Your Money or Your Life
I recently finished reading Your Money or Your Life. This isn’t just another book about saving money or investing; it is about re-examining your relationship with money. It is a nine-step program for identifying how much money you spend to earn, what you value, how much you really need to live, how you can align your spending to your values, and how to apply principles to achieve Financial Independence. There are many exercises in the book, and each serves to build consciousness of your behavior and values.
In the process of becoming Financially Independent, the book teaches principles of Financial Intelligence and Financial Integrity. Financial Intelligence is about understanding how money works. The book walks through calculating your true hourly wage by examining what you spend money on because of your job – commuting, special clothing, meals out, vacations, etc. You also analyze how much money you’ve earned so far in your lifetime to understand your earning potential, and then taking an inventory of all your possessions, to figure your Net Worth – what you have to show for all those years of hard work. Next you begin analyzing and tracking income and expenses – but with a twist. You also track, for each expense, whether that expense would increase, decrease, or stay the same if you did not have to work.
One of the exercises (and it gets a little hippy-dippy here) is to do some introspection and take stock of your values. The reason is that when you understand your personal values, the decisions you make – social, work, and financial – become more clear. You become more conscious of how you spend your time and energy. You begin to think of money not just as numbers and papers, but as your life energy – because that is really what you are trading. The only thing your really possess is your time. You trade your time for money which you spend on things that bring you fulfillment. So now, when you do your income/expense analysis, you also track your expenses in terms of life energy and ask yourself if what you spent brought you fulfillment accordingly. This sets you on the path to Financial Integrity – aligning your decisions with your values.
As you continue to track your income and expenses, you should see your expenses decrease and achieve a steady-state. Along the way, you’ve been saving the difference between your income and expenses and putting it into savings. When the income you earn from those savings (via various investment vehicles) exceeds your expenses, you have achieved Financial Independence! You are free to quit your job and spend your time and energy on things you find more fulfilling.
I highly recommend this book for anyone looking to re-evaluate their relationship with money – whether you are fed up working for “the man”, you want to live in service to others (but you realize you still need to be able to pay the bills), or if you’ve realized that you’ve become a “consumer” and want to break the cycle of spend-debt-earn.
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