Finding the balance between making as much money as you can without losing yourself
Hey, friends!
Greyscale is constantly dumping $BTC on us, and people are waiting for “safer” times to deploy their money. But if you think about it there really isn’t a safe time. You can also risk being sidelined and the prices might fly. It also depends on if you are a trader or long-term investor.
In today’s newsletter issue I wanted to touch on a topic I often think of: the balance of time and money.
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Finding the balance between making as much money as you can without losing yourself
There are tradeoffs for everything.
You might remember the fascinating debate of whether $10m is enough to retire on. IMO hilarious to even bring this up, because the numbers that are talked about on Twitter are completely unrealistic in most parts of the world. I would even say that 1/10 of that amount should do you very well in most places.
Money is a fascinating thing, and not as simple as it seems at first glance. We go to work and in return, we receive money as payment. We spend this money on stuff. But the value of money changes with respect to utility and time depending on how you use it.
A dollar is the same whenever you earn it, whether it is the first dollar or the millionth. It has the same spending power and the same value. Depending on when and what you spend the dollar on, the value is usually drastically different in the amount of additional comfort or happiness it brings, and, after all, the stuff we buy with money is just a means to this end goal of happiness.
The millionth dollar does not bring as much happiness or utility as the first. In fact, at some level, each additional dollar probably brings a small amount of unhappiness in the form of additional complexity, worry, and dependence on the next dollar. This concept was popularized in the book Your Money or Your Life. This was actually the book that changed everything for me, and that eventually led me down the road on crypto Twitter.
You’ve seen the figure below before, but it’s always nice to repeat it because it states a good example.
You can see that the more money you spend, the more happiness you obtain up to a point. This point will be different for everyone. The first dollars you spend bring you more happiness because presumably, you are spending them on things that bring more utility and are more important to you. At some point, additional spending has very little effect.
Money = Time (PS! not in crypto)
To expand this thought, money is a representation of our time. Money is a store of value. We trade time and energy (our life energy) for money, with the expectation that we can trade it back to other people in the future for either stuff or their energy.
For most of us, the relationship between time and money is more or less linear. After we finish our studies we trade X time and get Y money.
2X time = 2Y money.
Not always, but often, and especially when we think of it in terms of years worked. For some people there is a little upward curve to the graph, or the slope changes with a promotion or new job title.
Most people settle with this.
Time = Money
But we in crypto know that this doesn’t have to be true.
This is where I was in terms of my understanding of money a few years ago, after deciding to work on my early financial independence and freedom. The longer into life we make this time = money trade, the worse the exchange rate gets for us.
Our time is limited. As time moves forward it becomes increasingly more valuable because we have less of it remaining. Each day we march closer to death. I know it sounds tragic, but it’s true.
How much is your time worth when you’re on your death bed?
How much money would you trade for a few more days?
Would you work or spend it doing something else?
I don’t know about you, but I am at a cross-point in my life where I am starting to seriously think about quitting crypto after this bullrun. The time vs. money part is non-linear for sure, but as each dollar has diminishing returns, it gets less valuable for me. I am nowhere as rich as the crypto OG’s, but I am content, and I believe that is what matters.
I don’t want to end up looking like this guy. Maybe I have to stop actively trading and only focus on long-term investments.
It’s funny because when I think back at it I used to have my money in stock market index funds and only check the markets once per month(!).
Today I am checking in probably 50 times per day.
Trading time for money isn’t inherently good or bad, it is a choice that has consequences.
As far as I can tell, most people play this game and make the trade too long.
Some people truly do not have much of a choice, but most of us do.
I still think this should be the plan for most people:
I’ve developed a simple process that is not new (although it may be new to you). It is not complicated.
Step 1: How much money do you need? Figure it out
Step 2: Think deeply about what in life brings you happiness and how much money is needed for the basics you need to provide for this.
Step 3: Cut out all spending from your life that does not bring you joy.
Step 4: Use the saved money to buy your freedom.
Step 5: Use your freedom to do the work you love, or do less of the work you hate.
Step 6: If you are still working reassess and see if the trade makes sense, if not go back to step 1 and repeat until satisfied.
Step 7: If you don’t have enough money to get past step 1 you need to figure out how to make more money.
When people are on their death bed no one says ‘I wish I would have driven a nicer car’ or ‘I wish I would have worked harder for the company’. They regret how they spent their time or managed their relationships. They wish they hadn’t spent so much time being angry or worried.
Money vs. time vs. happiness for crypto people
Don’t misunderstand me, making money is great. I am just talking about finding the balance. I know for myself that I have several times pushed that limit and almost ended up depressed from it.
Now that the markets are heating up again I feel like the day doesn’t have enough hours. So many things I want to do, but not have enough time to look through them all. It has also led me to stress, especially in terms of trading and sleeping with big overnight positions.
I am not sure if I want this to be my everyday life, and I know I can limit my hours, but with a 24/7 market and being afraid of missing some moves, this is way harder said than done.
Anyway, if I were young again I would optimize my life this way:
It’s 3 years now since I quit my 9-5 job, but in a way, I’ve just replaced my 9-5 with even more work in crypto.
What I thought was freedom, isn’t really it. Don’t misunderstand me, my lifestyle now is 100x better than before, but I still want to optimize it a bit.
The last thing you want to do is to end up with lots of money, but no friends, an unhealthy lifestyle, and nothing to look forward to.
When you finally make it in crypto, you realize that it wasn't what you wanted in the first place.
You have money, but you're still the same.
Make sure to have more goals in life than money goals, otherwise, it's easy to end up getting depressed.
But that's for another day.
…
Happy trading and good luck with buying all the dips in 2024!
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Important post.
This part was interesting to me.
'It’s 3 years now since I quit my 9-5 job, but in a way, I’ve just replaced my 9-5 with even more work in crypto.
What I thought was freedom, isn’t really it.'
You know, I quit exactly a year ago and now I choose my own work. It's amazing!
Even if i get rich i think i will continue to write about crypto. Although a bit less.
Yet, for me, crypto gave freedom.
Great post man! Not whale levels of rich yet, but the money going up part is true, I’m still me, luckily enough I am on good terms with my family, and gym routine is dialled in. Thanks for sharing, will be ready in the future!