in connection with business and finance. The objective (of course) is to maximize the return on the money you spend. The implications of this concept go much deeper when you begin to consider time rather than money as your primary investment. Everything you do is a time investment. When you watch TV you are investing in entertainment. You have made a bad investment and received a poor return for your time when you watch a show that sucks.
Time is more valuable in many ways than money. You will always have the chance to make more money, but once you spend time, it’s gone forever. If you consider time as a commodity and all your actions as investments, it changes the way you make decisions every day.
We spend time in a variety of ways: work, eating, sleeping, exercise, fun, etc. These are all important things. When we invest too much in one area and not enough in another, we create problems. The key is to invest our time in a way that balances each of these areas perfectly and forms a productive and pleasant life.
How to invest our time is a tremendous task. Unlike businesses, there are no reference percentages or spreadsheets. We have experience and intuition to rely on. I’m far from a master, but these are some of the main principles that I use to guide my decision making.
1. Search for Multiple Positives
An activity with a positive result in more than one area is a multiple positive. This is great for ROI since it multiplies returns and causes fewer losses. I work on this website as one of my many best positive things. It contributes to a small (and steadily rising) stream of revenue and builds abilities that I can use throughout my entire life, such as writing, web design, and networking.
Each person will have different positive effects, the important thing is to find those who work for you. An open source or personal project could be a multifaceted positive for a software developer. It can be just as easy as playing basketball, a fun game that is great exercise too. Areas, where different positive actions intersect, are key to finding multiple positive factors.
2. Avoid Multiple Negatives
Multiple negatives, except the opposite, are identical with multiple positives. These activities undermine many areas of life. One of my favorite faults is to drink. That hurts me in three ways: the time spent is not productive; drinks are expensive, and it usually destroys the effect of staying late and hungry the next day. This is basically the worst possible scenario if I don’t have a good time.
You must never go out and have a good time, I’m not saying. We need socialization and excitement in order to be happy. My point is that the negative effect of our activities should never be reduced. I try to make that by keeping the amount I drink to a minimum and only go out when I know it’s nice. We are often caught in a bad investment pattern. Over time, the benefits are lost and most of what remains is negative, but we do this on an unusual basis. This can be prevented if our behavior is analyzed regularly. Does this investment still be good or is it time for a change?
3. Utilize the Power of Compunding
I’m sure everybody understands the compound interest power reading this. You earn interest when you invest money. Then you begin to earn interest on the money you earned. This continues to compound over many years and ultimately leads to a huge amount of money. Time is the same concept. You put yourself in a position if you invest time by working hard when you’re young.
Many people of my age do not understand this, in fact, until just recently, I did not, or at least I did not. The main reason is that we are caught up in childish thinking. As a child, all you have to do is entertain you. You do not have to worry about your time because Mama and Daddy are there and usually happy to take care of you while you are out of trouble. Many young adults are traveling through college right now. Following graduation, we should immediately take on the mentality of the adult (and the responsibility to invest our time). A lot of people don’t get it, and every year they waste trying to extend the college days is an opportunity that can never be replaced.
Many think their time isn’t valuable when they don’t work, so they discard activities that have low investment returns and don’t build for the future. The truth is until you do, no one else will consider your time worthwhile. If you want to acquire the wealth to give your ideal lifestyle the freedom to live, begin to think of every choice as an investment. There’s no meaningless thing.
One mental model that can help you make better decisions is imagining that your life is a corporation and you’re the only employee. If you were the CEO of John Doe Incorporated and were obliged to maximize profit on behalf of investors, what would you make yourself do? You’ll find that this sort of analysis simplifies many decisions and increases return on investment.