7 lessons from Your Money or Your Life
Originally published in 1993, personal finance classic Your Money or Your Life was revised in 2008, and again in 2018, and remains one of the most valuable resources about intentional spending. It was one of the first books I read in the FI/RE category, and it really opened me up to a whole new world of what money can do for me.
Since then I re-read it multiple times, to remind myself of what’s most important when it comes allocating resources, and to make sure that my spending aligned with my values.
Here are 7 important lessons I took from this book.
1) Defining “enough” is the most important thing you can possibly do.
Deciding how to spend your hard-earned money requires systematic introspection. You need to ask questions like, “What makes me happy?” or “What values will I never compromise?”
It’s easy to draw a blank when faced these deep, existential questions, and answers won’t come up right away. But you need to take the challenge nonetheless, and give your answers ample time to percolate to the surface. If you had unlimited funds, how would you spend your time in the next year? Two years? The next decade? What would you want your legacy to be? The answers to these questions will determine your unique definition of “enough.”
Most of us think we want things that signal our refined taste or financial success to others when what we truly want is to have our needs met, not only the basic ones like food and shelter but also our need to express ourselves in uniquely creative ways and nurture meaningful relationships without being scared of the future. “Winning isn’t having the most toys,” Robin and Dominguez write, “it’s having precisely what you need and nothing in excess and being able to stop playing the game at will.”
In that sense, knowing what “enough” and identifying the point of maximum fulfillment for yourself is the most important step you can take to the path of financial freedom. In the words of the authors, “enough is a fearless place. A trusting place. An honest and self-observant place. It’s appreciating and fully enjoying what money brings into your life and yet never purchasing anything that isn’t needed and wanted.”
“Enough” is not “less is more,” rather it’s the Goldilocks feeling of just-rightness. And it’s different for everyone.
2) Your first financial steps need to be getting out of debt and having at least six months of basic living expenses in the bank.
Robin and Dominguez identify “Financial Intelligence” as the first step on the path of financial independence. “One tangible outcome of Financial Intelligence,” they propose, “is getting out of debt and having at least six months of basic living expenses in the bank.”
This is the first step to move from financial precarity to financial safety. It also provides basic training in character traits that’ll help you get to financial independence while enjoying the process: frugality, patience, and perseverance in the face of adversity.
A six months worth of savings can give you a newfound courage in your job, or new energy to explore dormant interests. You may decide to take the time to explore new lifestyle options you didn’t have the bandwidth to consider before. You could decide to travel around the world, pivot to a new career, or start a business.
Try this: Ask yourself how you would spend your time if you could take six months off work without having a pay cut. Let your imagination run free.
3) Overspending is bad for your mental health, your financial health, and it’s bad for the planet.
Another step towards Financial Independence is what authors call “Financial Integrity,” which is “achieved by learning the true impact of your earning and spending, both on your immediate family and on the planet.”
Our ever-inflating lifestyle has a devastating impact on the planet and our (financial and mental) health. We need to shift as soon as possible from prioritizing growth to prioritizing sustainability, which requires that we truly reevaluate and transform our consumerist tendencies.
We need to remember that every time we spend our money, we are consuming the planet’s resources, not only the ones that went into the product we buy but also the ones that went to the logistical process that put it on our doorstep. Anything we buy and don’t use, anything we consume without enjoyment is irrevocable planetary resources going down the drain.
Consumerism causes not only a waste of resources but also unwanted clutter that unnecessarily takes up space in our physical environment as well as in our psyches. As much as frugality and thrift may sound like deprivation, they actually provide the key to clearer mind and better mental health. Once you realize the toll clutter takes on your finances and general well-being, it’ll be so much easier to spot, not just in objects you own but ways in which you spend your time. You’ll find that everything that takes from you without giving anything back is clutter.
Try this: Ask yourself “is this thing I’m going to buy or the way in which I’m going to spend my time worth my life energy?”
4) Effective budgeting is more like mindful eating than dieting.
If mindful eating means slowing down and paying attention to what you are actually hungry for, effective budgeting means slowing down to become conscious of what purchases bring you true return on investment.
This starts with diagnosing your current shopping habits. You might want to try tracking your expenses a little bit to get a more accurate picture of where your money goes—most people, even the ones that fancy themselves as very self-aware like me, are often surprised by the results. Authors also suggest you ask yourself these three questions:
Did I receive fulfillment, satisfaction, and value in proportion to life energy spent?
Is this expenditure of life energy in alignment with my values and life purpose?
How might this expenditure change if I didn’t have to work for money?
Next, they recommend identifying what they call “gazingus pins.” These are objects you tend to spend too much money in proportion to what they add back to your life. They are your spending Achilles’ heels, often things you buy while shopping as entertainment. Robin and Dominguez write, “more than the simple act of acquiring needed good and services, shopping attempts to fill (but obviously fails, since we have to shop so often) myriad needs: for a reward after a job well done; for an antidepressant; for esteem boosting, self-assertion, status, and nurturing; and in the case of malls, for socializing and time structuring.” Put simply, you don’t buy to have something you need, you buy to feel something.
