The Time Economy Vs. The Value Economy: What They Are, & Why You Should Care
“Work hard. Go to college. Get a good job. Make money. Live happily ever after.” Did you hear that quote growing up? Most people I know did. I sure did. I was always going to be a lawyer. My dad and grandpa were dentists. My brother is an oculoplastic surgeon. We like to go to school in my family. Yet, when I got to a point in my life where school was over and I was working as an attorney, I was neither rich nor happy. I was so confused. I realized that the quote above wasn’t true, no matter who told me it or how many people believed it.
This is what led me to quit my job as a lawyer then to quit my job as a financial planner. Finally, I landed right where I was always supposed to be — an online entrepreneur. It’s the ultimate career for me because I am responsible for creating my own money. At the heart of being able to switch from a lawyer to a financial planner to running an online business is a shift in my mindset. I had to change my thinking from believing that time creates money to understanding that value creates money. Then, I decided how to provide that value in alignment with how I wanted to contribute to the world. Let’s take a look at the time economy and value economy.
The Time Economy vs The Value Economy
I like to think of value systems as economies. When someone doesn’t understand how I live or what I do, I explain that difference by saying “I live in a different economy.” For example, when I let go of perfectionism and started intentionally producing B- work (example: I rarely edit a blog post, which is why there are typos), it’s because I’m an entrepreneur and need to produce 23439684 every week. I live in the “results economy” not the time economy. One day, I’ll hire someone to do things for me, but for now, it’s a one-woman shop, and I need to produce at an extremely high rate. Because this is a conscious choice, I don’t care about typos, as long as the value of the content is A+ quality, I’m happy. This is an example of me living in the results economy.
I’m talking about something similar today except with money instead of productivity. The time economy is where you believe that time creates money. The belief system in the time economy is that the more time you spend working, the more money you make. Contrast this with the value economy. The value economy is where you believe that the more value you contribute, the more money you make. Most people in our generation had parents and grandparents who taught us to live in the time economy. It’s nothing against them — that’s just what they grew up believing (think: Depression Era-style factory work where it was all about clocking in). Now, think about super, super self-made rich people. They don’t have more hours in the day. How can they make so much more money? It’s not from putting in more time.
There are only 24 hours in a day. Everyone has the same time, but self-made multi-millionaires have figured out a way to create money differently. An example of how the time and value economies work is how we buy and sell things.
Example: Your iPhone
When you go into the Apple store to buy a new phone, you don’t ask them how long it took to make or produce the phone. You don’t care how many hours Apple spent creating, designing, or producing the phone. All you care about are the features of the phone. In other words, you care about the value you’ll get from the phone. The same is true for anything else you buy, including the services you pay for. Think about your dentist. You don’t pay for his time. You pay for the result of getting your teeth cleaned. This is true even if you pay for a service hourly, like for an attorney. You don’t actually pay the attorney for their hours. You pay the attorney for what results you expect to be produced during those hours (example: The Nondisclosure Agreement or Employment Contract). Money is exchanged for value – not for time.
You Can Still Earn A Lot of Money in The Time Economy
What makes this concept hard to believe is that there is evidence that you can get rich in the time economy. You can work really hard, get a good job, make a decent amount of money, and stack a lot of cash so you can retire. In fact, a lot of people (most middle-class people) build wealth this way. The whole premise is that the more time you put in, the more money you’ll make. When you think this way, you’re living for Friday at 5 PM (or whatever time you get off work) and for vacations. You’re constantly focused on the time you have to spend working in exchange for money. Even though you can build wealth this way, I think your mindset around money, work, and time isn’t serving you — it’s limiting you.
