The One Book That Changed My Perspective on Money

Share:
Photo by Kenny Eliason on Unsplash

I’m just about one year away from graduating from university, which frequently makes me question what I truly want to do in my life. I am very much aware of the conveyer belt of school > university > rat-race job > possible retirement, and I don’t want my life to conform to that simplistic mould.

I don’t want most of my adult life to be defined by the mode I happen to earn money. I don’t want to be prevented from experimenting, exploring and creating due to a lack of finances.

So, I started reading a lot of personal finance books. They all had some useful advice, but Your Money or Your Life by Joseph R. Dominguez and Vicki Robin completely changed my perspective on money. Here are a few things that this book made me realise:

1 I started viewing the act of earning money as synonymous with exchanging my (finite) life energy. Momentarily, I saw a shift in how I approached my job. Am I living to work or working to live?

Money is something we choose to trade our life energy for ~ Your Money or Your Life

Photo by Morgan Housel on Unsplash

2 It forced me to actually track my income and expenses. I set up a rudimentary Excel table which I fill out monthly. Through using it, I identified areas where I’m overspending and live on less than I make while allowing myself to spend on things that genuinely make me happy (such as dance lessons).

The Excel sheet I use. Source: Author

Apart from tracking expenses I also answer two questions for every purchase I make:

  • Does this expense reflect my values? (Ever heard of voting with your dollar?)
  • Is this expense a good use of my life energy (Is this expense worth the number of hours I put into earning the money I spent on it?)

All of these values for income and expenses automatically land in this graph:

My Wall Chart (the y axis is removed because I don’t feel comfortable sharing the exact numbers) Source: Author

Notice how initially my expenses were higher than my income, and now notice how large of a gap I have between my floor (expenses) and my ceiling (income). The difference between there two goes straight into my savings.

3 I started saving my money. Money in your bank account gives you: inner peace, satisfaction, a “cushion” to fall on (in case you lose your source of income), and may even allow you to leverage the power of compounding. One day, I hope that my capital earned on my savings can take the place of your work income. Then I will be able to decide if I want to keep working or not.

Savings over time. Source: Author

Notice how when the income-expenses difference grows, so does the rate at which my savings increase.

To conclude

If you’re anything like me, with the weight of adulthood and your future wanting to rest itself on top of your shoulders, then you’re no stranger to existential dread resulting from finances. Even at the age of 21, I find myself ridden with anxiety over whether I’ll ever be able to retire, and if so, how?

Ultimately, Your Money or Your Life by Joseph R. Dominguez and Vicki Robin is just one of the tools I’m using to alleviate this ever-present existential dread. I believe the book is effective because so much of it is common sense. Even though the book is a little dated, with its US-centric approach and the “stories” woven throughout the book, underneath, a beautifully simple programme emerges, teaching you how to properly quantify and track your money.

What are some of the things that have changed your perspective on money?