So what to do instead? Authors of this book suggest what they call “creative frugality,” which implies things like taking care of and using up what you already have, being mindful of the emotions that encourage you to shop mindlessly, thinking before spending your precious resources (like time, money, or material possessions), and focusing on the expansion of spiritual resources (like creativity, intelligence, and love). They write, “frugality is enjoying the virtue of getting good value for every minute of your life energy and from everything you have the use of. […] Waste lies not in the number of possessions but in the failure to enjoy them. […] To be frugal means to have a high joy-to-stuff ratio.”
5) Distinguish between “cheap thrills” and “deep thrills.”
A cheap thrill is like the dopamine-high you get when you buy something, whereas a deep thrill is how you feel when you achieve a lifelong dream. Cheap thrills come from external rewards, whereas deep thrills come from serving a purpose you deem worthy. Cheap thrills are transitory. Deep thrills are long lasting.
Yet, most of us use external yardsticks (read: cheap thrills) for fulfillment. Some of the common external fulfillment criteria are: pleasing others; getting an A; proving yourself to the bully from third grade who still lives in your mind; beating out the competition; making it onto whatever top-ten list you worship; winning; not winning but getting a trophy anyway; scoring big—in romance or sales records. As the name suggests, it’s based on external factors, on other people’s opinions. This is not true fulfillment.
Deep thrills, on the other hand, occur when a purchase or experience leaves you satisfied and at peace, when it aligns with your true needs, values and priorities, and feel like an integral part of your general lifestyle. Prioritizing deep thrills over the cheap ones requires clarity of purpose despite the cacophony of external influences.
Ask yourself: Are your values and life purpose clear, or are they out of focus, buried under the weight of a lifestyle that doesn’t seem to fit?
6) “Job” and “work” aren’t the same thing.
Robin and Dominguez make an interesting observation about the nature of jobs in modern society: they argue that careers serve the purpose that religion did earlier. “They are the place where we seek answers to the perennial questions ‘Who am I?’ ‘Why am I here?’ and ‘What’s it all for?’” they write, “they also serve the function of families, giving answers to the questions ‘Who are my people?’ and ‘Where do I belong?’”
This is a problem, because it blurs the main purpose of employment: getting paid. While feeling a sense of belonging to your place of employment may be a good thing, equating your general sense of identity and meaning with your job means that you run the risk of not being able to remove yourself when your employment fails to pay you fairly, treat you justly, or protect your mental health. This is what happens to a lot of academics that I know, and it has certainly happened to me as well.
Instead of seeing your job as a part of your identity, authors propose, “what if we removed most of these expectations from our paid employment and recognized that all purposes for work other than earning money could be fulfilled by unpaid activities?” Redefining work as any purposeful activity instead of just paid employment thus frees us from the assumption that what we do to earn money also needs to provide us with a sense of meaning. It gives us permission to search for meaning and purpose elsewhere. You could, for example, say something like “I am a teacher, but currently I’m writing computer programs to make money.” This distinction also allows us to reunite work and play, and honor our unpaid labor that enriches our lives as well as those of others.
7) Not all wealth comes from money.
There are other forms of wealth, most of which money cannot buy. Health is one that comes to mind, particularly in the United States where healthcare system is a joke and inaccessible to many, health becomes a big asset. So, a healthy diet, exercise, good rest, and avoiding stress becomes modes of investing to keep this valuable asset for as long as possible.
Another one is a sense of community and belonging. Whom can you turn when you need help? Do you have a community that you can trust? A trusting community can not only create a sense of belonging that helps the longevity of its members but it can also allow a sharing of resources, effectively adding to everyone’s financial wealth as well. Isolation can be expensive.
Last but not least, there’s a sense of wealth that comes from learning and developing skills in order to create something meaningful and make a contribution to society at large. What have you always wanted to know and what could you learn to do for money while also having fun with it? What do you think people need right now? How can you give it to them? Asking these questions can be positively life-changing because some of the happiest moments in life come from creating something that aligns both with your skills and interests, and with what the world needs.
—————
As the title suggests, Your Money or Your Life proposes that money is a big deal, because it is a stand-in for our most precious assets: our time and our energy.
That’s why authors encourage us to ask all the big questions like: What have you always wanted to do that you haven’t yet done? If you knew you were going to die within a year, how would you spend that year? Whom are you trying to impress or please through what you have or how you spend? What do you like—and dislike—about the work you do for money? Highly recommended if you’re ready to make some changes to make the way you spend your money more intentional.
Want more money-related insights?
Join The Finance Rookie Newsletter for more free and bite-sized content on personal finance!
