It is possible to save and invest your way to wealth. Over the long term (30-40 years), with consistent investing, you can likely build a retirement fund large enough to live off once you turn 65.

But, if you want to do it faster than that, you can’t save your way there. Instead, you have to spend money to save time in the pursuit of wealth creation.

This is counterintuitive. Most people think you need to spend time to save money. This is likely what you’ve heard your entire life from your parents, friends, etc. But it’s wrong.

Set An Hourly Rate For Yourself.

Naval Ravikant has a great way to think about this. It’s all about how much you value your time. He encourages you to set an hourly rate for yourself - something that seems absurdly high. Naval originally picked a rate of $5,000/hour for himself, which is about $83/minute. So, go big.

Then, once you’ve set the rate, start considering the amount of time you spend on everyday tasks. How much money is your future-self sacrificing by spending hours on unproductive tasks that don’t get you closer to your goal?

If you value yourself at $1,000/hour, spending an hour grocery shopping is a terrible use of your time.

Here’s Naval in his own words, from The Almanack of Naval Ravikant:

“Always factor your time into every decision. How much time does it take? It’s going to take you an hour to get across town to get something. If you value yourself at one hundred dollars an hour, that’s basically throwing one hundred dollars out of your pocket. Are you going to do that? 

Another way of thinking about something is, if you can outsource something or not do something for less than your hourly rate, outsource it or don’t do it. If you can hire someone to do it for less than your hourly rate, hire them.”

Say you buy some build-it-yourself furniture. You think it’s going to take you two hours to put it together. If you value yourself at $100/hour, don’t build the furniture. Instead, hire someone to build it for you for less than $200.

This way, you can save the two hours to work on the inputs to get you to that future $100/hour rate. Spend money to save time.

Once you frame your time like this, you’ll see just how valuable it is. And you’ll realize that you spend a lot of time NOT working on getting rich…

Software Lets You Outsource Almost Anything.

You can free up more time by outsourcing tasks to software or people.

For example, my wife and I outsource our grocery shopping to Instacart. With a small fee, we can get our groceries delivered instead of having to pick them up. That saves about two hours a week.

I use Upwork to outsource almost any creative project that I don’t have time for. I hire freelance writers, graphic designers, and editors regularly as I juggle different projects. It’s a huge time-saver.

For things like social media, I use Hypefury (←affiliate link) to automate my tweets. This saves me from falling into the black box that is Twitter for hours on end.

Whatever your task, there’s probably a software or marketplace solution that will do it for you. Use it.

Spend Your Time Building Leverage.

Now that you’ve freed up a bunch of time, what should you do with it?

Easy - spend your time building leverage around your specific knowledge and skills.

Leverage is just a word for tools that amplify your efforts. My favorite kind of leverage is scalable digital media.

This website, for example, is a piece of leverage I’ve been building for years. It scales my skill of writing to potentially billions of people. The same goes for my Twitter account.

I wrote a pretty comprehensive article on leverage that you can read here. Here’s the money quote:

“Media leverage is the content you create that scales via software (code) with a zero marginal cost of reproduction. That means you only have to make the piece of content once, but anyone with an internet connection can consume it repeatedly…

Just like an investment in a great business, your returns on media will compound over time. The sooner you start, the larger you'll grow over the long term.”

This scalable media is the leverage of the newly rich. You should be spending money to save time to build leverage.

With Leverage, You Only Need One Great Decision Per Year.

Leverage is a tool - it’s not inherently good or bad. It only boosts the impact of the decisions you make.

In this way, Naval tells us that “leverage compounds your judgment.”

In a world where the consequences of your decisions are magnified, the quality of your choices become more critical. This means that if you have built enough leverage with code, media, labor, or capital, you only need to make one or two great decisions a year to get paid.

You should spend your time figuring out what that great decision looks like.

Here’s Naval Ravikant again, this time in an interview with Tim Ferriss on The Tim Ferriss Show:

“The ideal would be to make money with your mind, not with your time. So if I can just make one good decision a year, and that makes me all the money that I need for that year, then that’s perfect…

The judgment comes from clear thinking. The clear thinking comes from having time to reflect and to pursue your genuine intellectual curiosity. And you’ll see that a lot of the great investors, for example, just sit around reading most of the time, or Warren Buffett famously plays a lot of bridge.”

It’s not about how hard you work. Much of your “work” should be thinking about what to work on and pursue. And once you decide, you should move very quickly.

For example, as a producer of digital (scalable) content for major, international brands, most of my time is not spent producing.

I spend it thinking about how to position myself in the client’s eyes. I spend it researching and brainstorming ideas that I can pitch to multiple buyers.

When you have leverage, success is found in good judgment and positioning, not hard work.

Tim Ferriss has a quote from his book, The 4-Hour Workweek, that I keep close-by:

“Slow down and remember this: Most things make no difference. Being busy is a form of laziness- lazy thinking and indiscriminate action.”

With judgment and leverage, you only need one or two good decisions a year to get paid.

Spend your time figuring out what those decisions are. Then, execute ruthlessly.

Start now.

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ARTICLE SOURCES:

Jorgenson, Eric. The Almanack of Naval Ravikant: A Guide to Wealth and Happiness. Magrathea Publishing. Kindle Edition.

Ferriss, Timothy., Ray Porter, and OverDrive Inc. The 4-hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich. Expanded & updated ; unabridged. Ashland, Or.: Blackstone Audio, 2009.

You can find Naval Ravikant’s appearance on The Tim Ferriss Show here: https://tim.blog/2020/10/14/naval/