Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence (Revised 2018) by Vicki Robin
In my previous blog posts, I focused on books detailing the nuances of the stock market and the best places to invest your money. This month, I decided to backtrack a bit and dive into a revised edition of a book that has gained a considerable following since its original publication in the 1980s, especially amongst younger generations, Your Money or Your Life by Vicki Robin. Robin champions a Financially Independent, Retire Early (FIRE) mantra, and lays out steps to achieving this. What I originally thought would be a how-to book on saving turned out to be a compelling read on changing how we view money itself, thus fundamentally changing our relationship with it.
Robin lays out a nine-step plan for readers to change their relationship with money. She makes clear from the beginning it is not a book about investing your money nor a “get rich quick” book. Rather a book to make you feel more confident with your everyday interactions with money. Learning to create spending and saving habits that make sense to you. Here’s a brief overview of her nine steps to achieving this:
- Step 1: Find out how much money you’ve earned in your lifetime, down to the nearest dollar. Then, create a balance sheet of all your assets and liabilities. The goal of this exercise is not to depress, but rather have readers make peace with their past financial decisions.
- Step 2: Calculate your “real wages” by adjusting for money put into traveling, work attire, etc. each month to sustain your job. Keep track of every cent you’re spending.
- Step 3: Set up your unique spending and income categories after tracking a month’s worth of income and expenses.
- Step 4: Using Step 3’s results, ask yourself, essentially, “did I receive the satisfaction/fulfillment I anticipated after spending my money on (x)? The goal of this step is to make you aware of certain automatic expenses. Are they bringing you the satisfaction you expected, i.e. a magazine subscription or a bloated restaurant budget?
- Step 5: Chart your monthly income and expenses on a graph. Display the graph in a place where you will be continuously exposed to it. Again, Robin’s steps do not seek to shame or depress the reader, but rather make them conscious of their money habits and seek to incrementally improve their relationship with money.
- Step 6: Lower your monthly expenses by increasing your consciousness in spending and live within your means. Robin provides a list of ten ways to save money each month, such as wearing items out; taking care of what you own; avoiding shopping unless you have already anticipated your needs; and begin learning to do things yourself.
- Step 7: Maximize your monthly income. Robin says we all have more skills to offer than simply what we do for paid employment, and that we sell ourselves short. She challenges readers to reevaluate if his or her current work situation. This means taking into account the daily commute and all other expenses related to the job, and determine if it is worth the time and energy. Robin notes that oftentimes our dissatisfaction with our current jobs is not because of the pay, but because it is lacking in fulfilling some sort of need, such as prestige, personal growth, etc. She argues that these needs can be met through other unpaid activities as well.
- Steps 8 and 9: To become financially independent, Robin urges readers to reach the crossover point, where your monthly income from investments passes your monthly expenses. She lays out a few ways to make your money work for you, mentioning CDs and passively managed index funds, without going into too much detail. Robin doesn’t dive too deeply into investment strategies, but she does provide some general guidelines for investing your money.
Robin’s nine steps towards transforming the reader’s relationship to money involve a fair amount of unabashed introspection. But she promises readers that by going through each step, honestly and unashamedly, each reader will gain immeasurable insight to their money habits and make positive changes towards becoming more financially independent.
My Biggest Takeaway from the Book:
Robin repeatedly states as her mantra, “your money= your life energy.” What she means by this is that we give up our time (life energy) in exchange for money. The question then arises: How much of your life energy are you trading for that new television, or weekly visits to an expensive restaurant, or your magazine subscriptions? The point is not to berate a single activity or spending habit – each reader has different values. But by asking ourselves if what we’re spending our money on is actually worth our life energy, it rephrases a question that can end up reforming our views on money. By making more conscious decisions with our money, we can lead a more fulfilling life.
I found that the earlier sections of this book really resonated with me. I liked how Robin wasn’t pushing a cookie-cutter model for saving and budgeting. She forces readers to dig into their past spending habits and question whether those choices are truly bringing about satisfaction. If you wonder where all your money goes by the end of the month or you feel like you could be doing more with your money, then this book is for you. If you’re already a super-saver and wondering how to better invest, this isn’t the book for you.
Star Rating: 3/3 stars.
Where I’ll head from here:
I’ve had The Millionaire Next Door recommended to me by various people, and it is a cornerstone of many finance book lists. I’ll be reading that for next month’s blog.
Do you feel that you could improve your relationship with money? Any other tips on turning your money habits around? Feel free to comment below!