Your Money or Your Life (Book Review)
Your Money or Your Life by Vicki Robin and Joe Dominguez is one of the oldest and most well-known books about financial independence.
While it teaches you how to manage your money, it takes a much broader approach than many other personal finance guides.
In fact, the program created by the authors is designed to change almost every aspect of your life. Let’s have a look at whether this classic, first written in 1992 and updated in 2008, is still relevant for readers today.
KEY TAKEAWAYS
- Robin states that many of us don’t make a living, we “make a dying”.
- Our jobs sap the life out of us and rob us of our most precious years. By figuring out what we truly value, we can free ourselves from the endless cycle of working long hours and spending money to make up for our awful jobs.
- A number of exercises are included in the book. First, subtract from your monthly income the money you spend on work clothes, extra help you need because you don’t have time, and objects you purchased to reward yourself for working.
- You will also write down every possession you own and assign it a monetary value.
Having a purpose can help us lead a happier life, but it often gets drowned out by work commitments. As you graph your progress over the months, your spending will hopefully start to reflect your values more closely and allow you to find more fulfilment.
Here is the full analysis
Robin states that many of us don’t make a living, we “make a dying”. Our jobs sap the life out of us and rob us of our most precious years. By figuring out what we truly value, we can free ourselves from the endless cycle of working long hours and spending money to make up for our awful jobs.
SNAPSHOT
What Does This Classic Teach Us?
The book isn’t just your average financial independence guide. It offers a comprehensive system that evaluates your past choices, your present situation, and your future potential.
If you diligently follow every step of this program, you will not only think about how you are handling your money but also whether the way you live is aligned with your values.
Robin states that many of us don’t make a living, we “make a dying”.
Our jobs sap the life out of us and rob us of our most precious years. By figuring out what we truly value, we can free ourselves from the endless cycle of working long hours and spending money to make up for our awful jobs.
Throughout the text, the motto is “no shame, no blame”. We simply accept what happened in the past and move on towards a better future.
Is It Still Relevant Today?
While some of the advice, particularly the investment section, is dated, readers all over the world can get a lot of value out of this book.
This is especially true for those who are not familiar with the financial independence principles and are not satisfied with their current situation in life.
However, the book offers a helpful approach even for those who are already financially savvy.
In particular, the concept of money as a store of your time and the section about aligning your life with your values can be life-changing for everyone.
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As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash.
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As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash.
Figuring Out Your Past
In the first part of the book, Robin and Dominguez invite us to have a look at our past.
They ask us to find out our total lifetime earnings, including the money we made as teenagers, any untaxed gains, and inheritances or gifts.
This can show us our own earning power and help us understand how we are using our resources.
Then, we should add up all the money we currently have as well as the value of our assets.
If you follow the instructions exactly, you will write down every possession you own and assign it a monetary value.
During this process, you might find many objects that you no longer need, which you can then sell on or donate.
At the end, you can see how much of your total lifetime earnings you have retained.
Although this step might sound extreme, it can be a great wake-up call for those who have let things slide for many years.
I personally went through all my things recently and was surprised at the result. Even in my small, tidy flat, I have accumulated an astounding number of objects that could be put to better use by someone else.
How much do you Earn? The resulting total is often much lower, and many people realize that they have been selling their time, or, their life energy, very cheaply.
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Money and Life Energy: How Much Do You Earn?
As a next step, you will examine your income more closely. You might believe that you earn $20, $40, or $60 per hour, but this isn’t accurate.
The authors ask you to consider all the hours you spend commuting, preparing for your job, relaxing from your job, and looking for more work.
Then, you subtract from your weekly or monthly total the money you spend on work lunches, work clothes, extra help you need because you don’t have time, and objects you purchased to reward yourself for working.
The resulting total is often much lower, and many people realize that they have been selling their time, or, their life energy, very cheaply.
Now that you know your real hourly wage, you can calculate how much certain objects cost you. If you earn $10 for every hour you spend working at or preparing for your job, a fancy dinner could cost you 10 or 20 hours of your life.
Tracking Your Present
Once you know how much your net worth is and how much you earn per hour, you can track your spending.
The authors advise writing everything down in a book and then classifying your expenses.
Today, many banks and apps can do this for you, so this step has been greatly simplified and popularized.
At the end of the month, you can look at everything you spent and decide for each category whether you spent too much, too little, or just the right amount.
Over time, you graph your spending and earning on a large chart.
Because you are a much more conscious consumer now, you will automatically lower your expenses and raise your income over time.
Personally, I tracked my expenses for many years and definitely noticed this automatic shift towards optimization. As I became more aware of the time I spent earning my money, I stopped spending on things that didn’t improve my life, such as a gym membership or subscription service I wasn’t using.
Advertisement
As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash.
Advertisement
As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash.
Aligning Your Money and Your Values
Robin and Dominguez ask you to pose three questions about each category of your spending:
- 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 a living?
This allows you to explore your values, which might include caring for family and friends, helping out in your community, keeping the environment safe, or following a given passion.
Having a purpose can help us lead a happier life, but it often gets drowned out by work commitments.
As you graph your progress over the months, your spending will hopefully start to reflect your values more closely and allow you to find more fulfilment.
Investment Advice
The most underwhelming section of the book was the investment advice, which makes up the final chapter.
Dominguez, who passed away in 1997, exclusively invested in US government bonds, which is not a practical strategy in the current market environment.
Although the updated edition of the book contains a section about investing in the stock market, this is 13 years out of date and therefore not as useful as some more current books.
What’s more, it is quite vague, so readers will need to do further research.
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SHOULD YOU BUY THIS BOOK?
How we rated the book
Our overall rating comprises five key considerations, including suitability for beginners and European and UK readers.
1. Beginner-Friendly
2. Investing Concepts
3. Investing How-to (Europe)
4. Financial Freedom Principles
5. Personal Finance Know-how
1. Beginner-Friendly
2. Investing Concepts
3.Investing How-to (Europe)
4. Financial Freedom Principles
5. Personal Finance Know-how
Rating justification
Your Money or Your Life by Vicki Robin and Joe Dominguez is an important work for the financial independence community, and it has influenced the lives of countless individuals.
Because of the broad focus, it allows the reader to reevaluate their entire life in terms of their earning potential, spending habits, values, and allocation of their time.
The premise is that financial intelligence, integrity, and independence can help you lead a more meaningful life and avoid the earning-to-spend treadmill.
I really enjoyed the concepts of money as “life energy” and the strong focus on the “why” rather than the “how”.
The book is beginner-friendly and has a lot to offer American as well as European people.
The writing style, which includes many individual examples as well as explanations, feels long-winded at times.
However, I thoroughly enjoyed the interactive and practical setup of the book, which encourages the reader to complete the exercises and therefore get more involved with the concepts.
Your Money or Your Life is not designed as an investment guide, and it focuses more heavily on financial independence principles than personal finance.
It is great for anyone who is new to the FI concepts or who would like to use their financial situation to optimize their life.
Good Luck and Keep’em* Rolling!
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