Sunil is the author of The Extra Money Blog, a blog dedicated to helping hard working and successful individuals get more out of life, whether it is financial freedom, flexibility in lifestyle design or more freedom to live life on your own terms.

We all like to build our net worth so that we can enjoy a comfortable retirement.  Many of us start doing so by educating ourselves about personal finance, and then developing a plan to save and invest for our retirements in a systematic, slow and steady manner.  That is absolutely the right thing to do.

Spending less to save more money is a good thing to do, and often times means frugal living.  There is another option however that is not often talked about.

Investing Time

We all know we need to invest 10% of our paycheck so we can benefit from the compounding potential of investing over time.  But do we ever consider investing 10% of our free time to build a bigger investment portfolio so we can either retire early or retire more comfortably?

I don’t need to rehash the economic conditions we live in today.  We all know what is happening to Social Security, and what will happen to it by the time we retire.  We all know inflation is an inevitable and necessary evil.  We also know that salaries are not keeping up with inflation.  You get the point . . .

So why not take matters into our own hands and start investing some the free time we spend watching TV and eating potato chips on the couch to do something productive that can generate in some additional income for us?

For Example

I’m a visual person, so let’s go over Jason’s example to learn by the numbers:

• Say Jason makes $80,000 a year and puts away 10%, or $8,000 of his money away in retirement accounts.  I will compound by the year instead of by the month, and not factor in raises, bonuses, etc. to keep things simple.  Assuming 8% return on investment, he will end up with just under $400,000 in 20 years.  Nice!
• Now say Jason budgets away 10% of his time or 4 hours a week (10% of a 40 hour working week) to build a side business like a blog or website, or freelance and offer services that he is good and skilled at.  If Jason makes $80,000 at work, I am inclined to think he can make $20 per hour at the least working as a freelancer.  If Jason does this for 20 years, he will end up with an extra $76,800 in his bank account. Eh, not bad…
• Now let’s say Jason takes his earnings from his side gig every year and puts it toward his retirement.  Let’s see what the analysis shows us.  10% of a 40 hour workweek is 4 times 4 week per month = 16 times 12 months a year = 192.  192 total hours worked per year times $20 per hour is $3,840.  $3,840 plus the $8,000 he puts away for his retirement each year will grow to just about $564,000.  Wow.

If we stretch this over a 30 year period, the portfolio amounts to $1.4 million, and if we stretch it to 40 years, we are talking $3.2 million in retirement funds.

So if Jason started working at age 22, at age 62, he would have a nice $3.2 million retirement nest egg.

Conclusion

I realize that we have discounted several other variables from this equation.  However, the point I am conveying is quite clear.  At Age 52, Jason may decide that $1.4 is more than enough for him to live on and therefore could retire 10 or more years earlier than originally planned.

Alternatively, he may decide to work till age 62 and retire like a rock star with $3.2 million in his bank account.  Finally, he could just invest from his $80,000 salary and use the extra cash from his side gig to live less frugally and indulge more.

The point is that he has options, and options are good to have in life.  He can retire early, or improve his retirement years, or simply indulge more – the choice is his.  But this choice would not be possible if he does not set aside 10% of his time to invest into his future.

Creating options to get more out of life is what I am all about.  It is what I live, breathe and blog about.  Are you or anyone you know doing the same?