The time value of Money

 

One of the things I love to do, and invariably envisage when engaging others, is "adding value."
Interacting in ways that make a difference, have meaning and add value is what I consider key aspects of my life's work. Hopefully, a life well lived.

But what is value?
Value is basically the usefulness, worth or importance of something.

* * *

Lately, I have been thinking a lot about value, and how it is related to both time and money.
Thing is, life in the modern world revolves around making and then spending money. In some cases, there's a bit of managing money in between making and spending it.

And since money is a store of value, many of us have got to a point where we value nearly everything in terms of money. Only that it isn't entirely possible. But that's beside the point.

My focus today is the time value of money.

* * *

There are several ways of looking at this:

The first one, and the easiest and most useful way is how a single human being who only has 24 hours in a day, can get so many things done within that same time that s/he isn't able to do alone.

How this is done is by using the time resource of others. And this is what is at the core of employment, where one commits his or her time (in addition to other resources such as skills and effort) and in return, gets compensated/renumerated (wages or more commonly, salary).
In this way, labor becomes a key factor of production which can be multiplied many times over through addition of people. The sum total of this is measured as man-hours.

A second one is the effect passage of time has on the value of money. And I'll give an example:
About a dozen years ago, I contracted someone to make for me several windows and doors. I have so far used six of those windows in the house I currently occupy. Four windows still remain in storage, and will likely be used to build a new house.

Earlier this year, I decided I needed two new windows in a smaller size than what I already have in storage. Upon enquiry, I realized that those smaller windows now cost more than twice what I paid in 2010. And worse, the metal used to make such windows these days is of a lighter gauge (poorer quality).
In short, the amount of money I used acquiring those ten windows a dozen years ago is not enough to buy five windows today.

The economic term for this is inflation. That over time, money loses value. It is for this reason that storing money in the bank in a savings account or under the mattress in the form of notes and coins is a very bad idea.
Most of the things money can buy today, the same amount of cash cannot buy in the future.

But there is yet another way of looking at this.

* * *

Using the same example of my windows in storage, they haven't changed one bit and can still be used to build a house. The same goes for any construction material e.g. sand, ballast, stones that does not degrade over time. Cement is obviously an exception, since it contains active ingredients whose viability is only guaranteed for about 90 days... I digress.

The point here is that buying construction materials or storing money in terms of items that do not degrade is not an end in and of itself. Stagnation is no value addition.
Suppose what I did was build a house that then got occupied by tenants. Or a shop from which I would be selling things at a profit. Or a store that I would be leasing out...

There is an opportunity cost arising from merely storing items of value without putting them to good use. Gainful use. In other words, the time value of money is increased significantly when things acquired using money are in turn used to make more money.

Using the analogy of an airplane in the sky, it not only takes having a pilot in the cockpit to fly that plane. The pilot has to be doing the right things for that plane to fly.

So, with the time - which cannot be stored nor recovered once it passes - we each have each day, are you merely storing value, or actively adding value?

* * *

Having a brand new computer is no guarantee for a bright future in sales. One has to seize the day, starting today. At least we have a much easier time in that we can linearly and serially plan our time unlike Dr Manhattan for whom everything happens right now!

 

 

 

It Takes Time

UPDATE: I started working on this post a fortnight ago and mistakenly clicked on publish before importing my finished draft, which I have since lost.
Fortunately, while reading this past weekend, I came across a post that says exactly what I intended to communicate.

* * * 

We live in a world of instant coffee, instant gratification, even drugs that allegedly have instant effects.
Is this the reason we are no longer keen on letting things grow organically. Are we now done with letting nature take its course?

In my time, I know of no good thing that happens instantly.

It irks me when people imagine someone like Floyd Mayweather makes millions in just minutes, without taking into account just how much time it has taken to train, work long hours, endure pain and practise unrelentingly. It takes that much to perfect his punches.

The same goes for every admirable achievement you see out there. There is much more that went into the formation of almost everything, regardless of the fact that you only suddenly noticed it happen.

In Gradually and then Suddenly, Seth Godin tells of how things don't happen suddenly. We only notice suddenly. Too bad we only focus on the 'suddenly' part, and thereby miss out on the 'gradually' part that we can actually do something about.

Take time. You may as well enjoy the journey, not just reaching your destination.

In the Fullness of Time

I spent the better part of Saturday, July 27 with a most treasured friend, who for the purposes of this post shall only be named K.
You see, K had paid yours truly a courtesy call and having taken some snacks and amid great chatter, we together took a stroll which inadvertently evolved into an excursion - one full of adventure and amazing scenery to boot, but the hiking and climbing ultimately left us knackered.

Long after K had gone, I took time to ruminate on the engaging discourse that had flavored and greatly added color to the day.

The Element of Time

To this day, the most popular post on this blog is about time and its wonderful effect.
In this post, time is a gift, as was very well explained by fellow blogger who actually wrote:

Our Saviour has granted us a lot of gifts and one of the best is time. There are things that you go through in life: some good, some bad but what they both have is common is time.

With K, we mutually observed that everything does and should happen in its own right time. This time should not be unnecessarily determined by undue cultural leanings, popular opinion or shady statistics. That said, there is no exact right time to get married, to have kids, etc.
K asserted that the right time is essentially when one is able, ready and willing to handle a particular situation, and still be in line with, and subject to the will of God.

In effect, time has the ability to change everything. It heals wounds and changes perceptions.
The passage of time facilitates change. Interestingly, our ability to remain steadfast and focused despite the passage of time and varying circumstances is a key component of success.