How To Create Money By Providing Value
To create more money, focus on creating more value instead of putting in more time. Think about your life and how you make money. If you’re an entrepreneur, you provide a product to your customers or clients in exchange for money. Even if you’re a service-based entrepreneur (example: a virtual assistant), you’re still paid for the value you produce during the hours you work — not the hours themselves. The more value you provide to your customers or clients as an entrepreneur, the more money you’ll make. The way you make more money as an entrepreneur is by providing more value to the world. This is done by increasing the number of people you’re serving or increasing the cost of your product. Whenever I want to make more money, I always think “how can I provide more value to my audience?”
If you’re an employee, you’re also paid for the value you provide. Even if you’re paid for working 40 hours per week, you’re actually paid for the value you provide during that time — not the hours. Think about it. You don’t actually give hours to your employer. No one can take your hours. If you just sat there all did and did nothing, you would get fired. What you’re really paid for during the hours you’re working is the value you provide to your employer. When you’re an employee, your client or customer is your boss. Your job is to serve your employer. The more value you provide to your boss, the more you’re paid. You might say, “well, my boss is awful, and I’m not actually paid more for providing more value.” I hear you. That may be true right now. But here’s the thing: If you always over-deliver in value to whoever your boss is, eventually, you’ll be paid more. It may not be at the end of this week, but it will be sometime in the future.
Be known as the person who always over-delivers in value and you will make more money in the future. It doesn’t matter if you’re a full-time employee or a freelancer. You have to stop thinking you’re paid for your time. You’re not. The way you make more money is by providing more value to who you’re serving — your client, your customer, or your boss. When you shift from thinking “how can I make more money” to “how can I provide more value,” you shift your mindset to abundance, where you’re focused on giving, serving, and contributing. It’s such a better place to be in because you aren’t focused on the time spent “working” or “Friday at 5 PM” you’re focused on contributing and making a difference. You may not make more money tomorrow, but if you do this consistently for a year, I have no doubt in my mind more money will find you. This is why entrepreneurs often say money is a scorecard. What they mean is that money is a tally of how much value they’re providing to their customers or clients. If they’re overdelivering in value, their money is increasing. If they’re not, then their money is slowing down.
How I Shifted My Mindset to the Value Economy
I first heard this concept a few years ago on one of my all-time favorite podcasts, Knowledge for Men with Grant Cardone. He said the biggest lie perpetuated among the middle class is that you don’t get rich managing money — you get rich by finding opportunity. I didn’t really understand what he meant until this year. He wasn’t talking about having a random door open where opportunity magically finds you. He meant that you can create opportunity yourself through business, real estate, or investing (basically, through creating assets).
When I shifted my mindset from the time economy to the value economy, everything changed for the better. I was still working full time when it clicked for me, and I immediately started applying this to my work at my job. I switched from thinking of it as a 40 hours per week job and started thinking about it as my clients that I want to overdeliver value to. This didn’t mean anything changed about my love of my side hustle (blog) at the time, but it shifted how I showed up for my work. The same is true for entrepreneurship. I’m always obsessing over how I can overdeliver to my audience. I feel like I’m contributing to the world and that my life is better because of it. And yes, I now feel like the revenue I see in my accounting software is merely a scorecard showing how much value I’m giving to the world.
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This way of thinking has changed my life. Money is no longer such a big deal to me. I promise this has to do with the way I think about money, not the dollars in the bank. If this is a totally new way of thinking about money for you (like it was for me when I first heard it a few years ago), I suggest asking yourself “what if?” What if I’m right? What if this is how money works and you can change your thinking to support your future money mindset? What if you can decide to overdeliver value to the world and make more money as a result? What if your income potential is unlimited, and you can create any amount of money you want in your future? This way of thinking is magic. This is how you can create a lot more money in your life — focus providing a lot more value.
Natalie Bacon is an online entrepreneur. Prior to this, Natalie practiced as a certified financial planner, at a firm that managed over $1B in assets under management. Before her financial planning career, Natalie practiced as a business attorney. Natalie has been featured in CNBC, Forbes, and other publications. Natalie is most passionate about helping young, professional women design their dream lives. Read Natalie‘s full story here.
Image via Unsplash
