The following is a guest post from Philip from Weakonomics, a personal finance blog focused on the intersection of Main Street and Wall Street. According to him, he's usually sitting at the corner throwing rocks at traffic behind the fence of anonymity.
I'm looking staring at my grandfather's guitar. He gave it to me because the arthritis in his hands keeps him from enjoying it anymore. I know a chord or two, but in order to really pick up on it I need regular, structured, lessons. There's a problem though, I don't want to pay for them. I'm cheap and don't have that kind of discretionary income right now.
Perhaps I could find a guitar instructor willing to barter. What can I offer this person? Dog sitting, financial planning, running buddy, (basic) cooking lessons, computer help? That's about all I've got. So even if I find a willing barterer, I have to be able to meet their needs as well. My odds of finding such a symbiotic relationship aren't good, and the time I would spend finding one wouldn't justify the monetary benefit.
But if we were both members of a time bank, this wouldn't be a problem at all. I don't need to help the guitar instructor, I just need some time dollars to cash in.
What is a time bank?
A time bank is a centralized reciprocal service community where everyone is of equal value. You volunteer your time to assist with any listed need and you receive time dollars as payment. It doesn't matter if you're a lawyer or a bus driver, you are paid the same. Here's how I might be able to get some time dollars and get my guitar lessons.
I can search my local time bank listings for any needs I might be able to fill. Perhaps someone is new to town and wants someone to run with and show them to good jogging spots, or maybe someone is going on vacation and needs a dog sitter, or perhaps someone wants to start a blog and needs help getting everything up and running. These are all services that I can offer. For the example, let's say I apply for the job to help set up a blog and the person accepts. That weekend I go over to their house and we register a domain, sign up for hosting, and I introduce them to WordPress, themes, and plugins. The whole process takes us three hours.
These three hours are now my currency and kept at the time bank. I can use them to get services I may need like moving help, drafting a will, or guitar lessons. We all know I'm after those guitar lessons, if there is someone registered with the time bank offering guitar lessons we've got a match! Let's say over the next few weeks I have three 1-hour lessons. That guitar instructor would now have three time dollars and perhaps more if he/she works with other time bank members.
How do you keep track?
While earning your time dollars usually requires you to be out in the real world, the banking can be all electronic. Some larger time banks employ administrators full-time to keep things running smoothly, in other instances a volunteer could do it, perhaps earning time dollars for the work.
If one service were to be seen as more valuable than another, the risk for a monetary value being assessed arises. Doing so sets the time bank up for a situation where services rendered must be taxed. Nothing is perfect. However every problem has a solution. For time banks to work you have to assume everyone's contributions are of equal value. One hour of work equals one time dollar.
Time banks also must have a certain scale in order to maintain some kind of sustainability. If you only have the same 10 people involved it's possible many of them either won't have something to contribute or something to gain. I would estimate you need at least 50 enthusiasts for the time bank to last. But with 50 people you're going to need a tracking system, which will likely cost money. The economics of administration may outweigh the benefits.
How to Find A Time Bank
So where do we find time banks or learn more about starting one? The best resource out there is timebanks.org. There are books, articles and websites all listed here. They also have a directory of TimeBank USA member banks and non-member time banks with contact information. Sadly there isn't one around me, but I'm not opposed to starting one. I really want guitar lessons.