The Right Time

When the right time comes along, and this seemingly happens once in a lifetime, it is good to keep it going and not lose it... 




The Fullness of Time

The fullness of time means a whole lot of different things in different situations. It in most cases means "having waited long enough."
In theological circles, the dispensation of the fullness of times is well explained here.

In the Bible, the term appears in both the books of Ephesians and Galatians:

"That in the dispensation of the fulness of times he might gather together in one all things in Christ, both which are in heaven, and which are on earth; even in him."
- Ephesians 1:10 (KJV)

"But when the fulness of the time was come, God sent forth his Son, made of a woman, made under the law, to redeem them that were under the law, that we might receive the adoption of sons."
- Galatians 4:4-5 (KJV)

In view of the foregoing, it is my considered view that the right time, not just time, is something that needs to play a central role in the conduct of our lives.
The right things, done in the right places and for the right reasons, need to happen at the right time.

Admittedly, we all too often get this combination wrong and in haste, only end up moving too slowly, and even worse, in the wrong direction. When we are quick to judge and slow to learn, we hinder our own progress.
It's time we realized that we no longer know so much. It's time we took a different road:





At some point in our conversations, we both wondered why men generally die earlier than women, despite being generally strong.
Is it because men rarely vent, and the bottled-up emotions therefore degrade the male lifespan? This would ironically make men the 'weaker' sex....
What do you think?

The Wonderful Effect of Time

Taking Time to React
After Mwai Kibaki became the third President of Kenya in December 2002, I couldn't help but notice just how different his leadership style was from former President Moi's. Kibaki let his ministers actually guide policy and manage their ministries, he stayed away from the public spotlight and best of all, he took time to react to issues. In delegating and letting those under him be, President Mwai Kibaki was diametrically the opposite of a micro-manager like Amazon's Jeff Bezos.

While these attributes may come across as being stand-offish and indifferent, even bordering on negligence, there is much to learn from especially the third one, thanks to the keyword TIME.

You see, I realized in early 2003 that if the President of an independent republic would be patient and tolerant enough to take time before reacting to every thing that he had a say in, then there must be something worthwhile in the wait.

As we grew up, we were all taught  and constantly reminded to breathe in and count to ten whenever someone pissed us off, to never speak or act in anger, and that patience pays. Let us look at the wonderful effect of time in our lives.

Time is a gift
One of my favorite bloggers reckons that time is a gift. And I agree. She says,

Our Saviour has granted us a lot of gifts and one of the best is time. There are things that you go through in life: some good, some bad but what they both have is common is time.

Time does have this effect in life that we can barely understand. The passage of time changes attitudes and perceptions, makes pain go away, allows us to understand and appreciate what we couldn't before... time changes everything. In fact, we all know that time heals wounds. Inasmuch as scars may remain to constantly remind us what exactly happened, the passage of time will heal both emotional, psychological and physical wounds.

Time, and lessons learnt
Looking back, I remember some things I have said or written at a time of crisis, only to regret it after some time. Lately, I have however harnessed the wisdom of waiting it out, and saying or doing nothing no matter how much I'm tempted to react. It takes a great deal of determination to NOT DO something when you really feel that you have a right to say or do something in return.

With time, you cool down and even more interestingly, you begin to look at the same situation you were aching to react to in an entirely different way. This is the time when you realize that it was wise to not react too quickly, you have nothing to regret and should you act now, it will only be because it is necessary and you are now much wiser to handle the consequences of your actions.

Think about instances in your life when you had to resist the near-overwhelming urge to react to something. How did you manage to hold on and deal with the situation much later? Was the decision to wait a wise one? Has this made you better placed to deal with future situations and decisions that demand patience and tolerance.

Do you currently have very strong feelings of dissent about someone or something? Do you feel wronged and offended? Are you considering giving as good as you got and avenging yourself?
Well, take time and hold out. Give yourself a definite time to wait until you can deal with the situation or the person. It will surprise you how different your feelings and attitude will change after the waiting period.

Don't eat the marshmallow, yet.
In other news, success is also heavily hinged on our ability to wait. In his famous and engaging 2009 TED Talk, Joachim de Posada still reminds you to not eat the marshmallow... yet.



Have a great day.

Lessons on Personal Branding for success

After launching the all-new PeterNjenga.com, a close friend asked me if I was marketing Peter Njenga (myself) or Complit Communications (my registered business). I told him that Peter Njenga is the brand I am particularly keen to build at the moment. And I explained to him why.

Many people have a load of aspersions about the essence of building, nurturing and benefiting from their own (personal) brands. I recently read a speech on Target Setting for Success, that was delivered by Eric Kimani to the British Council Leadership Forum in Nairobi, on 19th September, 2007. He offers very useful lessons on Personal Branding as a tool for, and means to success.

Following are some highlights of the speech:

1. Keep time!


2. You must be passionate at what you do.


3. You must learn how to deliver extra-ordinary service.


4. Understand globalization.


5. Jobs have been re-engineered and continue to be re-engineered by technology. You must think and brand yourself appropriately!


6. You must stop thinking employment/employee and begin to see yourself as an independent contractor.


7. You must pass what one management writer called the Painter test.


8. Branding yourself for success demands that you exercise power that is far beyond what is vested in your employment, contract or work environment.


9. Powerful branding demands a high level of moral authority.


10. Personal branding demands higher credibility.


11. To increase brand visibility it would help to build yourself a web site.


12. Learn and upgrade your skills to improve the brand you! Read voraciously.

Download the entire speech by Eric Kimani here (zipped PDF 66KB).

Let us learn, share and prosper.