Optimize the Profit Margin of Your Life
At the end of 2018, I was interviewed about gender pay gap. However, that conversation quickly turned into a passionate rant about why we’re all trying to make the most money possible instead of making the best life we can possible.
Generally speaking, when it comes to money and life, we have two variables to consider: money and time. If we’re shit out of luck, we have no money and no time. If we’re really lucky, we have lots of money and lots of time. However, the majority of us have some mix of time and money, but they tend to be inversely proportional.
How many people do you know have millions of dollars and all the time in the world? Almost no one. So what the hell do you need millions of dollars for if you have no time to spend it?
If you have no money and lots of time, well guess what? Start using that time to make some money.
The real problem I see is having a surplus of money because it’s likely to go hand-in-hand with no time. And again, if you have no time to enjoy the hard-earned money in your bank account, then what the hell are you doing with it?
It’s a pretty simple concept and I really think it could work wonders for some people. Let’s take this question and align it to running a business.
When you’re running a business, you’re keeping an eye on revenue and your expenses, but most importantly, you’re keeping an eye on your profit margin. Because if you’re bringing in $200k in revenue, but it costs you $150k to make $200k, your profit margin is $50k or 25%. You’d be better off bringing in $100k revenue if you’re able to decrease your expenses so it only costs you $40k to make $100k, making your profit margin 60% and putting $60k in your bank account, $10k and 20% more than the $50k you’d make in the first scenario.
This is also 100% applicable to your life.
Think about this, say you’re working in a full-time job that has a pretty cushy salary, but you usually work 9am - 8pm and sometimes work on weekends.
This means that you are spending 70+ hours of the total 119 waking hours (assuming 7 hours of sleep) you have each week making $140k. So when you break that down, your cushy salary is really paying out about $42/hour and you have 49 hours a week to spend time with your loved ones, pick up a hobby or engage in a side hustle to increase your revenue.
So let’s take a look at another scenario. Say you decided that you’d rather have a “normal” 9-5 where you really do get to leave work at work.
This means that you are spending 40 hours of the total 119 hours you have each week making $85k. So when you break that down, your reasonable salary is really paying out about $44/hour. You still have 79 hours left to spend however you’d like: with your loved ones, taking salsa lessons or picking up a few photography gigs so you get to make a little extra cash doing that other thing you really love that you don’t get to do in your full-time job. That’s 61% more of your life you regain control of. That’s pretty awesome.
Now let’s say you do engage in the aforementioned “side hustle.” Say you work an extra six hours a week at $50/hour, you’re now making an extra $1,200/month. You’re making 71% of what you were making with your cushy job, but only spending 66% of the time you were.
And lastly, what if you said “f-this, I just want to take my skillsets and do my own thing.” Well first things first, I’d high five you and say “get it girl,” but then I’d also remind you not to forget that it’s tough, but it’s 100% doable.
So if you were doing your own thing, you could probably charge a higher hourly rate than you’d make at your 9-5. If you’re charging $100/hour, you only need to bill 29 hours/week to make $140k a year. That’s 41% as many billable hours as before. Now don’t get me wrong, there are a lot of unbillable hours spent running your own business, but this is possible. It’s more than possible. People do it all the time. Plus, if you’re only billing 29 hours a week, in theory, that still means you have 11 hours left each week for administrative, marketing, and business development work.
It’s so much easier to spend less than make more.
And it’s less stressful too.